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Tokyo Metro’s chief has signalled further fare increases as the recently listed company seeks to win over shareholders by cutting costs and raising prices to cope with falling ridership and the return of persistent inflation to Japan.
The operator of Tokyo’s feted subway system raised fares in March 2023 for the first time in 28 years after a pandemic collapse in passenger numbers and a period of heavy investment ahead of the Tokyo Olympics. Rising electricity bills and wages could push it to lift fares again, company president Akiyoshi Yamamura told the Financial Times.
“The trend is for costs to increase from here, so we calculate them every year and if a fare revision becomes necessary, then we will have to consider setting up a committee,” he said, referring to the process of applying to the transport ministry to raise prices. “The factors leading to rising costs will continue, so I believe the need for this will emerge in the future.”
Yamamura’s comments signal a willingness to balance shareholders’ demands for returns with the provision of a public service after Tokyo Metro’s $2.3bn initial public offering last year. The company is also pushing forward with international expansion plans, having secured a landmark contract to operate London’s Elizabeth Line.
Another price increase in Tokyo’s subway system, considered one of the world’s most affordable and efficient, would add to evidence that steady inflation has returned to Japan after three decades of sluggish economic growth and stagnant or falling prices. Consumer price inflation was consistently above 2 per cent last year.
Tokyo Metro, which is still half-owned by government bodies and railway operators, is preparing for cost increases with efficiencies such as standardising signalling equipment with other operators and using digital devices to reduce inspection costs.
But passenger numbers, about 6.5mn daily, are still below pre-pandemic levels because of a shift towards working from home, creating a need to raise fares to boost revenue.
The company’s stock market debut in October was Japan’s biggest IPO in six years. The listing was heavily oversubscribed, and the money raised was used to help repay bonds to rebuild Fukushima prefecture following the 2011 nuclear disaster. Shares are up more than 8 per cent since the debut.
Tokyo Metro has plans to diversify its business into more profitable areas. In its domestic market, it plans to grow in property and advertising, while internationally, it secured its first major contract in November, joining a consortium to operate the Elizabeth Line.
Yamamura said the company planned to “deliver Japan’s strengths such as safety, quality service, punctuality and cleanliness” to London and would only set out on further international projects once it had proven itself on the UK capital’s biggest infrastructure project in a decade.
