The case for Via Rail

Windsor Star photo. 
Hangout today at 3 pm ET on Via Rail.

Note that you will need a Google+ identity. Also note that you will need a fairly new computer with one of the following operating systems -  Windows XP+, Mac OS X 10.5+, or Linux.

The hangout va deroule, dans la plupart, en anglais.

1) Strategic considerations
2) Basic message
3) Actions

Hangout location:

On Jan. 20, the day Bloomberg News reported on the possibility of selling Via Rail, Transportation Action members reported:

Report 1

Rocky Mountaineer has been working Parliament Hill like mad.  There is a concerted effort on their part to sway Tory MPs into taking VIA out of western Canada.  They've even gone so far as to suggest they could run a tourist train as a replacement for the Ocean Limited.  It might be an idea to file under Freedom of Information for details of their lobbying efforts. Rocky Mountaineer is using ex-MP Jim Gouk as their stalking horse up on the Hill.  He's had quite a bit of success opening Tory doors for them.  Meanwhile, VIA has done itself no favours in Ottawa by infuriating a number of vocal citizens with dumbass moves such as not holding trains for late connections and cutting service to corridor points such as Cornwall and Brockville.  I'm sorry to say that VIA doesn't have a reputation in Ottawa that's going to make many members of this government fight for its maintenance.

Report 2

Just to be sure I called a source in Ottawa and it turns out that a combination of government programme reviews, budget cutting etc. and intense lobbying (by a well-known competitor of VIA in the Rockies who wants to eliminate VIA and take over the entire BC - Alberta rail tourist business) is taking a toll, so  it may be red alert time once again.

Arguments in support of Via Rail

On Jan. 21 the Windsor Star reported a Transport Action spokesperson said "Roads receive an annual subsidy of $40 billion which excludes all exported costs like policing, hospital care and environmental degradation."

Millions prefer Via Rail to bus

On Jan 24 the Toronto Star published a letter which said: Thank you for your interesting article on Ottawa considering putting Via Rail up for sale instead of providing the $260 million in funding required to cover its operating losses. According to page A95 of a 2008 Transport Canada report, the government gives over $4 billion yearly to the bus industry.

"And a report submitted by Ontario Motor Coach Association, the bus lobby group, to the Ontario Ministry of Finance, claimed on page 35 that because of VIA Rail funding they have had to compete in a market managed by government ( …  another Transport Canada report that indicates 29 per cent of people in the Toronto-Montreal corridor chose to travel by train compared with compared with only 8 per cent for the bus," Toronto Star letter writer Pierre Sultano noted.

Transport Action Vice President Justin Bur writes:

Going through VIA annual reports and the corporate plan gives a confused picture.

Government operating funding, after having dipped as low as $154 M in 2002, stabilized at $169 M in 2005 and 2006. Each year from 2007 onward had higher operating funding, and each year was higher than any year since 1999 (earlier figures would require older reports that are not on VIA's web site). It reached $261 M in 2010.

Total revenue (passenger and other) apart from operating funding fluctuates between $250 and $300 M. In 2010, it was in the middle, at $274 M.

According to VIA's breakdown of operating funding by "service group" (Corridor, Canadian, Ocean, Mandatory services), almost half of the funding is for the Corridor; although the mandatory services have a much higher funding rate per passenger mile, they account for only 17% of total operating funding.

System-wide on-time performance has been below 80% in 2003, 2004, 2007, and 2008. The first downturn led to the schedule padding of 2005, which hid the problem for a couple of years. The funneling of large amounts of capital investment towards CN seems to have got it under control again in recent years. I would guess that this is a serious problem for maintaining and increasing ridership – except that 2008 was a post-1990 ridership peak, despite mediocre on-time performance in the previous year. Although ridership remains quite high (below the 2008 peak but above the psychological threshold of 4 M passengers, reached in 2005 and maintained since), passenger miles are at low ebb: people are taking shorter trips on VIA.

Much ado is made of the need to make extra contributions to the pension plan since the 2008 financial crisis. This extra amount, counted as part of operating expenses, has thus far been more than made up for by the extra operating funding. However, the additional annual contribution has just been revised sharply upward.

The interest of Transport Canada in changing something is therefore somewhat understandable, though it remains unproductive and short-sighted.

Transport Action Vice President Justin Bur makes the following argument:

Last week, the issue of federal government funding of VIA Rail was raised by New York-based Bloomberg News, later echoed by Canadian newspapers. Transport Canada bureaucrats were once again exploring options to slash service or sell off routes in an attempt to reduce the financial burden they bear by supporting VIA. Little consideration if any was given to the consequences of such actions, though a spokesman for Transport Minister Denis Lebel was quick to downplay the bureaucratic musings as "suggestions" that were not going to be adopted "at this time".

Passenger rail in North America once had a long tradition of being profitable, as well as being run by corporations so powerful that they needed to be kept in check. That all changed dramatically when the U.S. government poured vast resources into the building of the Interstate highway system, starting in 1956, and Canada and the provinces followed quickly behind. Public funding also went into building a modern airport and air traffic control system. Virtually nothing went to passenger rail, and the system rapidly collapsed – leaving us with Amtrak and VIA Rail running the remnants of what had been a world-class rail system.

VIA's network was sharply reduced in 1981 and 1990. Then, in 1995 CN was privatized and stopped maintaining rail lines that were of interest only for passenger service. In parts of the country such as the Gaspé peninsula, New Brunswick, northern Manitoba, and Vancouver Island, VIA service has been curtailed, interrupted, and slowed down due to poor track conditions. Elsewhere, such as between Toronto and Montreal or on the western transcontinental, reliabullity has suffered as passenger train requirements were not taken into account by CN planning. The federal government's recent $923 million capital investment has finally begun to correct many of these problems, particularly on the Toronto-Ottawa-Montreal route, and allowed VIA to renew locomotives and rebuild passenger cars.

In the meantime, provincial highway construction and maintenance budgets (aided by federal infrastructure grants) continue at healthy levels. These projects do not generate operating profits, and aren't expected to. Increased air travel is leading to congestion in some airports, even to suggestions that a new Pickering airport should be built to increase capacity in Toronto. Public investment in transportation infrastructure is necessary to allow the country to function: but why should it be unquestioned for highways and considered reasonable for airports, while being exceptional and minimal when it comes to passenger rail?

The world outside North America has demonstrated the benefits of continued investment in rail infrastructure and rapid, frequent passenger rail service. No mode is so effective at offering travel for large numbers of people in comfort and safety, with speed and reliability, using minimal energy resources and with the smallest environmental consequences. But none of that is possible without track capacity and appropriate signalling and maintenance for fast trains. Most industrialized countries devote substantial resources both to both their highway and railway networks for this reason.

So what can be gained by privatizing or further cutting back VIA Rail? Without a subsidy, remote services would of course be terminated immediately, leaving many small towns poorly reachable. Some see opportunities in privately-run tourist trains. The Toronto-Vancouver Canadian is world-renowned as one of the best long-distance rail journeys anywhere, on which VIA's service is top-notch (repeatedly winning travel industry awards), while at the same time remaining an affordable option for Canadians crossing the country. The southern transcontinental, through Calgary and Banff, was privatized in 1990. Since then, the route has been operated as a luxury cruise train for tourists. It provides no transportation service to communities along the line. Should the communities along VIA's Canadian route – or in Atlantic Canada – also have their transportation service withdrawn?

Between major cities in dense corridors (like those in southern Ontario and Québec), the demonstration has been made in many countries in Western Europe that a reliable, fast train service can be operated profitably, often without public operating subsidies, and that airlines can take advantage of these trains as codeshare routes to improve their service and reduce wasteful short-haul flights. A 2011 government study of the Ontario-Québec corridors, despite making unlikely and unfavorable assumptions (no air-rail interconnection, no feeder rail network), concluded that investment in high-speed electric trains would offer net positive economic impact between Toronto and Montreal, and borderline impact elsewhere in the Ontario-Québec corridors.

If the federal government were to take a leadership role in developing passenger rail infrastructure, opportunities for private operators would arise, just as they have with all modes that governments have developed over the past two centuries. That is the scenario Transport Canada should be studying, not unproductive and arbitrary cutbacks.

Via Rail's service is too valuable to consider cutting

"Why would the federal government consider cutting back on something as acclaimed as Via Rail, particularly the Transcontinental, which remains one of our major tourist attractions? … For many international tourists it is a major attraction and an introduction to our country.  … In addition, trains are far more acceptable environmentally than planes, which offer a quick transfer from here to there but consume unacceptably vast quantities of fuel,"  Caroline Mervyn wrote to the editor of the Vancouver Sun on Jan. 25.

Transport Action's Paul-André Larose writes: 

"Fire Sale" indeed when it comes to Privatization which by the way is effectively a way to "Privatize the Profits and Socialize the Liabilities"

Case in point: the Privatization of CN.  It was done in the mid-1990's at $27 per share which, after multiple split since the original issuance, is equivalent to $4.50 per share NOW.

Given that a share of CN currently trades at some $76, this corresponds to an appreciation of some 16.9 times over the original investment and a paper profit of $71.50 for each share for which a private investor (generally and mostly foreign) paid the equivalent of $4.50 for.

Now I ask you: is it not clear that Canadians are being betrayed by politicians who practically gave away this National Asset?

It light of this, it should be clear why I now refer to CN, not as Canadian National, but as Canadian Nonsense.

In fact, the Canadian component of CN is now largely in its name.