On October 27, East Japan Railway Company (JR East) disclosed management data on “line segments with low usage,” defined as those with an average daily ridership of less than 2,000 passengers. All 71 segments across the 36 affected lines recorded operating deficit totaling 78.9 billion yen. Although 24 segments saw some improvement due to the recovery in travel demand after the COVID-19 pandemic and the increase in inbound tourism, 54 segments remained severely unprofitable, as revenues covered less than 10% of operating costs.

The aviation industry is likewise operating effectively in the red on domestic routes. Revenues have been squeezed by soaring costs of fuel and materials, competition from the Shinkansen bullet train and low-cost carriers (LCCs), and a decline in high-margin business travelers, while profits from international routes are being used to offset domestic losses. The situation is similarly severe for route bus companies. Due to rising costs and a shortage of drivers, bus routes extending a total of 2,496 kilometers were discontinued in fiscal 2023 (according to the 2025 White Paper on Transport Policy). Meanwhile, the aging of roads and bridges is also accelerated. Needless to say, the 286 regular ferry routes connecting 254 remote islands nationwide with the mainland (as of April 2022) covered under the Remote Islands Development Act are facing serious difficulties.

What is the best way to sustain unprofitable local public transportation systems? Mr. Mitsunobu Kojima, CEO of the Okayama-based Ryobi Group, who has long worked on the issue, argues that a European-style model --publicly established and privately operated without relying on subsidies-- is the most effective approach. In April this year, Ohmi Railway Co., Ltd. in Shiga prefecture adopted a new business scheme based on a vertical separation system in which the infrastructure is publicly owned while the train services are operated by a private company. In this case, the question of whether to maintain or discontinue a railway line was not predetermined. Rather, the decision was made based on a cost-benefit analysis conducted for each of the railway, bus, BRT (Bus Rapid Transit), and LRT (Light Rail Transit) options. On October 1, two bus routes of Ryobi Bus Co., a subsidiary of the Ryobi Group, also began operating under the publicly established and privately operated system. I would like to see those united collaborative efforts among citizens, local governments, and private-sector entities continue to grow and develop.

Now, what is JR East’s intention in disclosing management data on “line segments with low usage”? The company explains that the purpose is to encourage local residents to understand its policy and to promote constructive discussion. However, there is no mention of a specific word “local” in the Message from the President contained in the Group Management Vision “To the Next Stage 2034,” which declares that “The JR East Group operates its business based on the dual axes of Mobility and Lifestyle Solutions. Our ultimate goal is a people-focused Lifestyle Transformation.” In fact, as far as I read the President’s message, I do not sense any resolve or compelling presence. By contrast, these qualities are exactly what I find in Mr. Kojima, who has sustained local bus networks in Okayama prefecture by operating 20 unprofitable routes through the earnings of seven profitable ones.

Public transportation is, in essence, public property and social capital. Now that the shrinkage of regional communities is accelerating, it is necessary to redesign transportation networks as a comprehensive nationwide system, with a long-term vision for the future of the country on a scale that transcends the boundaries of any single company, industry, or local government. Above all, it is the JR Group that is expected to take the initiative and lead the development of such a grand design.

Takashi Mizukoshi, the President
This Week’s Focus, October 26-30, 2025