Report to workshop on implementing sustainable travel policies in Japan and other Asia-Pacific countries by Masayuki Satomi.

This work preserved here as an important historical cultural document helping us to understand aspects of Japanese culture through the work it has done to improve the efficiency of its rail network.

A pdf version of the report is available HERE.

From her presentation to the Workshop on Implementing Sustainable Urban Travel Policies in Japan and other Asia-Pacific countries,Satomi Masayuki lays out the state of the Japanese railway system before and after privatisation. The statistics and the final outcomes including a boost to safety and overall performance.

Causes of JNR’s Failure 1

0.00 1.00 2.00 3.00 4.00 5.00 6.00 i n c o m e ・ c o s t 0.00 5.00 10.00 15.00 20.00 25.00 b a l a n c e o f l o n g t e r m d e b t s long- term debts income cost (In trillion yen) （year） ○Unconsolidated long-term debts ‘63 ‘65 ‘70 ‘85‘80‘75 ‘86 Causes of JNR’s Failure 1

Causes of JNR’s Failure 2

---

(1) Beyond the scope of managerial control (2) Uniform operations (3) Unreasonable relationship of interdependence (4) Lack of competitive spirit (1) Interference from the government and administrative bodies (2) Loss of self-reliance in management (3) Abnormal labor-management relations (4) Restrictions on the scope of operations Problems related to the unified organization covering the entire nation Problems related to the public corporation system Incapable of accurately responding to changes in circumstances surrounding the corporation Managerial failure Causes of JNR’s Failure 2 JR Hokkaido JR Central JR East JR West JR Shikoku JR Kyushu Railway Telecommunication CompanyJapan Railway Construction Public Corporation – JNR Settlement Division Railway Information System Company Japan Freight Railway Company Passenger Railway Companies Railway Technical Research Institute Shinkansen Holding Corporation Corporation for Advanced Transport & Technology Japan Telecom Railway Development Fund JR Hokkaido JR West JR East JR Shikoku JR Central JR Kyushu Merged in May 1989 ‘91.10 ‘97.10 Transformation in April 1987 ‘98.10 JNR Reform Scheme 1 JNR JNR Settlement Corporation 国鉄職員 277 （1986.4） 7.3 6.3 39.1 1986年度中の退職者 52.7 希望退職 一般退職 公的部門転出 • JNR’s long-term liability • Deficit from pension funds, etc. 5.0 25.0 4.5• Liability of Japan Railway Construction Public Corporation • Burden of funds for the three smaller island railway companies 1.3 • Others 1.4 • Total 37.1 22.7 Selling of land Selling of stock shares Remaining burden for the Japanese government 7.7 1.2 13.8 Total 37.1 • Responsibility of new companies 14.5 7.9 6.6JR East Others • JNR Settlement Corporation { Disposal of long-term liabilities { Reemployment of JNR’s employees 4.5 14.6 12.0 12.7 82.5 21.4 51.5 1.5 200.7 23.7JNR Settlement Corporation Passenger Railway Companies JR Hokkaido JR East JR Central JR West JR Shikoku JR Kyushu Japan Freight Railway Company Others Subtotal (in thousands of people) (in trillions of yen) JNR Reform Scheme 2 JNR employees Employees retired in FY1986 Voluntary retirement General retirement Transferred to government and other public organizations Independently determinedSubject to approval by the National Diet Authority to determine railway fares Independently decidedThrough open competitive bidding in principle Methods for concluding contracts Through negotiations between workers and managementIn principle, wages are determined by law. Fixed total wage amount. Authority to determine wages Decided at the shareholders’ meeting. (Appointment of representative directors and auditors is subject to approval by the Minister of Land, Infrastructure and Transport.) President is appointed by the Cabinet; Auditing Board members are appointed by the Minister of Transport; other appointments are subject to approval by the Minister of Transport Authority to appoint executives Subject to approval by the Minister of Land, Infrastructure and Transport Decision on the amount ceiling is subject to approval by the National Diet; other matters are subject to approval by the Minister of Transport Borrowing and bond issues Operational plans are subject to approval by the Minister of Land, Infrastructure and Transport. (Balance sheets are only to be attached.) Subject to approval by the National DietAuthority to decide budget To be independently decided Deciding the scope of investment is subject to approval by the Minister of Transport Authority to make investment decisions Free in principle; moving into a new field of activity is subject to approval by the Minister of Land, Infrastructure and Transportation Enumerated restrictionsScope of operations Corporation with special status (Subject to the Civil Code and Commercial Law) Public corporation (semi-governmental organization)Status of corporation JR LawJapanese National Railways LawGoverning law JRJNR Regulatory Changes Note: As part of the reorganization of ministries and agencies, which took effect on January 6, 2001, the Transport Ministry merged with other agencies to become the Ministry of Land, Infrastructure and Transport. The following are major items which are made subject to approval of the Minister of Land, Infrastructure and Transport under the provisions of the JR Law: The company is now able to act with greater degrees of mobility and flexibility than before. In December 2001, the JR Law was amended so that the law would no longer apply to JR East, JR Central and JR West. In October 1993, the company was listed on the stock exchange, and 2.5 million shares were sold. In August 1999, a second set of 1 million shares were sold. Accomplishing full privatization In June 2002, the remaining 500,000 shares were sold. Amendment of the JR Law Sale of stock shares ◎Total revenue from share sale: 1,993.9 billion yen Achieving full privatization ⎯Appointment of representative directors and auditors ⎯Procurement of fund ⎯Appropriation of profit ⎯Sale of important assets JR East For 17 years since its founding, JR East has not raised fares (except when a new tax was introduced Of the long-term liability of more than six trillion yen which JR East had inherited, 2.6 trillion yen was repaid during these 17years. JR companies as a whole JNR used to receive government subsidies averaging 600 billion yen a year between fiscal years 1977 and 1986. After the reform, the seven JR companies have paid taxes at the annual average rate of 270 billion yen between fiscal years 1987 and 2003. Compared with the days of JNR, the JR companies have reduced the government’s fiscal burden by about 870 billion yen per year. Contribution to the National Finance Management Strategies of JR East 0.0 1.0 2.0 3.0 4.0 5.0 6.0 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2Operating Revenues （Right axis） Recurring Income (Left axis) Changes in operating and extraordinary revenues (Non-consolidated） Changes in outstanding long-term debt (non-consolidated) ○17 years have elapsed since the foundation of JR ○Stable income and steady reduction of long-term debt (\100 million) \1.8972 trillion in FY2003 ‘\183.2 trillion in FY2003 (\ trillion) (\ trillion) ‘87 3.03 ‘92 5.37 ‘03 3.90 (FY) (FY) Past Business Performance No. of people engaged in railway business Passenger- kilometers per 1,000 persons engaged in railway business 〇Per capita passenger-kilometers has increased by approx. 69.6％ since the company was founded. 〇The number of people engaged in the railway business has decreased by approx. 324％ from 71,800 to 49,400. This has been done not by lay-offs but rather by productivity improvement through technological renovation. Per capita passenger kilometer No. of people engaged in railway business 1,518 2,574 48,500 71,800 0 500 1,000 1,500 2,000 2,500 3,000 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Improving Productivity 46 247 96 376 0 100 200 300 400 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 Down by Approx.７７ ％ Down by Approx. ８１ ％ Changes in accidents Railway operating accidents Of them,those at railway crossings （No. of accidents） （FY） Railway operating accidents 376（FY’87） ⇒ 96（FY’03） of which those at level crossings 247（ FY’87 ） ⇒ 46（FY’03） Improved Safety 15 〇By increasing the number of train operations using longer trains, the transportation capacity by trains in the Tokyo Metropolitan area was increased by about 30% ※Corresponding to the capacity of Metro in Paris. 298.1 390.6 0 100 200 300 400 500 1988/4/1 2001/12/1 925 in 1,000 kilometers per day Change in vehicle - kilometers (Local trains in the Tokyo Metropolitan Area) Congestion FY1987 FY2003 ２３８％ １９４％ Average of 17 major stations during morning peak time ※341,000 kilometers per day for the average of 8 private railways in Tokyo area in 2000. Increasing Transporting Capacity (In 1,000 kilometers per day) Dramatic reduction of travel hours between Tokyo and major local cities ● Network of five Shinkansen rapid transport lines completed ・In addition to Tohoku and Joetsu Shinkansen lines, Yamagata (1992), Akita and Nagano (1997) Shinkansen lines opened ・Extension of Yamagata Shinkansen to Sinjo (1999) and Tohoku Shinkansen to Hachinohe ●Introduction of new rolling stocks 3:05 2:17 3:23 2:17 3:09 5:06 4:03 5:31 1:21 1:37 2:30 1:36 2:21 3:49 2:56 3:59 0:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 2002年 1987年 ▲９２ ▲７７ ▲４８ ▲４１ ▲５３ ▲４０ ▲１０２ ※Comparisons of fastest trains 1:23 2:30 2:21 3:49 1:37 1:36 3:59Tokyo-Aomori Tokyo-Morioka Tokyo-Sendai Tokyo-Yamagata Tokyo-Niigata Tokyo-Nagano Tokyo-Akita （７２７．９㎞） （６６２．６㎞） （５３５．３㎞） （３５１．８㎞） （３５９．９㎞） （３３３．９㎞） （２２２．４㎞） 2004 1987 （６３１．９㎞） Tokyo-Hachinohe 2:56 ▲６７ Increasing Speed Reviewing current layout and design Train info displayInformation centre For our customers… Universal signs Ticket office / Ticket gate Remote man-to-man ticketing system Barrier-free facilities Service Manager Station concierges Convenient and User-friendly Stations Ueno Tokyo Shinagawa Shinjuku 千葉 Omiya Nishi-Funabashi 横浜 Ofuna Kinshicho Ikebukuro 成田空港 Hamamatsucho Shin-kiba Haneda- Airport Construction plan for new network Direct through operations with other railway company Introduction of new commuter trains Introduction of First class cars: offering seting servise Introduction of new express trains Pre-production of next-generation commuter trains Strengthen the Transportation Network in Metropolitan area Introduction of new commuter trains Inside ticketing gates Ticket-less Information services In station 入金／乗車券 Charge Ticket／ ……………………………………………………………… ……………………………… ……………………………… ……………………………… ……………………………… ……………………………… ……………………………… ¥10000 ¥5000 ¥1000 500 100 50 10 Cash-less IC chip installed in mobile phones JR East Menu Buy commuter pass Buy reserved seat ticket Electronic money Joint-use tickets Hotels, theaters, etc. Hotel coupons and Theatre tickets Other transportation systems Convenience stores, etc. Integration with View Card Station stores Electronic money Reservation by Internet and electronic payment "Suica“, the IC card (Super Urban Intelligent CArd) { "Suica" IC card was introduced in Tokyo and its vicinity in Nov. 2001. Cell phone as a passenger ticket and/or a commuter pass Cell phone as a passenger ticket and/or a commuter pass Cell phone Telecommuni- cation function Visual display IC Suica Mobile SuicaMobile Suica “Mobile Suica” will be usable as Electronic money as well as transportation ticket. “Mobile Suica” will be launched within FY2005 under the cooperation with NTT DoCoMo and Sony. “Mobile Suica” will be usable as Electronic money as well as transportation ticket. “Mobile Suica” will be launched within FY2005 under the cooperation with NTT DoCoMo and Sony. ＋ Mobile Suica