A long time ago, after working in a factory, I started driving buses in Gyeonggi Province. At that time, it felt as if I had come to a starry sky. Not a starry land where a princess with eyes like a shooting star lives, but a Mars-like starry land in a hot, dry wasteland where only the wind blows. Once, while driving a bus in Uijeongbu, a scruffy colleague who had come from working in a nearby city said that at his previous company, the owner was gambling and his salary was delayed by several months. Although it was difficult, I was working for a company that was being run in a novel way, so I couldn’t believe what that colleague said. By then, Korea’s per capita national income was already talking about $30,000.
Later I learned that the owners who had gathered to gamble were in a state of despair, resigned to the fact that there was no tomorrow for us because the bus company, which could not make a profit, was struggling, and the bus drivers, like our Jesus who bore their sins, were carrying all their hardships on their shoulders. At that moment, I deeply felt that the bus should become a semi-public system. In the end, Gyeonggi Province became a quasi-public system. And while Seoul’s city buses have become a quasi-public system, the village buses still operate under a system more backward than a country with a $5,000 per capita income, faithfully serving only as a training ground for recruiting more staff for Seoul’s city buses.In the end, the damage fell on the citizens and the bus drivers. However, the bus company executives felt just as frustrated.
There was a great deal of ideological conflict over the fact that buses, which clearly have the characteristics of a public good, had so much trouble transitioning to a semi-public system. Conservative politicians tried to privatize the railways and block the semi-public operation of buses, while progressive politicians moved in the opposite direction. I have said for decades that all of Korea’s problems must move beyond ideological logic, and the bus problem was a prime example.
But now, private equity funds are trying to acquire bus companies that have already become quasi-public and make a profit from it. I said that the profit private equity funds seek to obtain is wrong without question because it is directly linked to taxes, but AI presented the problem of executives’ lax management as the logic that justifies private equity fund intervention. I understood that because AI is neither a politician nor a bus driver like me, and we debated for quite a while. In the end, we settled on the idea of fiscal avoidance by local governments and the public ownership of bus companies, and concluded the discussion.
Why Does Public Tax Money Become Private Equity's Dividend?
The Bill for a Half-Finished Reform of Korea's City Bus System Lands on the Driver
Lee Hyeong-chun · Independent Columnist
1. The Problem
Of Seoul's 7,384 city buses, 1,027 — about 14 percent — belong to companies now owned by private equity funds. In Incheon, PE firms own roughly 30 percent of the city's 34 bus companies, with further holdings in Suwon and Hwaseong. This wave of acquisitions, which began in earnest around 2020, has already produced cases where dividends were paid out even as the company posted a net loss. Payouts continued at the very moment the firm was losing money. That single fact compresses everything this column is about.
Korea's city bus system operates under a quasi-public model: local governments set routes and fares, and cover the gap between revenue and cost out of public funds. Under this arrangement, what private equity sees is not a business but an asset whose principal and return are effectively guaranteed by tax money. This is not investment bearing risk; it is extraction from a subsidy stream.
2. A Historical Continuity — From Owners to Private Equity, the Burden Always Lands on the Driver
The quasi-public system introduced in Seoul in 2004 exists because the previous owner-operated model had failed — some companies were run so recklessly that drivers went unpaid, and low-revenue routes were routinely neglected. Twenty years later, what we are watching is the same structure recurring with a different owner in the driver's seat.
Stage one: before the reform, owner mismanagement was passed on to drivers as unpaid wages and poor working conditions. Stage two: after 2004, local governments took over route planning and revenue management and began covering losses, but ownership of the companies stayed private. Stage three: in the 2020s, private equity found that gap and moved in, maximizing dividends while the pressure again lands on drivers — in shift schedules, rest breaks, restroom access. Whoever holds title, the driver has always been the shock absorber of last resort.
The continuity is telling. The quasi-public reform publicized management and oversight but never touched ownership or profit — a half-finished reform.
3. What "Public Management, Private Profit" Actually Means
This phrase should not be accepted as neutral policy language. Spelled out, it means: the local government covers losses with tax money based on a standard operating cost formula, and the profit generated on top of that guaranteed stability is collected by private owners as dividends. This is not policy — it is a decision to redistribute tax revenue to private shareholders.
That is precisely why Seoul and Incheon have moved, belatedly, to cap dividend payout ratios, limit ownership stakes, and penalize quick resale. Private equity firms have pushed back, arguing such restrictions infringe on investor rights and could even constitute breach of fiduciary duty under criminal law. That confrontation is itself evidence of how badly the underlying structure was designed from the start.
4. Rail Versus Bus — A Misapplied Ideological Frame
The worry that a call for full public ownership will run straight into ideological gridlock is realistic. But the case most often invoked to justify that worry — the fight over rail privatization — actually runs in the opposite direction from the bus problem. Rail was originally state-owned, and progressives have fought attempts to privatize it. Buses were originally privately owned, and it is attempts to bring them under full public ownership that meet resistance.
Missing this asymmetry produces a half-true explanation: "ideology blocks bus nationalization." The more fundamental obstacle is not ideology but where the fiscal burden would land. Full public ownership means the local government would have to absorb the debt, the workforce, and the political accountability outright. Local governments' longstanding failure to claim authority over ownership changes has served, in practice, to avoid exactly that liability. Ideology is being deployed as an alibi for that avoidance — not as the real cause.
5. An Alternative — A Public Corporation, Not a Bureaucratic One
The framing usually offered here is a false binary: private ownership chasing profit (whether under an owner or a fund) versus civil-servant management. That binary erases a third option — the public-corporation model already used for Seoul Metro or Incheon International Airport. Ownership rests entirely with the public, while management is run by professional executives rather than by a civil-service bureaucracy tied to annual budget cycles.
This model largely avoids the standard critique of nationalization — personnel decisions untethered from performance, fleet renewal delayed by budget rigidity — while cutting off, at the root, the channel through which tax-subsidized profit leaks out as private dividends. A body along the lines of a proposed "Seoul City Bus Corporation" could give this concrete shape: ownership held by citizens, operations run by professionals, and profit reinvested into route expansion and drivers' working conditions.
6. Conclusion
Private equity's acquisition of city bus companies is not an aberration. It is simply what happens when a design flaw, left unaddressed for over twenty years, is finally located and exploited. Under owner-operators, under the quasi-public system, and now under private equity, one thing has not changed: risk and burden have always settled on the least powerful position in the whole system — the seat behind the wheel. What is needed now is not another round of ideological argument, but a redesign of ownership that returns the stability tax money creates to the citizens who pay for it.
References
Public Transport Network. "[Interview] Kim Sang-cheol: 'Seoul Should Buy Back Its Private-Equity-Owned Buses.'" (accessed September 23, 2025).
Daejeon Ilbo. "Private Equity Sells Off Daejeon Bus Companies Amid Concerns Over Public Interest." October 24, 2024.
Kyeonggi Ilbo. "[Editorial] 10 Companies, 700 Buses — Why Is Private Equity Flocking to Incheon?" February 12, 2024.
Daehan Kyungjae. "[Reporter's Notebook] Was Private Equity's Management of Bus Companies Really a Farce?" October 31, 2024.
Seoul Economic Daily. "Is Private Equity Investment in Bus Companies Drying Up? Tighter Rules Make Sales Difficult." May 16, 2025.
"Is Seoul's Bus System a Profit Vehicle for Private Equity? Seoul Should Run Its Own Buses." (accessed November 13, 2025).
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