JR Hokkaido faces tough road to exit corporate structure of chronic deficits

The Yomiuri ShimbunHow should a regional transportation system be rebuilt in an era of population decline? This is a serious problem being confronted by JR companies, the central government and local authorities.

The Land, Infrastructure, Transport and Tourism Ministry has decided to extend financial assistance worth more than ¥40 billion over the next two years to JR Hokkaido, which is now in financial difficulties.

JR Hokkaido has posted record ordinary losses for two consecutive years. As things stand now, the kind of situation could occur in which the central government repeatedly covers losses by the railway operator. Drastic management reforms are urgently needed.

The transport ministry has also issued a supervisory order to the railway operator, and will heighten oversight of its management. The ministry will examine the company’s quarterly management situation, pressing it to diversify its business operations and trim costs so as to recover its earnings.

In light of the planned extension of the Hokkaido Shinkansen to Sapporo in fiscal 2030, JR Hokkaido aims to stand on its own feet financially, no longer needing the state’s help, by fiscal 2031. Yet the prevailing view is that the benefits from the Shinkansen will be limited. The journey toward its reconstruction is tough.

JR Hokkaido not only operates over a wide area but also needs to take measures against fallen snow without fail, thus increasing the maintenance costs of its facilities. The population within the region is steadily declining, making it difficult for the company to expect an increase in transportation revenues.

It is necessary to boost its operations outside the railway business. The company must operate businesses in a diversified manner, including ones aimed at attracting the growing number of foreign tourists visiting Hokkaido, and those related to real estate, the hotel business and retailing.

Keep residents in mind

The biggest task lies in the continuation or abolition of lines that have seen marked drops in their passenger numbers.

JR Hokkaido has publicly named “13 lines that are difficult to be maintained on our own.” The overall length of these lines equals half of the company’s total distance of lines now in operation.

The company is approaching municipalities located along these lines about such alternative transportation services as buses. But the only policy decision that has been made so far is one related to the Sekisho Line, for which the city government of Yubari decided to switch to bus services. One factor behind this situation may be anxiety about losing long-familiar railway lines.

What should be the future vision for local transportation systems? It is important for local municipalities, JR and the central government to discuss this question from a broad angle.

The viewpoint of utilizing transportation infrastructure for new urban development is also becoming important. As a means of transportation in an underpopulated area, an experimental run to introduce an auto-driving vehicle has started. It is hoped that such advanced technology will be utilized.

In taking a railway line out of service, it is vital to deal conscientiously with local communities. Regarding the abolition of the JR Sanko Line that straddled the prefectures of Hiroshima and Shimane, JR West worked to persuade local communities for five years and made the transfer to bus routes. Such a precedent will be a good guide.

Due to its deteriorating business conditions, JR Hokkaido neglected investment in safety measures, leading to a succession of accidents, including fires on trains and derailments.

As long as it operates a public transportation system, it is indispensable for both the labor and management of the company to give top priority to safety, regardless of its business performance.

(From The Yomiuri Shimbun, Aug. 7, 2018)Speech


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