Privatisation

The Shinkansen and Japanese Rail Culture

Course 4 · Chapter 6 · Privatisation

By the 1970s and 80s the national railway had accumulated enormous debts, suffered strikes and lost traffic to cars and aircraft (check the figures). In 1987 it was split into a group of regional passenger companies and a freight company, and the new firms were later listed on the stock market. This chapter explains why it happened, what the new structure looked like, how the private railways had already built a different model, and how the results compare with Britain's own privatisation.

Why Break Up the National Railway?

Debt

Large losses, especially on rural lines, and heavy borrowing had left the national railway with debts that the state could not easily carry (check the totals).

Labour disputes

Industrial action was frequent in the 1970s, and service reliability and public confidence suffered (check the details).

Competition

Roads, domestic flights and private lines had taken customers. Reformers argued that smaller regional companies would be more flexible.

The New Structure

Part	Role (check the details)
Passenger companies	Several regional companies, usually called the JR Group, each covering an area (for example East, Central and West)
Freight company	A single company running freight over the lines of the others
Shinkansen	At first held and leased by a separate body, then sold to the regional companies (check)
Remaining debt	Taken over by a government-backed body and repaid over many years (check)

Break up by region, not by track Japan divided the railway into regional operators that each own their track and run their own trains. This is different from the British approach of separating the infrastructure from the train operators, and it keeps timetabling and maintenance under one roof.

A British comparison Britain privatised its railways in the 1990s, splitting track ownership from many train-operating companies (check the dates), and has since moved toward bringing operators back under public control and a new national body (check the current position). Both countries privatised, but in opposite ways, and their results are often argued about. Treat claims that one model simply "worked" with caution (check the source).

The Private Railway Model

Alongside the state lines, private railway companies had long been a major part of the system, especially around Tokyo and Osaka. Many of them developed a particular business model.

Own the line. Build a railway out from the city centre.
Own the land. Buy land along the route and develop housing for commuters.
Own the terminus. Build a department store and entertainment at the city end, so that passengers become shoppers (check the best-known examples).

The railway brought customers, the customers filled the housing and the shops, and the shops filled the trains. After 1987 the JR companies copied the idea at their own stations, with shopping and offices built into major hubs.

Judge results with care The JR companies in busy regions have generally been profitable, while those in rural areas have struggled and cut or questioned some lines (check the current position). A fair assessment separates the different regions and does not treat the whole country as one case.

Exercises

Exercise 1

Give three reasons the national railway was broken up in 1987, and say which you think was the most important.

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Exercise 2

In three sentences, explain how the private railway model of "line, land and department store" turns passengers into customers.

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Exercise 3

Compare the Japanese and British approaches to privatisation in two or three sentences, saying what was divided in each case.

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Quick Reference

1987: national railway split into regional passenger companies and a freight company (check)
Reasons: debt, labour disputes, competition
Structure: regional operators own track and trains; Britain separated the two
Private model: line, land, housing and department store
Results: busy regions profitable, rural lines under pressure
Check: debt totals, structure details, Shinkansen ownership, best-known examples, British timeline and current position

Next chapter: Station and Street Culture, which covers station lunchboxes, announcements, commuter manners and the enthusiasts who love trains.