Sustaining Public Transport Services during the COVID-19 Pandemic: Experiences and Lessons from China and Korea1 June 2020 Public Disclosure Authorized 1. Introduction As countries respond to the COVID-19 pandemic by imposing lockdowns, social distancing protocols, and stay-at-home orders, the public transport sector is suffering from both demand and supply shocks. Despite these impacts, the sector is critical in ensuring essential transport services during the outbreak, and in supporting the economic recovery and citizens’ lives during the gradual reopening, while at the same time controlling the spread of the virus. As the earliest nations to go through the outbreak, containment, and reopening sequence, China and the Republic of Korea are positioned to offer valuable lessons for other countries. This note summarizes the policy responses of their respective governments and looks at some Public Disclosure Authorized operation-level experiences of public transport operators in Shenzhen and Beijing in China, and Seoul in Korea to see if there are any valuable lessons or insights that might be gleaned from them.2 2. The Impact of COVID-19 on Public Transport Systems A. Plummeting ridership and slow recovery In China, 27 provinces and 428 cities completely suspended their public transport services during the outbreak. 3 In the first quarter of 2020, passenger transport in 36 major cities in China dropped by more than half. Total passenger transport trips were only 43.3 percent of the amount Public Disclosure Authorized during the same period in 2019, with bus ridership down to 41.7 percent, metro/light rail to 45.7 percent, and taxis (traditional) to 43.2 percent.4 Although cities witnessed various impacts and recovery speeds, the ridership generally plummeted right after the outbreak and slowly recovered to about half in the subsequent months after reopening (for example, see Beijing in figure 1 and Shenzhen in figure 2). The pace of recovery also varied among cities. For example, by late April, Beijing bus and metro ridership had recovered to about 40 percent of its 2019 level,5 while in Hangzhou the recovery, by late March, had already reached 50–60 percent.6 Public Disclosure Authorized 1 Figure 1: The effects of COVID-19 on public transport ridership in Beijing Source: Guo Jifu, presentation on World Bank Transport GP webinar series Figure 2: Shenzhen Bus Group Ridership Source: Shenzhen Bus Group (SZBG) Private online taxi hailing was also hit hard by the outbreak, but its ridership rates seem to be rebounding faster than traditional public transport. In February, more than 50 cities suspended online taxi-hailing services on Didi (which operates 90 percent of the online taxi-hailing services in China).7 In Dongguan, online hailing orders dropped 56 percent in Q1 2020 compared to Q4 2019.8 By April, Didi got back 60–70 percent of its ridership level before the pandemic. In the case of Korea, the ridership decreased by 60–70 percent for inter-urban bus services and by 30–40 percent for urban bus services, compared to during the same period of previous year. B. Financial difficulty for operators and drivers With plummeting ridership and increasing costs to ensure essential services and the safety of passengers and employees, public transport operators have been incurring massive financial losses. According to the bus operating company SZBG, the revenue of the Q1 2020 is about 42 2 percent lower than Q1 2019. Although the operational cost is also slightly lower due to cancelation of some bus services—manpower saving, and since all buses run on electricity, electricity and charging-service costs were also saved—it was partially offset by the costs of sanitation and personal protective equipment (PPE) needs. For the first three months of 2020, SZBG suffered a CNY 320 million financial loss due to COVID-19.9 The financial losses are expected to gradually ease off with the recovery of ridership. 3. Government Responses A. Central Government: Coordination Mechanism & Guidance The central government of China has established a COVID-19 Joint Prevention and Control Mechanism at the national, provincial, and local levels for efficient resource allocation and streamlined decision-making. Through this centralized chain of command, the central government is providing local governments and public transport operators with in-time technical and financial guidance about the outbreak and the expected schedule and approach to re- opening. “Technical Guidelines for Disinfection of Public Transport,” issued by the State Council’s Joint Prevention and Control Mechanism in late January 2020, sets out provincial- and city-level disinfection procedures for cars, trains, planes, ships and other public transport vehicles.10 Similarly, “Guidelines to Anti-COVID-19 Measures in Passenger Terminals and Transport Facilities Based on Different Risks and Areas,” issued by the Ministry of Transport (MoT) in March in response to the rising rate of work resumption and public transport ridership nationwide, provides transport service providers with guidance regarding reopening strategies and procedures. MoT has updated these guidelines every month to reflect how the latest policy thinking is tracking the fluidly evolving transition from shutdown toward recovery. 11 The publication specifies the frequency and procedures for, among other things, disinfection, ventilation, personal protection, operation adjustment (including load and occupancy control), and public communication. For example, it instructs that the occupancy rate for all inter-city passenger transport should be less than 50 percent; passenger density on buses should be no more than 4 passengers per square meter in high-risk areas, and 6 passengers per square meter in moderate-risk areas. The maximum occupancy rate for subway trains is 50 percent and 70 percent in high-risk and moderate-risk areas, respectively. When Wuhan started to re-open its public transport services in late March, it signaled that China had fully resumed its public transportation and urban rail transit services—just two months after the onset of the coronavirus outbreak. B. Central and Local Governments: Relieving Financial Burden Public transport operators in China, typically state-owned enterprises (SOEs), rely on government subsidies to make up the gap between operational expenses and fare revenues. During the pandemic, local governments provided substantially higher subsides to ensure the survival of the 3 public transport system. The central government waived the value-added tax for public transport services in 2020 and extended the period of purchase tax waiver and additional fiscal incentives for upgrading bus and taxi fleet to new-energy vehicles (battery electric, hybrid, or fuel-cell vehicles) till the end of 2022. For their part, local governments and financial institutions, following further guidance from the central government,12 offered financial support to operators and drivers. This included lowered licensing and rental fee, reduced-interest loans and financial guarantees to taxi operators and drivers (including online taxi-hailing drivers), relaxed insurance terms for operating vehicles, and reduced fees from service providers such as GPS monitoring and navigation companies. Similarly, the central government of Korea provided nationwide support to bus operators by waiving insurance payments for three months and extending the maximum allowable lifespan for ageing vehicles by one year. This has saved many old vehicles that were due for scrappage between July and December 2020, and effectively allows them to be used one year longer than legislation permits. This, however, applies only to vehicles that pass safety and emission inspections. The central government’s budget contains appropriations for additional support for both urban and inter-urban bus services, amounting to 25 billion won (USD 20 million), to be matched by local government budgets for their respective provinces and cities. Additional measures implemented by Seoul Metropolitan Government (SMG) to mitigate the shock to operators’ finances include • Setting up an emergency fund to provide masks, hand sanitizers, and disinfection, including labor cost. Based on the principle of ‘first execution, then settle,’ Seoul Metro and Bus Association first purchased the resources with their own budget, and then settled with the emergency fund later. This helped to expedite implementation and cut through bureaucratic red tape. Cumulatively, tens of millions of dollars’ worth of equipment have been requested, and the fund has consistently offered timely support. • Indirect support by cooperating with the operators to allow for reduced hours of operation and advancing by several months annual subsidy payments that they are entitled to. • Operational subsidies, in the form of direct financial support for bus and taxi operators, are currently under review. To ensure transparency and fairness, the operating subsidies will be based on the operational data collected from the use of fare cards and historical data. Based on the SMG’s budget for operating subsidies, which are regularly set based on such data and operators’ performance, the necessary financial support is estimated through consideration of the losses due to lower demand, compared to the same period in previous years. 4 4. Public Transport Operator Responses A. Coordination and Preparedness To respond to the pandemic effectively, Seoul’s public transport operators needed to be able to make prompt decisions