Japan hugely subsidizes public transport both directly and indirectly, e.g. almost all employers will pay for employees to commute by public transport but not by car, because the government heavily incentivises them to do so. The Japanese transport providers are indeed more entrepreneurial about this kind of stuff, but I think that's more a case of Japan having high trust in government and quasi-governmental entities than expecting them to pay their way. (Indeed a lot of the penny-wise pound-foolish decisions we see in western public transport are driven by an insistence on cutting costs at all, well, costs).
Or the Hong Kong model. Railway operators are also property developers whose main profits comes from selling homes next to important stations. (This is not necessarily a good thing)
What exactly is wrong with said approach? My guesses are sprawl promotion and attendantly encouraging elimination of green spaces more than normal for developers?
Cronyism, in general. Government pushing for policies favouring railways and cutting bus routes while being the biggest shareholder of the railway company.
Companies paying for public transport is a matter of flooring the commute cost: (almost) nobody lives in an area with no public transportation and car commute costs more, so companies will pay the price for lowest commute and you get to decide what you do with it.
Same thing if your train transit costs 440 yens at base rate but you decide to ride first class or even one of the special luxury trains at a thousand+ yens, you'll only get the base 440 yens from your company.
On profitability, as mentioned by sister comment, they all have a realtor arm and also rent the space surrounding the stations to shopping malls and department stores, sometimes own or revenue share with the attractions in the town that will bring more visitors and they'll talk with he city planners to foster a whole ecosystem, JR famously gets a cut from every Suica transaction etc.
They don't need to make it all from the ride ticket, even if it's price appropriately. Government has little to do with most of it, subsidies only matter on the smaller, super low volume lines where rising prices would kill the traffic.
> Companies paying for public transport is a matter of flooring the commute cost: (almost) nobody lives in an area with no public transportation and car commute costs more, so companies will pay the price for lowest commute and you get to decide what you do with it.
If that was the reason they would simply not pay for commutes at all, as is normal in most other countries.
> Government has little to do with most of it, subsidies only matter on the smaller, super low volume lines where rising prices would kill the traffic.
Nah. Both the railway companies and the government lean into the myth of their being private operations because it suits everyone, but the "private" railway companies were set up with immensely valuable government funded capital assets and would never have been able to operate without them, they rely on government support for any substantial new capital investments, and they have the relevant governments as significant investors, in many cases the largest investors. Yes JR central is immensely profitable if you accept the accounting fiction that the tokaido shinkansen simply popped into existence one day and is worth nothing.
> If that was the reason they would simply not pay for commutes at all, as is normal in most other countries.
Paying for commute is mostly a tax thing. It's the same kind of adjustement as doing BYOD or giving employees PCs that have passed their business depreciation value instead of doing leases.
It's way easier to do with train transit, as train companies will give traceability/limitations on the commute and it's way easier to explain that just paying for a week's worth of gasoline or a car's insurance, or other costs.
If a country doesn't have any arrangement to make these expenses easier to pass on the company, I see how commute would just be cover privately by the employee.
> "private" railway companies were set up with immensely valuable government funded capital assets and would never have been able to operate without them,
Fundamentally no business of significant size operates without any gov. oversight nor preferential treatment. Tim Cook shaking Trump's hand is not the outlier, and at the size of a railroad company you better be in good terms with regulators if you want anything done.
> almost all employers will pay for employees to commute by public transport but not by car, because the government heavily incentivises them to do so
Could you clarify this? To my knowledge only 2 things that could qualify as incentive exist:
- commuting allowances are not considered taxable income for employee
- commuting allowance could be used to reduce tax base for the business
But this is not something I'd call 'heavily'.
My understanding is that commute is universally covered as this is an expected job benefit in Japan, and commuting by car is disencouraged in cities due to the increased insurance liability (as commuting time could be considered work time and injuries incurred to 3rd party will expose the company to liability as well).
> To my knowledge only 2 things that could qualify as incentive exist:
> - commuting allowances are not considered taxable income for employee
> - commuting allowance could be used to reduce tax base for the business
> But this is not something I'd call 'heavily'.
They do both those things, so commute costs are a free tax discount. But they also just tell companies directly that they want them to act in a certain way, and the companies generally fall into line. While the zaibatsu have nominally disappeared, there are still very close ties between the politicians and big businesses in Japan.
