This paper aims, first to analyse the profitability of coastal passenger ships deployed on both subsidized and non-subsidized routes, ie competitive routes, in Korea, second to evaluate them by route, by ship type, and by ship size, and finally to identify whether the ships deployed on subsidized routes are justifiable to receive subsidy from the government. They are followed by the analyses on the profitability of all ships on the coastal routes and their dependence rate of subsidy. The research covers the period of 1995-1997. The research results say that 35% of the total subsidized routes has more than 90% of subsidy dependence rate and that some monopolized routes among subsidized ones with moderate rate of profitability need to be crossed out from the list of subsidy beneficiary. In addition, some ships deployed are not appropriate type in terms of characteristics of route and traffic. One of implications drawn from this study is that the government has to set up a watchdog to monitor subsidized routes, which enables to make them competitive and save the budget.