Intensified competition between High Speed Rail and Airlines
29 February, 2016 4th Florence Intermodal Forum “How does digitalization affect transport and the competition between transport mode?”
Ichiro Takahashi
Executive Director Brussels Branch East Japan Railway Company (JR East) Today’s Contents
1 Shinkansen Network
2 Airports in Japan
3 Effects on the airlines by Shinkansen
4 Relation between market share & time/distance
5 Digitalization for customer satisfaction
6 Shares by transport modes
7 The way forward
2 1 Shinkansen Network
Total Length： 3,300 km
Sapporo Akita Line (Upgraded Conventional line) JR East Shin-Hakodate JR Central Yamagata Line 2016 (Upgraded Conventional line) Shin-Aomori JR West 2010 Hachinohe JR Kyushu Joetsu Shinkansen(270km) 1997 2002 Morioka Under Construction 1999 Hokuriku Shinkansen (345km) 1992 Planned line Niigata Tohoku Shinkansen (593km)
Kanazawa 2015 1982 Sanyo Shinkansen (554km) 1982 1982 Nagano Omiya Hakata 1972 1997 1975 Shin-Osaka Takasaki Omiya 1985 Okayama Nagoya 1964 2011 Tokyo Nagasaki Ueno 1991 Shin-Yatsushiro Tokaido Shinkansen (515km) 2004 Kyushu Shinkansen (127km) Tokyo Kagoshima-Chuo Scale 200Km(approx.) 3 2 Airports in Japan
There are 97 airports in Japan.
4 3 Effects on the airlines by Shinkansen
Tokyo - Regional Airport (Volume of passengers / Year) 3,500,000 Yamagata Aomori Hokuriku 3,000,000
2,500,000 In 1992, a part of Shinkansen line started operation
2,000,000 In 1999, the whole Shinkansen line started operation 1,500,000
1,000,000
500,000
0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
In 1992, a part of the Shinkansen line to Yamagata Yamagata started operation. After that, the number of the airline passengers has decreased by 40% from 1992 to 1995. The whole line became operational in 1999. The market share of Shinkansen is currently 97%. JR East
The distance between JR West JR Central Tokyo and Yamagata is Tokyo 356km. The travel time is 2 hours 26 minutes by Shinkansen.
JR Kyushu Volume of passenger data Source: Yamagata, Aomori, Komatsu, Toyama Airport Management Office 5 3 Effects on the airlines by Shinkansen
Tokyo - Regional Airport (Volume of passengers / Year) 3,500,000 Yamagata Aomori Hokuriku 3,000,000 2,500,000 In 2010, the whole Shinkansen line started operation 2,000,000 In 2002, a part of Shinkansen line started operation 1,500,000
1,000,000
500,000
0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 In 2002, a part of the Shinkansen line to Aomori Aomori started operation. After that, the number of the airline passengers has decreased by 35% from 2002 to 2009. The market share of Shinkansen is currently 79% after the whole line opened in 2010. JR East
The distance between JR West JR Central Tokyo and Aomori is 714km. Tokyo The travel time is 2 hours 59 minutes by Shinkansen.
JR Kyushu Volume of passenger data Source: Yamagata, Aomori, Komatsu, Toyama Airport Management Office 6 3 Effects on the airlines by Shinkansen
Tokyo - Regional Airpot (Volume of passengers / Year) 3,500,000 Yamagata Aomori Hokuriku 3,000,000
2,500,000
2,000,000
1,500,000
1,000,000 In 2015, the whole Shinkansen line started operation 500,000 0 Hokuriku 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Kanazawa In 2015, when the whole Shinkansen line to Kanazawa opened, & the number of the airline passengers decreased by 35%. Toyama The market share of Shinkansen is currently about 50%. The airplanes were downsized in 2015. The frequency will be reduced from 18 to 14 round flights per day JR East in March 2016. The distance between JR West JR Central Tokyo and Kanazawa is Tokyo 714km. The travel time is shortened from 3 hours 47 minutes to 2 hours 28 minutes by JR Kyushu Volume of passenger data Source: Yamagata, Aomori, Shinkansen. Komatsu, Toyama Airport Management Office 7 3 Effects on the airlines by Shinkansen
Tokyo - Regional Airport (Volume of passengers / Year) 3,500,000 Yamagata Aomori Hokuriku 3,000,000
2,500,000
2,000,000 Intensified competition is expected 1,500,000 1,000,000 ? 500,000
0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 The whole Shinkansen line to Hakodate will open in March Hakodate 2016. There will be no change in the airline services because the airlines expect almost the same demand as before for airline services. JR East
The distance between JR West JR Central Tokyo and Hakodate is Tokyo 827km. The travel time is shortened from 5 hours 30 minutes to 4 hours 2 minutes by JR Kyushu Volume of passenger data Source: Yamagata, Aomori, Shinkansen. Komatsu, Toyama, Hakodate Airport Management Office 8 4 Relation between market share & time/distance
% Relation between Travel time and Market share of Shinkansen 100 90 80 70 60 50 ★ 40 30 20 10
Market share ofShinkansen share Market 0 0:00 0:30 1:00 1:30 2:00 2:30 3:00 3:30 4:00 4:30 5:00 5:30 h:m Travel time % Relation between Distance and Market share of Shinkansen 100 90 80 70 60 50 ★ 40 30 20 10
Market share ofShinkansen share Market 0 0 200 400 600 800 1000 1200 Distance Km The current market share trend is shown in the charts above. The market share of Shinkansen is shown vertically, while the travel time and distance are shown laterally. The market share is considered to have been affected mainly by the travel time and distance. No significant relation between the market share and other elements (frequency, access to airport and price) has been found. Source: JR East, JR Central, JR West and Ministry of Land, Infrastructure, Transport and Tourism 9 5 Digitalization for customer satisfaction
Domestic airline Shinkansen (Japan Airlines) (East Japan Railway) Self printing ticket ○ ×
E-ticket ○ △ *Japanese feature cell phone with Near Field Communication provides a kind of this service Time table information available ○ ○ on smartphone Operation information available ○ ○ on smartphone Wifi service ○ △ *Extra charge *Only a few trainsets & Extra charge Frequent shoppers program ○ × (mileage program) Client identification marketing ○ ×
10 6 Shares by transport modes
100% 4 19
80% 56 Airline 54 22 60% 75 78 Ship 88 Automobile
40% Bus 22 57 Railway 20% 40 20 22 9 7 0% 5
Although significant quantitative change in the market shares has not been found yet, some qualitative turn might have been developing.
Source : Research of the number of passengers by distance and transport modes (Ministry of Land, Infrastructure, Transport and Tourism) 11 7 The way forward
Digitalization enables us not only to digitalize the information but also to convert it into new business added value.
Therefore, digitalization may make a big difference in customer satisfaction to affect the real market in passenger transport.
Effective utilization of the information had better be secured with an appropriate protection of sensitive information.
Entrepreneurial freedom is not only a prerequisite for digitalization but also the main benefit that digitalization will bring to the sector.
12 Thank you for your kind attention
Contact Tel: 32 (0) 2 808 3643 Email: [email protected]
Brussels Branch East Japan Railway Company (JR East)