Can Japan's Shinkansen Bullet Train Gain Market Share from Airline Companies?
Nowadays, travelers from Tokyo to Sapporo mostly opt for the eight-hour flight because taking a train takes eight hours. However, the East Japan Railway Co. (JR East) is here to change that. The company tested a new prototype of a train (part of the next-generation Alfa-X Shinkansen trains), which can reach speeds of 360km per hour. The new bullet trains will shorten the Tokyo—Sapporo route by train to only 5 hours.
In 2018, the total number of passengers that flew between New Chitose Airport in Hokkaido and Haneda Airport in Tokyo was around nine million people, making it one of the busiest domestic routes in Japan. JR East is looking to grab a piece of the market and compete with airline companies.
The price for a ticket on the new bullet train from Tokyo to Sapporo will be 17,000 yen ($150), while a discount airline ticket for the trip can cost less than 10,000($90). However, JR East is confident that it will attract customers because their target customers are people who want to ensure that they arrive on time and people who prefer the luxury seats and high-level service of a train.
The Alfa-X will not have to face a major problem that current trains have when taking the route. At the moment, the route from Tokyo to Sapporo is divided into two sections. The first of which being from Tokyo to Shin-Hakodate-Hokuto and the second of which being from Shin-Hakodate-Hokuto to Sapporo. Switching tracks is a slow and time consuming process. However, by the time the Alfa-X goes into service, there will be a direct route constructed. By eliminating the need to switch tracks the trip becomes substantially shorter.
It will be at least ten years before the Tokyo—Sapporo route by train speeds up. However, due to the construction and speed-up operation of the Shinkansen railway, the operation time of Tokyo—Kanazawa route decreased from 5 hours to 2.5 hours. This caused the railway market share for the route to increase from 42% in 2014 to 74%, providing JR East with confidence.
There are many reasons why rail continues to fail in the United States. But, when you take all of the reasons and boil them down it comes to a lack of efficiency and speed. Japan, unlike the US manages their railways in an extraordinarily efficient manner and is able to continually introduce new technologies to their operations. The difference in Japanese vs US rail is great, that you are taking about almost 180 degrees of difference. Amtrak is the poster child for government incompetence, while Japan's rail industry is a beacon for the potential of capitalism vs government control.
The construction and speed-up operation of Shinkansen will provide more choices for travelers in Japan. However, there are still many catch-22s for JR East to consider, such as the balance between the construction cost and ticket revenue, high speed and customers experience, and ticket price and service provided.
I am looking forward to seeing the development of the railway market because it will bring more options for traveling and will not only move passengers but also will move the economy.
Written by Yujia Zheng, Edited by Will Turchetta & Alexander Fleiss