JR Hokkaido announced on the 16th that it is withdrawing its proposal for a “Vertical Separation Model”—under which municipalities would own rail infrastructure such as tracks and stations—for eight loss-making lines (commonly known as “Yellow Lines”) that the company has deemed “difficult to maintain on its own.” The proposal was unveiled in April as a cornerstone of the company’s management improvement plan, but discussions had stalled as municipalities along the routes refused to enter negotiations due to concerns over fiscal burdens.
President Yasuyuki Watanuki apologized at a press conference the same day, saying, “We received harsh feedback from various quarters, and discussions did not move forward. I offer my sincere apologies.” He added, “Our desire to keep the Yellow Lines has not changed,” while reflecting that insufficient explanation had resulted in “a proposal that effectively imposed burdens on municipalities.”
Going forward, the company formally excluded the Vertical Separation Model and announced plans to establish a new consultative body involving Japan’s Ministry of Land, Infrastructure and Transport’s Hokkaido District Transport Bureau, the Hokkaido prefectural government, and municipalities along the lines, with approximately three meetings to be held by the end of March 2027. The aim is to formulate line-specific measures, including revisions to transportation systems and utilization of sightseeing trains.
National Government Expected to Serve Purely as Facilitator
The Hokkaido District Transport Bureau will serve as the secretariat for the consultative body. The plan calls for a plenary session addressing common themes across all lines, as well as working groups for individual lines, with roughly three meetings to be held within fiscal 2026. The timing of the first meeting has not yet been determined.
JR Hokkaido has requested that the national government take a proactive leadership role in the discussions, and has also sought cooperation from the Hokkaido prefectural government. According to the company, while the national government has indicated its willingness to establish the consultative body, it is expected to refrain from proposing specific measures and limit its involvement to serving as a facilitator. Finalizing improvement measures may therefore still require considerable time.
The Vertical Separation Model is a framework in which the railway operator focuses exclusively on operations while municipalities own and manage facilities such as stations and tracks, thereby reducing the operator’s fixed-cost burden. JR Hokkaido presented it in April as one option for sustaining the Yellow Lines, but municipalities successively expressed reluctance, citing “new fiscal burdens,” and substantive discussions had effectively ground to a halt.
Supervisory Order Deadline Approaches
Yellow Lines refer to rail sections where average daily passenger volume per kilometer (transport density) falls between 200 and 2,000 passengers. JR Hokkaido publicly identified these lines in 2016 and spent five years from 2019 working on ridership promotion and cost reduction, but no notable improvement in profitability was achieved.
In 2024, the national government issued a supervisory order requiring the company to firmly compile fundamental improvement measures for each line by the end of fiscal 2026. With the withdrawal of the Vertical Separation proposal, roughly six months remain. The extent to which the national government takes a proactive role is increasingly shaping the future of the Yellow Lines.
President Watanuki expressed expectations for a state-led framework, stating, “Building a shared understanding with local communities is an urgent priority. We want to move discussions forward with the national government taking a proactive role.”
On the other hand, if the national government limits itself to a facilitator role, substantive decisions regarding cost burdens and line prioritization will once again fall to JR Hokkaido and the municipalities. While the withdrawal of the Vertical Separation proposal has eliminated one source of conflict, whether fundamental improvement measures can be finalized within the fiscal year remains uncertain.
AloJapan.com