Seoul City will raise the public transportation fare as part of its efforts to reduce its budget deficit and improve services, officials said Thursday.

Seoul Metropolitan Government said it would increase the subway fare by 250 won ($0.20) to 1,300 won and bus fares by 150 won to 1,200 won. This is the first hike in 3 1/2 years.

The new fares are expected to go into effect from late June after the city council reviews the proposal. As an alternative plan, the city has proposed a 200-won hike only for the subway.

To lessen the fee burden and relieve the rush hour congestion, the city vowed to offer an early morning discount. Passengers taking the subway or buses before 6:30 a.m. will get a 20 percent discount, the city said.

The new discount offer will be available in Seoul City and inter-city buses in Gyeonggi Province for now, to be later expanded to Incheon, the city added.

Seoul City will also extend the facility of free rides ― currently available to Korean senior citizens ― to green card holders aged 65 or older. About 2,200 passengers are expected to benefit from the new service, it said.

Fares for under 19s will not be raised, it added.

The city has stressed the need to raise the public transportation fare, citing rising deficit and the number of seniors with free passes.

According to the city government, the budget deficit of the Seoul subway system reached 420 billion won last year, up 14 percent from two years ago.

Bus operators also saw a 25 percent deficit jump to 310 billion won. The free-ride policy for the elderly partially contributed to the subway deficit, officials said.

The policy caused about 290 billion won of losses last year with some 250 million elderly trips, the city said.

This accounted for 13.7 percent of the total subway users.

The city also emphasized that nearly 2 trillion won is needed to improve the safety measures and transportation service by 2018.

By Lee Hyun-jeong (rene@heraldcorp.com)