Late night drinkers, movie-goers and those simply working until the last trains of the day will need to finish their pub crawls, popcorn and overtime a little earlier from the coming spring, as East Japan Railway Co. rolls out unprecedented changes mainly due to the COVID-19 pandemic.
With the health crisis pushing people to work remotely from home and making them hesitant to go out for social gatherings, there has been a severe toll on the nation’s largest railway operator in terms of sales.
For the first time since it became a private company in 1987, the firm also known as JR East, which has enjoyed steady passenger demand in the metropolis, posted operating and net losses in its earnings released last week for the first half of this fiscal year.
To revamp its operations and adjust to a changing society, JR East will renew its train schedules, including pulling back the departure times of final trains and making drastic changes to pricing systems, which are expected to charge more during peak rush hours and offer greater discounts for off-peak passengers.
We looked into JR East’s business situation and its plans in more detail.
Why will JR East be stopping its train services earlier?
The pandemic has considerably decreased the number of passengers riding trains late at night.
The volume of people traveling between midnight and 1 a.m. on weeknights on the Yamanote loop line, which runs through areas in central Tokyo, plunged by 66% in August compared to the previous year, JR East said.
Another factor is labor shortages, in particular the manpower needed for railroad construction and maintenance after the last trains finish running.
With Japan’s population continuing to dwindle, “the issue of labor shortages is only going to get worse,” said JR East President Yuji Fukasawa in an interview with TV Tokyo aired in October.
He said about 7,000 workers are now tasked with construction and maintenance work in Tokyo and surrounding prefectures after train services end at night, but that the number has already decreased by about 20% over the past decade and is likely to shrink further in the decade to come.
Fukasawa added that young workers tended to quit because they could not get days off easily and flexibly.
The company needs to tackle reform of its working style while making the operation more efficient, through the use of technology and machines. But such bulky equipment takes time to move and set up, so JR East wants to pull back the schedules of its last train services to secure more time for late-night maintenance and construction work.
Which train lines will be affected?
JR East says 17 lines running through Tokyo and extending into Saitama, Kanagawa, Chiba, Gunma and Tochigi prefectures will see their last trains running up to 37 minutes earlier, in a change of unprecedented scale for the firm.
Clockwise services on the Yamanote Line will end about 15 to 20 minutes earlier. For example, the current last train leaving Shibuya Station for Ikebukuro Station departs at 12:52 a.m. but after the change will depart about 19 minutes earlier.
For services running counterclockwise on the line, departure times at some stations will be about 20 minutes earlier.
Trains on the Keihin-Tohoku Line departing from Shinagawa Station that continue into Kanagawa Prefecture and operate services on the Negishi Line will leave up to 30 minutes earlier. The last trains on the Keiyo Line departing Tokyo Station bound for Chiba Prefecture will also leave up to 30 minutes earlier.
Other lines affected are the Tokaido, Yokosuka, Nambu, Yokohama, Chuo, Ome, Musashino, Sobu, Takasaki, Utsunomiya, Saikyo-Kawagoe and Joban lines.
For Keihin-Tohoku and Negishi, Chuo, Sobu and Joban lines, the schedules for their first trains in the morning will also be pushed forward to run up to around 17 minutes later.
JR East will announce more details in December.
How will this impact other industries?
Changes in last train schedules could be a boon for some businesses including low-cost hotels and taxis, since more people might miss their trains and end up taking a cab or staying at such facilities.
“We expect that the number of guests will increase to a certain degree,” said Yasuyuki Watanabe, director at nine hours Inc., which runs capsule hotels in Tokyo.
Hotels located in popular night-life centers, such as Shinjuku and Ebisu, will likely see more customers, he said, adding that the firm was considering rolling out a dedicated plan for those who miss last trains.
But restaurants and bars are likely to face some drawbacks.
“It will impact us for sure. Running the last trains early means customers will go home early, too. Our employees also use public transportation, so we will have to move up the closing time of our izakaya to send them home early,” said a spokesman of a company that runs more than a dozen izakaya pubs in Tokyo.
The spokesman, who agreed to speak on condition of anonymity, said even shortening the closing time by 30 minutes would be a significant opportunity loss on an annual basis.
What is JR East planning to do with fares?
Fukasawa said the firm was considering using a dynamic pricing system to give discounts for off-peak passengers using a commuter pass. But under the plan it will charge passengers more during the busiest times.
The new pricing system will not impact total sales from the fare, as it will be designed to keep that nearly the same as the current figure, Fukasawa said.
Hiking train fares requires government approval and the systems involved need major updates, so it will take more than a year to actually change the prices, he added.
How badly has JR East been impacted by the COVID-19 virus?
The situation at the firm may not be as dire as that seen in the aviation industry, but it is still grave.
For the April to September period, JR East posted its first operating and net losses since 1987, when it was privatized amid the split of Japanese National Railways and its logistics business into seven entities by region.
Sales have plunged 48.2%, to ¥787.3 billion, compared to the same period last year, with operating and net losses of ¥295.3 billion and ¥264.4 billion, respectively.
“This is the first time we’ve reported losses in our earnings and we are taking this very seriously … railway businesses come with really high fixed costs, but we plan to change this cost structure,” said Ryoji Akaishi, an executive director at JR East, during a news conference last week.
“We understand that we are facing a very tough situation, but we will reduce the losses as much as we can. And we will strive to secure a profit in the next fiscal year, for sure.”
As a raft of companies are looking to continue telework even when the health crisis is over, JR East believes that the volume of passengers will never return to the levels seen before the pandemic. Because of that, it will need to cut costs and increase revenues from other businesses. The firm has said it will streamline costs by ¥100 billion during this fiscal year.
If that major cost cutting is done and the number of passengers returns to 80% of pre-pandemic levels, JR East will be able to move back into the black, Akaishi said.
The firm said that since the September national holidays it had seen some recovery in passenger numbers, adding that the number of short distance travelers has reached about 75% of levels seen prior to the pandemic.
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