Small Bus Company Revitalizes Community
August 12 2010
Nikkei Business, May 10, 2010 (page 24)
Lesson: Data Reveals Waste, Ways to Turn Around a Decline
A bit of background: Mr. Tanijima worked at a small local travel agent owned by his father. He wanted to enter into the lucrative bus transportation business, but that seemed to be an impossible dream because the major bus-rail transportation conglomerates dominated all the bus routes. His first bus business was a school bus for handicapped students in 1980, and then expanded into the tour bus business in 1990. However there were more than 280 tour bus companies in the same prefecture, spurring fierce price wars.
With a slumping economy, a major bus route became available in 2006. Seibu Bus Co. withdrew its operations and Eagle Bus was asked if it might be interested in taking over the route. It appeared that the route was one a big business could not make a go of. As soon as Eagle Bus took over the route, the company’s debt ballooned to 2 million yen.
After much brain-wracking, Mr. Tanijima realized that the reason he could not come up with an effective solution to the money drain was because he did not know the realities of the bus route business: after a bus leaves the terminal how does it operate?
So Mr. Tanijima set about identifying all the sources of operating losses and, together with the University of Saitama, constructed a bus-operation management system. Every bus was fitted with GPS and a sensor to monitor passenger on/off patterns in order to generate data on where a bus operated, and with how many passengers. The data revealed valuable information, such as segments where the bus was empty and which bus stops were often not used.
Based on the data collected, Eagle Bus revised its schedules and routes, mitigating route segments that experienced chronic delays. In addition, demographic data were entered into a simulation program to assess the impact on operating costs of relocating bus stops and routes. The simulation yielded suggestions such as using smaller buses according to passenger numbers; this change resulted in cutting fuel costs in half last October (2009). In addition, a flexible number of buses were assigned to route segments to meet increased or variable demand. Eagle Bus expects to become profitable in 2010.
An important contribution of Eagle Bus is that it now offers more efficient and popular public transportation with neighboring municipalities, evidenced by a 60% increase of domestic and even international tourism.
Location: Saitama-ken, Kawagoe-shi, approximately 20 miles NW of Tokyo population 340,000
Company: Eagle Bus Group
President: Ken Tanijima
Eagle Bus
Category: Global insights
Filed under: Transportation, Japan
Nikkei Business, May 10, 2010 (page 24)
Lesson: Data Reveals Waste, Ways to Turn Around a Decline
A bit of background: Mr. Tanijima worked at a small local travel agent owned by his father. He wanted to enter into the lucrative bus transportation business, but that seemed to be an impossible dream because the major bus-rail transportation conglomerates dominated all the bus routes. His first bus business was a school bus for handicapped students in 1980, and then expanded into the tour bus business in 1990. However there were more than 280 tour bus companies in the same prefecture, spurring fierce price wars.
With a slumping economy, a major bus route became available in 2006. Seibu Bus Co. withdrew its operations and Eagle Bus was asked if it might be interested in taking over the route. It appeared that the route was one a big business could not make a go of. As soon as Eagle Bus took over the route, the company’s debt ballooned to 2 million yen.
After much brain-wracking, Mr. Tanijima realized that the reason he could not come up with an effective solution to the money drain was because he did not know the realities of the bus route business: after a bus leaves the terminal how does it operate?
So Mr. Tanijima set about identifying all the sources of operating losses and, together with the University of Saitama, constructed a bus-operation management system. Every bus was fitted with GPS and a sensor to monitor passenger on/off patterns in order to generate data on where a bus operated, and with how many passengers. The data revealed valuable information, such as segments where the bus was empty and which bus stops were often not used.
Based on the data collected, Eagle Bus revised its schedules and routes, mitigating route segments that experienced chronic delays. In addition, demographic data were entered into a simulation program to assess the impact on operating costs of relocating bus stops and routes. The simulation yielded suggestions such as using smaller buses according to passenger numbers; this change resulted in cutting fuel costs in half last October (2009). In addition, a flexible number of buses were assigned to route segments to meet increased or variable demand. Eagle Bus expects to become profitable in 2010.
An important contribution of Eagle Bus is that it now offers more efficient and popular public transportation with neighboring municipalities, evidenced by a 60% increase of domestic and even international tourism.
Location: Saitama-ken, Kawagoe-shi, approximately 20 miles NW of Tokyo population 340,000
Company: Eagle Bus Group
President: Ken Tanijima
Eagle Bus
Category: Global insights
Filed under: Transportation, Japan