The Journal The Authority on Global Business in Japan

Ministry of Economy, Trade and Industry
¥10 Billion to Be Allocated for Testing Commercial Drone Systems

The government’s unwavering enthusiasm for drones keeps soaring to new heights. The Ministry of Economy, Trade and Industry (METI) and the Ministry of Internal Affairs and Communications are working on navigation control systems for drones that will be implemented as early as 2018. The objective of the systems is to avoid in-air collisions as part of the comprehensive environment that will enable the use of drones for home deliveries and other commercial purposes. The government is expected to submit a bill to the Diet sometime next year that would amend the Civil Aeronautics Law to recognize commercial utilization of drones.

To test the navigation control system, METI alone is expected to allocate a budget of about ¥8 billion in the next fiscal year. “Including funds from the Ministry of Internal Affairs and Communications, and of Land, Infrastructure, Transport and Tourism, it’s possible the total budget will exceed ¥10 billion,” a METI bureaucrat was quoted as saying.

The testing will be conducted on an exceptionally large scale. Japan’s space agency JAXA, venture companies, universities, and other specialized organizations will be involved. Most of the testing is expected to be conducted in the National Strategic Special Zone in Chiba City, where approval has already been granted for home deliveries by drone. The possibility of tying operations to automation through artificial intelligence (AI) is also being explored. The aim is to initiate operation of a navigation control system in unpopulated areas by 2018, with adoption in populated areas beginning around 2020.

To promote international standardization, Japan has set its sights on achieving leadership in this field. However, Japan’s environmental infrastructure and technical development for drones lags behind that of Europe and the United States. In the US, for example, regulations for operation of commercial drones were announced on June 21, and the National Aeronautics and Space Administration (NASA) already began testing a drone navigation system in 2015. Likewise, Germany’s Federal Ministry of Transport and Digital Infrastructure has established regulations for commercial drone use in partially restricted areas.

In consideration of this, Japan’s drone testing may also consider tie-ups with NASA and other foreign organizations. “To close the gap with Europe and the US, we can’t allow ourselves to be concerned over appearances,” a high-ranking government source was said to have remarked.


Ministry of Land, Infrastructure, Transport and Tourism
Expectations That Revised Taxi Fares Will Stimulate Ailing Market

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) has begun reviewing a proposed reduction for initial taxi charges to ¥400, as opposed to the current fare of ¥730 charged for the first 2 kilometers in the greater Tokyo area. Approval may be granted this year. It is anticipated that the new fares will attract more passengers, such as seniors and foreign tourists, to travel for comparatively short distances.

The areas in which the new fare structure will come under review include the 23 wards of Tokyo and neighboring municipalities of Musashino and Mitaka. According to the regulations, new fares will go into effect if, over three months, fleets whose vehicles total 70 percent or more of the total number operating in an applicable area apply for and receive approval.

On April 5, Nihon Kotsu Co. Ltd, a major fleet operator in business since 1928, began charging fares of ¥410 for the first 1.059 kilometers. Beyond that distance, charges go up ¥80 for each additional 237 meters.

While it is possible that the reduction of initial fares may result in a decline in taxi revenues, the prevailing view is that the industry might not be able to overcome its current difficulties without some sort of sacrifice. Since the 2008 Lehman Shock, the industry has suffered from slack demand. And while other transportation modes, such as air and rail travel, have achieved recovery, demand for taxis has continued to decline. According to data from MLIT, the total number of passengers carried nationwide in 2014 was nearly 30 percent below the 2005 figure.

One source in the industry conceded: “The initial fare of ¥730 seems somewhat expensive, and may have also dampened demand.” With the spread of ride-sharing systems (transportation services using private vehicles) that compete with domestic demand, it will be necessary to improve services relative to pricing.

Keizaikai magazine
Japan’s drone testing may also consider tie-ups with NASA and other foreign organizations.