Japan has one of the world’s largest networks of remote island liner services. As with other remote island lifeline services, operators face similar problems such as traffic imbalances, seasonality, and inadequate fare levels. Many of these liner operations, and hence the communities they serve, depend on state subsidy for survival. This paper explains the subsidy system for remote island liner services in Japan. It provides analysis of some of the industry’s difficulties, in the face of diminishing traffic flows, and national budget constraints. Several proposals are offered in an effort to help modernise what is a particularly fragmented shipping system, and to aid decision makers in their quest to ensure long-term stability of the industry.