Introduction

JR Kyushu celebrated the 20th anniversary of its establishment on 1 April this year. During this time, the company has tried to assure the safety of its railway operations, improve services, and revitalize the local area. In addition, we have promoted efficiency, positively expanded railway-related businesses and tried to strengthen our management base. Although the worst operating loss was ¥1.5 billion in FY1987, operating profits of ¥1.5 billion were achieved in FY2006. The company is targeting profits of ¥10 billion in FY2008 and is putting business on a sound footing.
This article looks at the last 20 years and future business developments from both the hardware and ‘software’ aspects, including railway-related businesses expansion, efficiency promotion, and promotion of group management.

The Last 20 Years

Operating results
Table 1 shows the operating results for the last 20 years. Fiscal 1987—the first business year—saw operating losses of ¥28.8 billion with a current profit of ¥1.5 billion. In the subsequent economic boom years until 1992, JR Kyushu made continuous efforts to improve and steadily expand its railway-related businesses. The recession starting in 1992 saw non-operating profits drop along with the first ever drop in year-on-year current profits. In FY1993, year-on-year transport-related profits dropped too due to fiercer competition with other transport modes and natural disasters and by the end of FY1994, both operating and non-operating profits had dropped further, pulling JR Kyushu into the red for the first time.
Fare revisions in January 1996 helped to increase revenues and moves were started to cut costs, resulting in a return to the black in FY1995 and FY1996. However, after peaking in 1996, transport profits dropped for 6 years in straight succession until FY2003 when the Kyushu Shinkansen opened. In the difficult business situation after FY1996, the company tried implementing more thorough measures to raise business efficiency and cut costs by growing railway-related businesses and reinforcing the operations base.
The partial opening of the Kyushu Shinkansen on 13 March 2004 helped revive railway-operation profits for FY2003 while the company tried boosting revenues through new developments, including real estate, such as shopping malls in main stations, apartment buildings, and rental apartments. In FY2004, JR Kyushu made a profit of ¥400 million and returned to the black. Operating profits in FY2005 and 2006 were ¥1.5 billion and ¥2.5 billion, respectively.
Concerns about the viability of railway business in Kyushu prior to the 1987 privatization and division led the government to establish a Management Stabilization Fund of ¥387.7 billion to help stabilize the financial conditions of the three smaller island JR operators on Kyushu, Shikoku and Hokkaido. Although the interest profit from this fund was ¥28.3 billion in 1987, it soon dropped to ¥14.3 billion in FY2005 because of the massive drop in interest rates during the recession. In FY2006, JR Kyushu targeted current earnings of ¥10 billion.

Comprehensive service improvements
The main factor in improved business performance is improving all services from both the hardware and ‘software’ aspects.
In hardware, JR Kyushu has introduced new expresses in quick succession since 1988, like the Series 783 (Hyper Saloon), 787, 883, and 885, to offer more comfortable inter-city services. Meanwhile, new Series 811 and 813 rapid trains have been introduced for urban commuters. As a result, 58% of all JR Kyushu’s services were using new rolling stock by late FY2005 and the total number of services had risen by 70% compared to FY1987. Train timetables had also been improved.
In addition, the company has built 52 new stations
(Table 4) to improve passenger convenience and is promoting universal design concepts and park-and-ride for good accessibility.
Restaurants and shopping amenities, such as Amu Plazas, have been built at main stations to help revitalize regional communities and offer shopping convenience.
In ‘software,’ the company has worked hard to create a corporate service culture by conducting extensive employee training to raise awareness and improve service quality. In addition, a new business strategy was implemented in July 2003 to improve basic business skills and methods, including organizing and managing a workplace.

Related business development
For several years following 1987, most profits came from railway operations (67% of total profits in 1987). With the company’s expansion into new travel, distribution, restaurants, shipping, real estate, etc., profits of these affiliated businesses had increased to more than 60% of total profits by FY2005, reflecting the great change in JR Kyushu’s business structure (Fig. 2). Affiliated business is now just as important as railway business, and JR Kyushu maintains a firm focus on expanding affiliated business profits.

Promoting streamlining
In addition to improving services and profits, JR Kyushu is making efforts to streamline work and labour through rationalization and cost reductions. Station systems have been changed, the control centre has been improved to integrate railway operations, and the number of one-man trains has been increased. Some business operations, such as accounting, computer systems, and network management have been transferred to subsidiary specialists in the JR group of companies, and new regional departments have been established to manage and control lines and stations. Following these policies has streamlined staff levels from 15,000 in 1987 to 8700 in April 2007.

Promoting group management
JR Kyushu has promoted a group management system and improved infrastructure by forming a mission strategy, introducing integrated financial systems, and establishing group management committees. At the same time, the company has reviewed its businesses, services, and products to streamline overlapping areas. Furthermore, competitiveness has been strengthened as a member of the JR Kyushu group with 34 business affiliates all sharing the same philosophy and working to accomplish the same medium- and long-term targets.
Table 5 shows the group’s consolidated results for 7 years; in FY2005, the group achieved ¥256.4 billion in operating revenues, ¥5 billion in operating profits, and ¥13.2 in current profits.

Future Prospects

So far, the biggest project is opening the entire Kyushu Shinkansen and redeveloping the new Hakata Station, which is scheduled for spring 2011. In addition, new mid-term plans have been drawn up to marking the company’s 20th anniversary.

Opening Completed Kyushu Shinkansen

Conclusion

JR Kyushu Chronology