An assessment of the Japan Railway companies since privatization: Performance, local rail service and debts

Abstract

This paper deals with three issues related to the privatization of Japan National Railway: the performance of each Japan Railway (JR) since privatization, the state of local rail service since the privatization and the handling of JNR's long-term debts. First, after a summary of what happened during the privatization of JNR in 1987, I will analyse the JRs' performance since privatization, taking the following performance measures: operating revenue cost ratio as an indicator of financial situation; average fare; wage; labour productivity; and average operating costs. In this analysis, I will investigate factors that attain performance improvement, such as competitive pressures and practical options related to organizational structure, incentive schemes, corporate strategies, etc. Second, I will focus on the question of whether the local rail service in small communities has remained intact since privatization. Opponents to privatization had argued that such service would atrophy. With JRs' typical local lines as samples, service quality is observed as reflected in frequency, operating time, departure of first and last train, with all figures taken between 1987 (the onset of privatization) and 1997 (10 years after privatization). Finally, the current issue of the long-term debts of JNR is discussed. In addition to the sale of JNR land and stock, it is inevitable that taxpayers' money will have to be used against this massive debt. I will outline the liquidation plan upon which the government has decided and look into the kind of political involvement brought about by the debt predicament.