The demise of the government-owned system came after charges of serious management inefficiencies, profit losses, and fraud. By the early 1980s, passenger and freight business had declined, and fare increases had failed to keep up with higher labor costs.
What remained of the debt-ridden Japanese National Railways after its 1987 breakup was named the Japanese National Railways Settlement Corporation. Its purpose was to dispose of assets and debts not absorbed by the successor companies and to execute other activities relating to the breakup, such as outplacement of former personnel.
The new companies introduced competition, cut their staffing, and made reform efforts. Initial public reaction to these moves was good: the combined passenger travel on the Japan Railways Group passenger companies in 1987 was 204.7 billion passenger-kilometers, up 3.2% from 1986, while the passenger sector previously had been stagnant since 1975. The growth in passenger transport of private railways in 1987 was 2.6%, which meant that the Japan Railways Group's rate of increase was above that of the private-sector railroads for the first time since 1974. Demand for rail transport improved, although it still accounted for only 28% of passenger transportation and only 5% of cargo transportation in 1990. Rail passenger transportation was superior to automobiles in terms of energy efficiency and of speed in long distance transportation.
The six companies had 18,800 km (11,700 mi) of routes (mostly 1,067 mm/3 ft 6 in gauge) in use in the late 1980s. About 25% of the routes were in double-track and multitrack sections, and the rest were single-track. In 1988 about 51% of the six companies' 1,000 locomotives were diesel, and the rest were electric.
Japan Freight Railway Company owns its locomotives (295 diesel and 569 electric locomotives in 1988), rolling stock and stations, but hires track from the six passenger companies. It runs fewer trains on less track than Japanese National Railways freight service did before its demise, but at increased revenues and higher productivity.
The Shinkansen Property Corporation (新幹線保有機構, Shinkansen Hoyū Kikō?) leased Shinkansen railway facilities, including 2,100 km (1,300 mi) of 1,435 mm (4 ft 8 1⁄2 in) gauge high-speed track, to the passenger companies on Honshū. In 1991, the SPC was reorganized into the Railway Development Fund (鉄道整備基金, Tetsudō Seibi Kikin?) and the three operators bought their lines on 60-year loans. Some of the Shinkansen electric-powered trains operate at speeds up to 300 km/h.
Another nearly 3,400 km (2,100 mi) of routes are operated by major private railways and by what are known in Japan as third sector railroads—new companies, financed with private and local government funds—which absorbed some of Japanese National Railways' rural lines. There were twenty-seven private and third-sector companies in 1989.
Read more about this topic: Japan Railways Group
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