Sunday, March 27, 2016

Bullet-train passenger numbers at 340 million last financial year were more than three times the figure for domestic air travellers

Bloomberg March 26, 2016 

Dinner with sake, an airport-like lounge and roomier seats.

That's the offer on bullet trains as the Shinkansen rolls into Japan's northern island of Hokkaido, home to some of the country's best ski resorts, for the first time.

Starting Saturday, Hokkaido Railway Co will whisk Tokyo passengers to Hakodate in first class for 38,280 yen ($339) in just over four hours. The journey will take only about an hour longer than flying business class on All Nippon Airways Co, which costs 44,900 yen ($397), after including check-in and transfers. With the luxury offerings, bullet trains may give the nation's two largest carriers, ANA and Japan Airlines Co a run for their money.

"It could be a very pleasant experience," said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, who rides the bullet train to Nagoya or Osaka and back about once every two months.

Japan's high-speed trains, known as Shinkansen, have expanded their network since their debut in time for the 1964 Tokyo Olympic Games. Bullet-train passenger numbers at 340 million last fiscal year were more than three times the figure for domestic air travelers.

Bullet trains are gaining more ground against airlines. When the Hokuriku link opened last year, it cut the travel time between Tokyo and Kanazawa city in central Japan to 2 hours 28 minutes, and made it faster than flying. As passenger numbers tumbled by as much as 50 percent, ANA cut the number of flights to the region.

"At this point we aren't taking any special measures with the opening of the Hokkaido Shinkansen line," All Nippon Airways Co. President Osamu Shinobe told reporters in Tokyo last month. "Considering the time it takes on the train, we don't think that airline passengers will be lured away anytime soon."

The trains will run at a top speed of 320 kilometers (200 miles) per hour to whisk passengers takes passengers to a new Shinkansen station on the edge of Hakodate in 4 hours 2 minutes. From there, another train connects to the city center, pushing total travel time to 4 hours 29 minutes. That compares with 3 hours 16 minutes by plane, including check-in time and connections, from Tokyo station to Hakodate city center, according to Yahoo Japan Corp.'s travel website.

Still, not everyone is enthused by a four-hour train ride. So the focus on luxury and price is critical, said Masayuki Kubota, chief strategist at Rakuten Securities Economic Research Institute.

"Four hours in a train is quite boring," Kubota said. "They have to compete in other areas such as service."

Passengers on the GranClass can check into a lounge at Tokyo station before boarding. Train seats are 52 centimeters (20 inches) wide, compared with 50 centimeters in ANA's business class. The seat pitch, a measure of legroom, spans 130 centimeters, 3 centimeters more than on ANA.

Business and first-class travelers also get complimentary drinks, snacks, Internet access and newspapers in the business lounge beforehand. There will be 18 first class seats on each of the 10 daily return trains to Tokyo, along with 55 business class and 658 regular seats.

"We're targeting wealthy travelers and business people," said Akira Hidetaka, head of the sales planning department at View Card Co., a credit card company that operates the lounge with JR East.

The bullet train is also generally cheaper. On the day the line opens, the lowest business class fare on ANA to Hakodate from Tokyo's Haneda airport is 44,900 yen ($398). That compares with 38,280 yen for a one-way first class ticket on the bullet train.

By 2030, the Hokkaido line will be extended to the prefecture's capital Sapporo, further intensifying competition with planes.

The bullet train link will be "much more competitive if it connects to Sapporo because it's quite expensive to go there by airplane," said Dan Lu, an analyst at JPMorgan Securities Japan Co.


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