Introduction

JR Hokkaido celebrated the 20th anniversary of its establishment on 1 April this year. However, things have been far from plain sailing over this time, which includes Japan’s Lost Decade, caused by the collapse of the bubble economy in 1991. Hokkaido has not been isolated from these events and, in particular, the bankruptcy of Hokkaido Takushoku Bank, one of the prefecture’s main financial institutions, almost devastated the local economy. JR Hokkaido has also faced many difficulties from changes in the operating environment. We look back with deep emotion to think that it has been 20 years since JR Hokkaido was established.
When Japanese National Railways (JNR) was privatized, it was thought that JR Hokkaido would have the toughest time of the seven JR companies established. Conditions in Hokkaido are ill suited to railway operations. In addition to the sparse population density and vast size of the prefecture, more and more of Hokkaido’s population and commercial functions are being concentrated in Sapporo. Despite such a testing operating environment, JR Hokkaido celebrated its 20th anniversary this spring and has posted ordinary income every year for the last decade or so.

Main Initiatives in Last 20 Years

Safety and technology transfer
JR Hokkaido, which is a major transport provider in Hokkaido, has taken a range of initiatives based on the principle of putting the customer first at all times with a firm focus on maintaining safety. As a company providing transportation, we must put safety before everything else, so customers can ride our trains with full peace of mind. Notwithstanding this emphasis, a number of serious accidents have occurred on JR Hokkaido lines. In February 1994, high winds derailed and overturned a limited express travelling on the Sekisho Line, injuring 25 passengers. In March 2007, a local train on the Sekihoku Line carrying many high-school students collided with a large trailer at a level crossing, injuring some 50 passengers and seriously injuring the train driver.
JR Hokkaido follows a safety code referred to as ‘the safety bible’ from the JNR era. In October 2006, the company created safety control regulations based on this code as mandated by revisions to the Railway Operation Law. The company has made concerted efforts to implement a broad range of measures to ensure safe operations. We have implemented a code of conduct for employees, provided guidance to staff, and improved safety equipment, with the head office, branch offices, and rail staff working in unison to achieve the goal. Going forward, we must continue to work tirelessly in this quest.
There is always danger associated with work on or near railway tracks and in April 2005, a track maintenance worker was tragically killed after being hit by a limited express train in a station. It is paramount to take action to prevent such work accidents by training workers with as much background experience as possible about safety issues and enhance their ability to foresee danger. As a result, in August 2006, we started a companywide initiative called hiyari hatto (near miss) to stamp out the causes of accidents by nipping them in the bud.
Railway operations are supported by technical abilities and know-how in a range of fields, including traffic, safety and ticket sales systems, accumulated and handed down over many years. Because the baby-boom generation born just after World War II is about to retire, we are actively holding training and guidance sessions to ensure that veterans’ technical know-how is passed on to newer employees.


Looking back at 20-year history of railway operations
In railway operations, JR Hokkaido has continued striving to steadily expand services and enhance customer convenience, based on the safety and technology transfer measures outlined above. In intercity services, we carried out work to increase operation speeds between Sapporo and Nayoro via Asahikawa, Hakodate, and Kushiro. In urban rail transport in the Sapporo metropolitan area, we began passenger services to New Chitose Airport and double-tracked and elevated the Gakuen-Toshi Line. In local train services, we streamlined operations based on passenger usage to enhance efficiency, for example by removing the conductors from local trains, and closing the Shinmei Line in 1995 and running substitute bus services instead. We have also worked in conjunction with local communities to develop tourism, chiefly through operation of norokko (slow sightseeing train) and steam locomotive services.
Looking back, one major event in JR Hokkaido history was the opening of the Seikan Tunnel in March 1988. With the tunnel finally linking Honshu and Hokkaido, Hokutosei limited express sleeper services were started between Ueno and Sapporo. The Seikan Tunnel heralded a new era for Hokkaido because it heightened expectations for the Hokkaido Shinkansen. In November 1988, work was completed to elevate tracks at Sapporo Station so that roads and lines are grade separated, and a new commercial facility called Paseo opened under the elevated tracks in July 1989. This marked the start of planning of an integrated development project around the south exit of Sapporo Station near the site of the former railway lines.
The closure of some local branch lines with introduction of replacement bus services started in 1980 as part of JNR’s financial reconstruction measures. JR Hokkaido continued some of this work, closing lines targeted for abolition a few years later. As a result, the 4000 km of lines in JR Hokkaido’s network immediately after the JNR privatization has now been reduced to 2500 km. The policy of closing the Shinmei Line and running replacement bus services was put forward in 1994 after it had been left out of the first lines scheduled for closure because a parallel road had not been completed at the time. Following negotiations with local authorities, the line closed and replacement bus services started in September 1995, representing a landmark in JR Hokkaido history.
JR Hokkaido started rapid Airport passenger services at 15-minute intervals between Sapporo Station and New Chitose Airport in July 1992 following relocation of the airport. Finances for construction of an underground railway station under the new airport building and an access tunnel were allocated by the national government from the special budget for airport improvement. This airport-railway link (ARL) service is actually JR Hokkaido’s most profitable and elements were subsequently incorporated in similar projects at other airports around Japan. The interior design of New Chitose Airport Station was performed jointly with a design team from Danish State Railways (DSB) as a result of a twinning agreement in October 1990. The design received such acclaim that the Danish team was also involved in the interior design for Series 261 limited express cars, as well as design of the new station buildings at Otaru-Chikko and Hakodate stations.

Operating Results for Last 20 Years

Revenue from railway operations, the main income source for JR Hokkaido, peaked at ¥80 billion in FY1996 and then continued falling due to the stagnant Hokkaido economy and intensified competition with other transport modes, despite measures to boost revenue. Although railway revenue has not fallen since FY2004, there has been no recovery. The annual operating loss totalling ¥53.8 billion at the company establishment has been cut by almost 50% in the intervening 20 years thanks to aggressive efforts to cut costs and enhance efficiency, but always with safety as the highest priority. The number of employees decreased from about 13,000 in 1987 to about 8000 in April 2007 as a result of streamlining measures taken in cooperation with the labour unions. This downsizing substantially enhanced the productivity of railway operations.
Income from the Management Stabilization Fund to compensate for operation losses, totalled ¥49.8 billion in FY1987. Despite measures to prop up investments, continuing low interest rates over the long term have reduced the income by about ¥20 billion over the past 20 years, offsetting improvements in operation losses. Nevertheless, thanks to special government measures in relation to fixed assets tax for the past 20 years, JR Hokkaido has remained in the black since FY1998, posting ordinary income every year.
The 2-year Scrum Challenge 2006 plan ended in March 2007 and we expect to easily hit our targets of ¥166 billion in consolidated operating revenue and ¥7 billion in consolidated ordinary income, serving to solidify the group’s operational base.

JR Tower focal point of related development business operations.

Future Outlook

Conclusion

JR Hokkaido Chronology