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Starter: Kitase Line Railway: a rural line's loss nearly doubled
You run the case. Read the prompt, answer questions from the notes below, and share data only when the candidate asks for it or gets stuck. Score at the end.
Case timer
00:00
1. Read the prompt aloud
Read it slowly, then pause. Let the candidate ask questions before they structure.
The Kitase Line is a 40-kilometer rural railway in Japan. Its yearly loss has nearly doubled in five years, and the prefecture that covers the loss asks what it should do. The exhibit shows the key figures.
Format note: Difficulty: Starter. Format: interviewer-led, with an exhibit. Industry: Public transport. Region: Japan. Interview length: about 25 minutes. The company is fictional and all figures are illustrative.
2. Answers to clarifying questions
Give these answers only if the candidate asks. If they ask something not listed, give a sensible answer or say it does not matter here.
If asked: Who owns the line?
Answer: A company owned jointly by the prefecture, the towns along the line, and local businesses. The prefecture covers the loss each year.
If asked: Why are passengers falling?
Answer: The towns are losing population, and most remaining riders are high-school students and older people.
If asked: Can costs be cut on the railway itself?
Answer: Only a little. Most of the JPY 1 billion a year is track, signals, and staff that are needed whatever the number of passengers.
3. The hypothesis a strong candidate states
Listen for an early, testable guess like this one. It does not need to match word for word.
Costs are mostly fixed and passengers are falling, so my hypothesis is that fare rises cannot close the gap and the prefecture will need to change how the service is run.
4. A model structure
Compare the candidate's structure with this one. A different split can be just as good if it is clean and fits the problem.
- Loss = passengers x fare - operating cost
- Key: Passengers: population and who rides
- Fare
- Operating cost, mostly fixed
- Other ways to run the service
Exhibit 1
Reveal to candidate: when they ask for this data, say "Open Exhibit 1" (they press "Show exhibit 1" on their screen).
| Measure | Five years ago | This year |
|---|---|---|
| Passengers a year (millions) | 2 | 1.6 |
| Average fare per trip (JPY) | 400 | 400 |
| Operating cost (JPY billion a year) | 1 | 1 |
So-what
Costs stayed the same while passengers fell by a fifth, so every lost passenger adds to the loss.
5. The working, step by step
Each step shows how a strong candidate works it out. Share a new fact from it only when the candidate asks or is stuck, and let them do the math: the result in the dark box is what they should reach.
Step 1: Revenue five years ago
What a strong candidate does: 2.0 million passengers at JPY 400.
Revenue five years ago (JPY): 2,000,000 × 400 = 800,000,000
Step 2: Revenue this year
What a strong candidate does: 1.6 million passengers at JPY 400, 20 percent fewer.
Revenue this year (JPY): 1,600,000 × 400 = 640,000,000
Step 3: Loss this year
What a strong candidate does: Revenue minus JPY 1 billion of operating cost. Five years ago the loss was JPY 200 million.
Result this year (JPY): 1,600,000 × 400 - 1,000,000,000 = -360,000,000
Step 4: Cost per passenger
What a strong candidate does: Each trip now costs this much to provide, against a JPY 400 fare.
Cost per passenger (JPY): 1,000,000,000 ÷ 1,600,000 = 625
Step 5: Raise fares 10 percent
What a strong candidate does: Interviewer: "The line expects 3 percent fewer passengers after a 10 percent fare rise." Revenue becomes:
Revenue after the fare rise (JPY): 1,600,000 × (1 - 0.03) × 400 × 1.1 = 682,880,000
Step 6: Curveball: switch to buses
What a strong candidate does: Interviewer: "The prefecture could turn the track bed into a road only for buses, called bus rapid transit, a model some regional lines in Japan have used. It would cost JPY 550 million a year to run, and passengers would fall a further 10 percent."
Result with bus rapid transit (JPY): 1,600,000 × 0.9 × 400 - 550,000,000 = 26,000,000
Step 7: Improvement against the railway
What a strong candidate does: The bus result minus the railway result.
Yearly improvement (JPY): (1,600,000 × 0.9 × 400 - 550,000,000) - (1,600,000 × 400 - 1,000,000,000) = 386,000,000
Step 8: Payback of the conversion
What a strong candidate does: Interviewer: "Converting the track bed would cost about JPY 2 billion once." Payback on the yearly improvement:
Payback (years): 2,000,000,000 ÷ ((1,600,000 × 0.9 × 400 - 550,000,000) - (1,600,000 × 400 - 1,000,000,000)) = 5.18
The recommendation to listen for
At the end, say: "The CEO walks in. What is your recommendation?"
The prefecture should study turning the line into bus rapid transit, rather than rely on fare rises. First, the loss grew from JPY 200 million to JPY 360 million a year because passengers fell 20 percent while costs stayed fixed; each trip now costs JPY 625 to provide against a JPY 400 fare. Second, a 10 percent fare rise adds only about JPY 43 million of revenue and hits students and older riders hardest. Third, bus rapid transit would turn the loss into a small surplus of about JPY 26 million, an improvement of about JPY 386 million a year, and would repay a JPY 2 billion conversion in about 5 years, even with 10 percent fewer riders. Hold public meetings early, because many residents see the railway as part of their town, and set bus times around school hours.
Risks a strong answer names: Residents may oppose losing the railway; Passengers could fall by more than 10 percent after the switch.
Next steps: Count passengers by station and hour to design the bus timetable; Ask national and prefectural offices which grants could fund the conversion.
Strong versus weak
A strong answer
Showed that costs are fixed, compared the fare rise with a change in the service model, and thought about residents and students.
A weak answer
Recommended a large fare rise to close the gap, without asking who the riders are or how many would stop riding.
Score the candidate
Score each criterion from 1 to 5. A 2 or a 4 sits between the descriptions.
Total
0 out of 25
Score all five criteria to see the band and the feedback template.