[bhc]

Rail companies in Japan turn profit due to these factors: 1. Transportation by road in large Japanese cities is a complete nightmare. People really can't take the bus or drive if they want to arrive on time. 2. JR companies have been privatized in the 80s. They are free to set fares without political interference. 3. JR companies were allowed to shut down unprofitable lines to remote regions or demand the local governments subsidize them if they want to keep the lines running 4. Japanese rail companies own the land the stations sit on and were allowed to develop the stations into massive retail and office properties from which they earn rental income. Some rail companies even have department store subsidiaries.

Even then, JR Hokkaido, which serves the relatively sparsely populated Hokkaido region, has been unprofitable for a long time.