Company Foundation and Business Trends

JR Central was established in April 1987 when Japanese National Railways (JNR) was broken up and privatized. A principal role of the new company is to maintain and develop the Tokaido Shinkansen, the main transport artery linking Tokyo, Nagoya and Osaka, as well as to provide local transportation in the urban areas around Nagoya and Shizuoka. In the following 20 years, we have done our utmost to ensure customer satisfaction by providing convenient and comfortable services based on an integrated approach to the railway business, and with safety and provision of a stable transport service as our top priority. We have also worked to achieve efficient operations across all our business activities and to maintain a healthy relationship between management and labour.
The Tokaido Shinkansen is the major source of our revenues, and when the company was established, the national economy was strong and transport volumes in general were growing steadily. However, the boom years in Japan were soon followed by recession, and combined with strong competition from other companies, the business climate became very difficult. In this context, we launched the Nozomi shinkansen—service frequencies were raised gradually and revenues increased coupled with aggressive marketing tactics. Ever since privatization, we had been working on opening a new Tokaido Shinkansen terminal at Shinagawa Station and this finally opened for business on 1 October 2000. Building the new terminal and upgrading the operating speed of all our shinkansen to 270 km/h allowed a radical timetable revision and the improved speed and convenience created what some passengers called a ‘rebirth’ of the shinkansen. The recovery in the Japanese economy since 2003 has helped transport volumes on the Tokaido Shinkansen to grow steadily, reaching 43.8 billion passenger-km in FY2005—1.4 times more than in 1987.
During the last 20 years we have also made great efforts to strengthen our financial position; long-term liabilities of ¥5.5 trillion inherited after the dissolution of the Shinkansen Lease System in October 1991 have been paid down to ¥3.5 trillion at the end of FY2005. JR Central was listed on the Tokyo Stock Exchange in October 1997 and the government sold all its remaining shares in the company in April 2006.

Safe and Stable Transport

Ensuring safe and stable transport is the fundamental principle of all JR Central operations. Based on the recognition that safety is the most important duty of a transport business, we have improved and strengthened our safety facilities by consolidating and investing in our safety systems and taking systematic safety measures every year. To complement these measures, we educate our employees to understand the importance of always putting safety first and strictly complying with laws and regulations using training programmes to develop safety awareness skills.
Since 1987, we have allocated about 60% of our investment in safety equipment and have systematically introduced new infrastructure. For example, we have established a new Stand-by Operation Control Center for the Tokaido and San’yo shinkansen, introduced ATC (Automatic Train Control) systems, introduced and improved the Tokaido Shinkansen Earthquake Rapid Alarm System (TERRA-S), and strengthened the seismic resistance of viaduct pillars and ground. We have also been improving facilities on conventional narrow-gauge lines where we have introduced CTC (Centralized Traffic Control), PRC (Programmed Route Control) and electronic interlock systems, improved ATS (Automatic Train Stop) systems and railway crossing safety equipment, strengthened the seismic resistance of viaduct pillars and ground, and upgraded train safety equipment. As a result, accidents on JR Central lines in FY2005 dropped by more than 60% compared to the number at privatization.

Railway Operations

Tokaido Shinkansen
Tokaido Shinkansen services were greatly upgraded by quickly replacing the inherited and aging Series 0 shinkansen with Series 100 train sets. Combined with the favourable economic conditions at the time, transport volumes grew too. For example, Hikari shinkansen achieved a daily seat load factor of 99% in non-reserved cars and we responded by increasing the number of cars and improving facilities. Services were expanded too—in March 1989, the number of hourly Hikari services was increased from six to seven, and then again to eight in March 1992. However, we soon reached our capacity limit, and despite improvements still did not have enough capacity to meet future needs. For this reason, we decided to proceed with a radical plan for improving the transport capacity of the Tokaido Shinkansen, which included construction of a new shinkansen terminal at Shinagawa.
Since most journeys on the Tokaido Shinkansen are made by business travellers, we realized that if we wanted to continue our role as one of the most important transport companies in the Japanese economy, we needed to improve the time ‘value’ for customers. In other words, it was essential that we shorten journey times by increasing train speeds and we immediately devoted a lot of effort to increasing train speeds because it was the most crucial issue we faced along with expanding our transport capacity. The March 1992 timetable revision saw the start of the Nozomi service with Series 300 trains running at maximum speeds of 270 km/h. The timetable was revised again in 1993 to increase the number of Nozomi trains to one every hour and extend direct service to Hakata Station on the San’yo Shinkansen. The start of the Nozomi services cut journeys, with times between Tokyo and Shin-Osaka reduced to 2.5 hours.
Investment in the Series 300 continued as ground equipment was improved, enabling further expansions in Nozomi services and an increase in the number of trains stopping at Shin-Yokohama Station. The March 1999 timetable revision supported the start of Series 700 Nozomi services, offering greater comfort and better environmental performance, and the October 2001 timetable revision saw Nozomi trains running every 30 minutes.
Finally, the radical timetable change on 1 October 2003 reflected the start of shinkansen services running from the new Tokaido Shinkansen terminal at Shinagawa Station and the speed upgrade to 270 km/h for all trains and enabled a maximum of seven Nozomi services an hour. This timetable change was not a minor revision, but was a complete transformation in service quality by creating a new gateway and hub for the huge Tokyo market to complement our existing terminals at Tokyo and Shin-Yokohama stations. Not only did this greatly improve convenience for customers, it also played a key role in redeveloping the area around Shinagawa Station.
In addition, to provide transport for the 2005 World Exposition, Japan (Aichi Expo), peak capacity was increased by running eight Nozomi services every hour. The convenience was also improved by increasing the number of Nozomi services linking directly with the Tokaido and San’yo main lines, establishing flexible services for the periods and time slots when most customers were travelling.

Marketing

Expansion of Affiliated Businesses

Technological Developments

Maglev Activities

Environmental Activities

Trains have always been an environment-friendly transport mode.  In a journey between Tokyo and Osaka, the Tokaido Shinkansen releases just 10% of the CO2 emissions of an aeroplane, making the shinkansen an efficient mode in terms of environmental conservation.  At JR Central, we are developing and introducing low-energy trains to further reduce the environmental burden of trains.  We are also taking the lead in promoting use of trains by making our service more attractive to customers, helping lessening environmental damage.

Reduction of Long-term Liabilities

When JNR was first privatized, a Shinkansen Lease System was established for the three JR railway operators on Honshu as a revenue adjustment measure.  However, this system was soon found to have inherent problems, such as unfair distribution of financial burdens, defects in earnings retention for maintaining and upgrading infrastructure, and a lack of clarity in asset ownership when debts are repaid.  We worked to correct these defects immediately after our company was founded and the lease system was dissolved in 1 October 1991.  We inherited ¥319.1 billion of JNR’s long-term liabilities calculated at privatization in April 1987.  Added to that was ¥5.0956 trillion in assets and liabilities from the Tokaido Shinkansen, leaving us with huge long-term liabilities of ¥5.5 trillion—a figure of more than five times our annual revenues.  Consequently, improving our financial position was a top priority, so we worked hard to reduce long-term liabilities by increasing profitability and cutting costs.  As a result, the balance of consolidated long-term liabilities at the end of FY2005 was ¥3.5455 trillion, meaning we have cut our liabilities by about ¥2 trillion.

Public Listing and Government-Held Share Sell Off

Conclusion

JR Central Chronology