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Home , 321 series, Biwako Line, Fukuyama Station, Hanwa Line, Hikari (train), JR Kobe Line

Operating Results by Business Segment Transportation Operations Overview covering the -- met- an increase in capital expenditure, JR-West’s Transportation Operations ropolitan area covers 622.0 kilometers operating income for the segment rose consist of the railway business, along (954.3 kilometers including the three 0.2% year on year to ¥97.4 billion. with small-scale bus and ferry services. branch offices in Kyoto, Osaka, and The railway business encompasses 18 Kobe), and other conventional lines prefectures in the western half of Hon- (excluding the three branch offices in Sanyo shu and the northern tip of Kyushu, Kyoto, Osaka, and Kobe) extend a total The Sanyo Shinkansen is a high-speed an area of approximately 104,000 of 3,425.7 kilometers. intercity passenger service between square kilometers. The region is home Operating revenues in the Trans- Shin-Osaka Station in Osaka and to approximately 43 million people, portation Operations segment rose in Fukuoka in northern equivalent to 34% of the population of 1.5% year on year during fiscal 2008, Kyushu. The line runs through several . The Company operates 51 lines to ¥861.2 billion. The majority of this major cities in western Japan, includ- with a total of 1,221 stations. Operating revenue is derived from the passenger ing Kobe, Okayama, Hiroshima, and route length totals 5,024.0 kilometers, railway revenue of the parent company Kitakyushu. It has a total operating a little less than 20% of all passenger JR-West, which rose 2.1% from the kilometerage of 644.0 kilometers, and railway kilometerage in Japan. By line, previous fiscal year, to ¥781.3 billion. 19 stations, including Shin-Osaka Sta- 26 the Sanyo Shinkansen, a high-speed As a result, despite a change in the tion. JR-West owns the entirety of the intercity transport line, stretches system for depreciation and greater railway facilities related to the existing 644.0 kilometers, the Urban Network depreciation expenses stemming from Sanyo Shinkansen, and with the JR-West 2008 Annual Report

Sendai

Niigata

Tohoku Shinkansen Joetsu THE JR-WEST NETWORK Shinkansen Kanazawa Toyama Nagano Sanyo Shinkansen Urban Network (954.3-km basis) Fukui Other conventional lines Nagano Yonago Shinkansen

Fukuchiyama Tokyo Kyoto Hiroshima Yamaguchi Shin-Osaka Tokaido Shinkansen Hakata Okayama (Fukuoka) Kobe Osaka

Sanyo Shinkansen Route (644.0 kilometers) Shin-Yatsushiro

Kyushu Shinkansen

Kagoshima-Chuo exception of Shin-Osaka Station stations along the Sanyo Shinkansen— marketing efforts such as the Express (owned by JR Central), operates all of Okayama, Hiroshima, and Hakata— Reservation system, revenue from the the other 18 stations. without having to change trains. Sanyo Shinkansen rose for the fifth There are four types of trains in op- Transportation revenue from the consecutive year in fiscal 2008. eration on the Sanyo Shinkansen: the Sanyo Shinkansen began declining express trains , Rail Star, after fiscal 1997 due to the slowdown Fiscal 2008 Measures and Hikari, and the local train . in the Japanese economy, and more In response to more intense competi- Of these the fastest is Nozomi, which intense competition from competing tion from airlines over competing operates at a maximum speed of 300 transportation services, such as airlines routes, in July 2007 JR-West introduced kilometers per hour, linking Shin-Osaka and highway buses. However, usage the new N700 Series Shinkansen, of- and Hakata in two hours and 23 min- began to rise following the switchover fering improved speed, comfort, and utes (in the case of the fastest rail ser- from Hikari to Nozomi trains in Oc- energy conservation. In March 2008, vice). The majority of the Nozomi trains tober 2003, and timetable revisions we implemented timetable revisions to are through-service trains running on centered on lower fares for Nozomi enhance the competitiveness of Shink- the Tokaido Shinkansen tracks oper- trains. As a result of further timetable ansen services, including hourly opera- ated by JR Central linking Tokyo and revisions in March 2005, March 2006, tion of an N700 series train between Shin-Osaka. This allows passengers to and July 2007 to accommodate more Tokyo and Hakata, and an increase in 27 travel across the Tokaido Shinkansen Nozomi trains, the introduction of the number of Nozomi trains running Report Annual 2008 JR-West from Tokyo or Nagoya to the major the N700 Series and the success of between Tokyo and Hiroshima.

The new N700 Series

Hikari Rail Star The new N700 Series features number of trains in operation, as Shinkansen timetables that maximize improved energy efficiency, further en- well as the convenience and price the benefits from the introduction hancing the environmental friendliness advantages of the Express Reservation of the N700 Series, along with other of Shinkansen travel, and contributing system. We further worked in coopera- efforts to offer a comfortable and significantly to global environmental tion with local communities, travel highly reliable transportation service conservation. The N700 Series also agents, and other JR companies to responsive to demand. We are also received the fiscal 2007 Environment stimulate demand for tourism, includ- moving forward with measures to Minister’s Prize for Global Warming ing promotion of the DISCOVER WEST increase use of the Shinkansen, includ- Prevention Activity. Campaign, and operating the Club ing advertising campaigns promoting Sales and marketing initiatives DISCOVER WEST travel association for the environmentally friendly aspects to promote use of the Shinkansen persons over 50 years of age. of Shinkansen service. We are also included proactive publication of encouraging the use of the Express information on Sanyo Shinkansen Initiatives for Fiscal 2009 Reservation system to further enhance timetable revisions, the comfort of JR-West is working amid a fiercely the convenience of sales channels, the N700 Series, and the increased competitive environment to create and expanding the Express Reserva- tion IC card service (EX-IC) service to 28 include the Sanyo Shinkansen from summer 2009.

Through-Service Operations with the JR-West is planning to provide through-services between the Sanyo Shin- kansen and Kyushu Shinkansen, operated by (JR Kyushu), following the completion of the extension of the Kyushu Shinkansen JR-West 2008 Annual Report scheduled for spring 2011, linking Shin-Osaka and Kagoshima-Chuo stations in four hours. We expect to increase revenue by introducing a new Shin- kansen model based on the N700 Series that will provide even higher-quality Shinkansen travel, as well as by working together with JR-Kyushu to develop demand for sightseeing among the wealth of tourist destinations in Kyushu, and stimulate travel from Kyushu to the urban centers of Kyoto and Osaka. Planned total investment for this project is about ¥100 billion.

Tokyo Kyoto Hiroshima Okayama Shin-Kobe Nagoya Kokura Hakata Shin-Osaka

Scheduled to open in spring 2011 Partnership with JR Kyushu Kumamoto

Shin-Yatsushiro JR-West JR Central Sanyo Shinkansen Fastest Traveling Time on Opened in March 2004 Through-Service Operations From Shin-Osaka to Kumamoto stations: JR Kyushu About 3 hr 20 min Kagoshima- Currently: 3 hr 47 min Chuo Kyushu Shinkansen From Shin-Osaka to Kagoshima-Chuo stations: About 4 hr Currently: 4 hr 57 min Urban Network Services to prioritize safety, and regaining that also renovated to coincide with the (Kyoto-Osaka-Kobe Area Conventional Lines) trust is of the highest priority. opening of the , im- The Urban Network provides passen- Ridership on the Urban Network proving access to Osaka Station from ger service for the densely populated (954.3-kilometer basis) during fiscal and the Kansai major cities of Kyoto, Osaka, and Kobe, 2008 was up 0.8% year on year to International Airport. We also opened and their surrounding areas. It has an 1,445 million passengers, with total three new stations, and made other operating route length of 622.0 kilo- passenger-kilometers up 0.6% to efforts to further improve convenience. meters (954.3 kilometers including the 28,962 million passenger-kilometers. In terms of facilities, we undertook a three branch offices in Kyoto, Osaka, Transportation revenues increased series of measures to enhance safety, and Kobe), forming a comprehensive 0.3% (up ¥0.9 billion), to ¥303.3 billion. including expansion of the ATS-P network stretching across the entire system, improving the safety features Kyoto-Osaka-Kobe region. Fiscal 2008 Measures equipment at railway crossings, and The Urban Network area includes Timetable revisions were implemented introducing new equipment such as the portion of the in March 2008 for the opening a por- train proximity warning systems, and between Tsukaguchi and tion of the Osaka Higashi Line between early-warning seismic activity warning where JR-West caused a terrible ac- Hanaten and Kyuhoji, providing links systems. We also installed additional cident on April 25, 2005, resulting in to the Yamatoji Line, Gakkentoshi Line anemometers, and strengthened 29 a substantial loss of the trust we have and JR Tozai Line to improve access pillars supporting elevated tracks Report Annual 2008 JR-West built among customers and society. We for passengers traveling from Nara to against earthquakes. recognize that redoubling our efforts . Tennoji Station was Tsuruga

Omi-Shiotsu

Nagahara

URBAN NETWORK Nagahama Maibara

Sonobe Sasayamaguchi

Kusatsu Kyoto

Yamashina Kibukawa Takatsuki

Tsuge Shin- Osaka

Shin-Kobe Amagaski Osaka Kyobashi Kizu Himeji Nishi- Sannomiya Kitashinchi Akashi Nishi-Kujo Hanaten Kamo Kobe Sanyo Shinkansen Nara JR- Osaka Loop Lines Sakurajima JR Kobe Line (Osaka–Himeji) Tennoji JR (Osaka–Kyoto) Oji (Kyoto–Nagahama) train in operation JR Tozai Line (Kyobashi–Amagasaki) Kyuhoji JR Yumesaki Line (Nishi-Kujo–Sakurajima) Kansai Airport JR Takarazuka Line (Osaka–Sasayamaguchi) (Kyoto–Sonobe) Takada Gakkentoshi Line (Kyobashi–Kizu) Hineno Nara Line (Kyoto–Nara) Yamatoji Line (JR-Namba–Kamo) (Tennoji–Wakayama) (Hineno–Kansai Airport) Osaka Higashi Line Wakayama Initiatives for Fiscal 2009 more user-friendly and to enhance use with the Suica IC card issued by JR-West is focusing its efforts on mea- customer satisfaction, including raising East Japan Railway Company, and in sures to further enhance safety, and is the overall level of service, from ticket January 2006 reciprocal use with the steadily implementing a range of other windows and other station and train PiTaPa IC card issued by Surutto Kansai initiatives for the future. services, introducing special displays Association, an organization composed In transportation and marketing, at station entrances to provide better of public and private railway operators we are utilizing the railway network information when a transport disorder in the Kansai region. We have steadily across the Kyoto-Osaka-Kobe metro- occurs, and moving forward with the broadened the area in which the politan area to further enhance the installation of “barrier-free” facilities in ICOCA card can be used, introducing convenience of access to the Osaka conjunction with local governments. the service in the Okayama and Hiro- area and otherwise improve the quality shima areas from September 2007, and of transportation services. The Railway The ICOCA IC (Smart) Card offering interoperability with Central Operations and Business Develop- Use of the ICOCA non-contact IC card, Japan Railway Company (JR Tokai)’s ment headquarters are also working a service introduced in the Urban TOICA card from March 2008. together with local communities to Network area in November 2003, has For the ICOCA e-money service improve the value of our railway belts steadily increased, with the number launched in October 2005, we began 30 through initiatives to develop sta- of cards issued reaching 3.68 million offering reciprocal use with the Suica tions and surrounding areas. Further, within the first four and a half years IC card issued by East Japan Railway JR-West is proactively implementing of the launch of the service. In August Company, and are working to expand measures to make stations and trains 2004, we began offering reciprocal the number of stores in towns and JR-West 2008 Annual Report

ICOCA card

Smart ICOCA card inside stations accepting ICOCA in lines. However, considering that these Bus and Ferry Services order to improve the convenience of lines play a role as feeders for the The Transportation Operations seg- the service. Shinkansen service and function as a ment also includes bus and ferry vital part of the railway network, we services. JR-West undertook a number are working to provide community- of initiatives aimed at further ensuring Other Conventional Lines oriented services and undertake other safety, including equipping vehicles JR-West’s other conventional lines management efforts, while placing with safety devices, and bolstering comprise intercity transport provided priority on ensuring safety. employee training. We began operat- by limited express and express trains, Ridership on the other conven- ing bus routes between Kobe and regional transport for commuters and tional lines during fiscal 2008 (exclud- Shirahama, and took other steps to students in and around regional hub ing the three branch offices in Kyoto, supply services responsive to the cities such as Hiroshima and Okayama, Osaka, and Kobe) increased 0.5% year varied needs of customers. and local lines with low transport den- on year to 374 million passengers, In ferry services, the Company sity. The other conventional lines though total passenger-kilometers worked to establish safety manage- have an operating route length of were down 0.2% to 9,690 million ment systems based on the Marine 3,425.7 kilometers. passenger-kilometers. Transportation Safety Management Manual, with The operating environment for revenues increased less than the aim of providing safe and 31 other conventional lines continues ¥0.1 billion year on year, to reliable transport. Report Annual 2008 JR-West to be difficult due to the declining ¥134.4 billion. population of areas served by the

Diesel car for local lines

Haruka limited train Sales of Goods Real Estate and Food Services Business JR-West’s retail services mainly target such as a “self-service” style. For the JR JR-West’s real estate services consist of railway passengers, consisting of KYOTO ISETAN department store, we the management of shopping centers convenience stores, specialty stores, took steps to increase store revenues in station buildings and other facilities, and other food and beverage establish- to coincide with the 10th anniversary operation of large station buildings ments located in and around station of the opening of the at terminal stations, development of buildings, as well as the JR Kyoto Isetan building, including a renewal of the commercial facilities near station areas department store. men’s clothing floor, and the opening and underneath elevated tracks, and of SUVACO JR KYOTO ISETAN, a new real estate sales and leasing operations Fiscal 2008 Measures station commercial facility along for residential and urban development JR-West continued its efforts to the north-south passage through focused on railway lines. improve the attractiveness of sta- Kyoto Station. In shopping center operations, tions, such as by opening SUN FESTA As a result, operating revenues in JR-West has strengthened the Group’s OKAYAMA in and the Sales of Goods and Food Services tenant leasing functions, and acceler- shin-kobe Entree Marche in Shin-Kobe segment rose 2.2% over the previous ated its efforts to attract preferential 32 Station, as well as promoting the fiscal year, to ¥212.8 billion, with oper- tenants. At the same time, we have opening of new types of Kiosk stands, ating income up 4.3%, to ¥5.2 billion. enhanced the customer drawing power and freshness of our facilities through regular merchandise and tenant changeovers. In real estate sales and leasing, JR-West seeks to effec- JR-West 2008 Annual Report tively utilize its real estate holdings by steadily developing shopping centers in station buildings, as well as developing and selling condominiums on former sites of company housing units and leisure facilities. We are also currently renovating Osaka Station and

New-style Kiosk stand

SUVACO JR KYOTO ISETAN in Kyoto Station JR NK Building Other Businesses developing the New North Building, JR-West’s other businesses consist of through Fiscal 2011), which sets a which are planned to open in the travel agency business operated by policy of stable growth in core fields spring 2011. Nippon Travel Agency, which became a and a shift of management resources consolidated subsidiary of JR-West in to growth fields. In hotel operations, Fiscal 2008 Measures fiscal 2004, the hotel business centered the Company promoted sales with JR-West continued to develop sta- on the Hotel Granvia Kyoto, advertis- renovations to its guest rooms and tion premises and surrounding areas, ing agency business, maintenance dining facilities, as well as hosted including the opening of the JR Kyoto and engineering services, and other various events. Station NK Building at Kyoto Station businesses to facilitate the smooth Nevertheless, operating revenues with a large-scale electronics retailer, and efficient operation of the mainstay in the Other Businesses segment the JR Kanazawa Station NK Building railway business. declined 2.8% over the previous fiscal at Kanazawa Station, and SUN STA- year, to ¥139.3 billion, and operating TION TERRACE FUKUYAMA shopping Fiscal 2008 Measures income fell 11.8%, to ¥11.0 billion. center at . We moved In travel agency operations, JR-West steadily forward with the plan for the pursued sales and marketing activi- 33 JR-West 2008 Annual Report Annual 2008 JR-West Osaka Station Renovation, including ties utilizing the New Domestic Travel the New North Building Development Information System recently put into and ACTY Osaka expansion. In addi- operation. We also formulated the tion, in an effort to effectively utilize Nippon Travel Agency Group Medium- assets, we continuously developed Term Business Plan (Fiscal 2009 condominium apartments on Company-owned land, such as former sites of Company housing. As a result, operating revenues for the Real Estate Business segment rose 22.4% over the previous fiscal year, to ¥76.7 billion, with operating income up 16.2%, to ¥24.6 billion.

Hotel Granvia Hiroshima

J GRAN condominium apartment Osaka Station Development Project

34 JR-West 2008 Annual Report

Artist’s image of Osaka Station

The Osaka Station Renovation and comfort and convenience of Osaka Sta- itself an excursion destination, such as New North Building Development Plan tion, and provide it with the stateliness walkways and public areas in the new was formulated in December 2003 appropriate to a terminal station. building, and over the station. with the aim of making Osaka Station— The focus of the station renova- The New North Building will have JR-West’s foremost terminal station tion and improvement is on alleviating 210,000 square meters of floor space, located in the heart of Osaka’s Kita overcrowding, providing more conve- and incorporates a symbolic atrium in District—a facility befitting its status as nience for changing trains, and making its central portion. The anchor tenant the gateway to Osaka. The plan would facilities barrier-free. The plan includes will be a department store, and there also increase the earnings of the corpo- substantial revisions to the passenger are plans for a mall of specialty stores, rate group, and help to revitalize both flow and station layout, along with offices, a cinema complex, and other the Osaka Station area and the Kansai improvements that make the station facilities. Station renovation work be- region. The three main elements of easier to use. It also incorporates ele- gan in spring 2004, and groundbreak- the plan are a fundamental renovation ments to create an attractive, symbolic ing for the New North Building in fall of the station, enhancement of sta- station space, such as the erection of a 2006. The opening of the New North tion concourses and public areas, and large dome. To complement the station Building, along with the walkways and development of the New North Build- renovations, we have also included public areas (the grand opening) is ing, which together would enhance the additions to make the station area planned for the spring of 2011. Artist’s image of the New North Building The New North Building under construction

Along with the renovation of Osaka ity as the heart of the Osaka Station department store operator in the New 35 Station and development of the New north district, and with the support of North Building was changed to JR- Report Annual 2008 JR-West North Building, JR-West also formu- customers further enhance its draw- West’s consolidated subsidiary, West lated a plan to remodel the southside ing power, it would be necessary to Japan Railway Isetan Ltd. Since this will station entrance as a new gateway, and make use of all group resources from generate additional refurbishment and provide for a balance and uniform flow both West Japan Railway Company, other expenses for the JR-West Group, with the north side. Work on expansion and Isetan Mitsukoshi Holdings Ltd., the total projected cost to the Group of the existing south building, ACTY launched on April 1, 2008. Accordingly, for the project has been increased to Osaka, began in May 2008. Specific in April 2008 the plan for the main approximately ¥200 billion. plans include expanding the floor space of the ACTY Osaka building by 35,000 square meters, constructing a con- Northern Area of Osaka Station necting concourse linking the north (24 hectares) and south sides of the station together C with a multi-story public space, along Advanced Opening Area with other measures to make the south (7 hectares) For side of the station more like a main Kyoto B entrance. The renovation will help New North Station link the north and south districts of Building Yodobashi Osaka Station, and make a substantial A contribution to the vitality of the entire Expansion of Osaka Station area. ACTY Osaka Hankyu Dept. Store JR-West had originally planned for the core tenant of the New North Nishi-Umeda Area Osaka Station North East Block Building to be a department store op- Hanshin erated by Mitsukoshi, Ltd. However, we Dept. Store For recognized that in order to establish Kobe Hilton-West SC a more attractive commercial facil- Harbis Ent SC