NRI Papers
No. 199 February 1, 2015
  Growth Strategy for Japan's Airline and Rail Industries:Tokyo Olympics to Trigger a Leap  
Keisuke SANO and Kotaro SHINTANI
Given Japan's shrinking population, in order for infrastructure businesses such as airlines and railways to attain sustainable growth, it is vital that they both uncover latent demand in the domestic market and tap into overseas markets with a particular emphasis on emerging markets. Traditionally, transport service products have been designed for the working-age population as a major user base. However, in the future, increased attention must be paid to the senior market. Because people travel less as they age, transport companies must develop new services such as those that encourage senior citizens to travel as well as those related to nursing care. A market that is set to grow is that of "foreign visitors to Japan." In 2013, the number of tourists to Japan exceeded 10 million. The Japanese government is aiming to double this figure over the next seven years. The airline and railway industries must take note of the current trend away from group travel to individual travel, where tourists design their own itineraries, because individual travel creates a greater demand for these industries. As the population of Japan will decline to below 100 million in the medium to long term, it is necessary to develop strategies to quickly embrace the rapid economic growth of emerging markets. Specifically, with an eye to international open skies policies, the airline sector needs to establish a strategy to attract travelers within Asia as well as long-distance travelers transiting through Japan. The railway sector should develop railway operation and incidental businesses such as maintenance overseas. In addition, a business model adopted by railway companies for the development of areas along their lines can also be offered in emerging markets. With the growth of the middle-income segments in emerging economies, there are now more areas in which Japan's services that were so far regarded as "excessive quality" can be accepted. The Tokyo 2020 Olympic Games will provide a great opportunity to present Japan's strengths to the rest of the world. The Japanese government and private-sector companies should work together to demonstrate urban infrastructure in an integrated manner. The Ministry of Land, Infrastructure, Transport and Tourism plans to set up an organization designed to help Japanese companies export infrastructure-related business overseas. The authors hope that through this organization, efforts to demonstrate Japan's infrastructure during this event can lead to success among the airline and railway sectors in exporting their infrastructure-related business.
Contents
I Vision for the Airline and Rail Markets as They Reach a Turning Point
II Japan's Stagnant and Shrinking Domestic Airline Market
III Higher Demand in West Japan and Lower Demand in East Japan for Low Cost Carriers (LCCs)
IV Success in the Market of Foreign Visitors to Japan is Key to Sustainable Growth
V Approaching a Time Where Railway Company's Business Model May No Longer Be Relevant
VI Strengthening Cooperation between Companies to Spur Growth of Railway
VII The Challenge of New Ways to Increase Revenues
VIII The 2020 Tokyo Olympics Would Be an Ideal Showcase for Introducing Japan

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