In this paper, we propose a method to minimize the system losses of electrified railway traction systems by utilizing static var compensators (SVCs). We suggest a power flow analysis model for a railway system considering two types of SVC connections: line-to-ground and line-to-line connections. Furthermore, an optimal operation whose objective is to minimize the system loss is presented based on particle swarm optimization by utilizing the power flow calculation method. The proposed power flow model and optimal operation are verified using MATLAB and PSCAD simulation programs. An electrified railway traction system can be operated economically by exploiting the proposed method.