Provision of local bus services in Japan: focusing on the roles for local governments and nonprofit organisations

Abstract

Japan’s bus deregulation program (coach and local) was carried out in February 2002. Its main point was to loosen or eliminate Demand-Supply Balancing (Jukyu-Chosei.) This regulation was a licensing system and functioned as entry/exit regulation. It defended incumbents (approximately 360 operators) and did not let potential entrants respond to increasing demand for some services. It also forced the incumbents to cross-subsidise noncommercial services. In other words, the incumbents were allowed to enjoy a situation of local monopoly but forced to maintain non-commercial services. Although five years have passed since the deregulation, we have not seen major changes in the structure of the local bus market, as there have been few entrants. On the other hand, the incumbents are apt to abandon non-commercial services, because they now have freedom of exit and cross-subsidisation is no longer sustainable. The supply of commercial services can be left to the market mechanism, but the problem is who is in charge of maintaining noncommercial but indispensable services, especially in rural areas. This is why the deregulation has had impact on the transport policy by local governments. In fact, local governments all over Japan have been more involved in policies for public transport. But many of them are now facing a budget deficit and need to cut expenditures, including subsidies for bus services. Thus, nonprofit organisations (NPOs) are also expected to play a crucial role in the local transport market, like community transport in England. Some NPOs have been founded by the inhabitants and have tried to form a partnership with bus operators, local governments, shops, hospitals and so on in their local communities. The aim of this paper is to analyse the roles for NPOs in the local bus market, in comparison with those for local government. First, we describe the Japanese local bus market before and after the deregulation. Secondly, we consider the roles for local governments and NPOs in the local bus market. Next, we analyse some pioneering cases. In conclusion, we give a future prospect of local bus service provision in Japan, from the viewpoint of partnerships among local governments, private operators and NPOs.