Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • AUD/USD

    0.6515
    -0.0003 (-0.05%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • Bitcoin AUD

    108,143.33
    +1,184.23 (+1.11%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6042
    +0.0008 (+0.13%)
     
  • AUD/NZD

    1.0904
    +0.0001 (+0.01%)
     
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,348.93
    +180.86 (+0.45%)
     

All aboard? As VIA Rail turns 40, questions about its future remain

VIA Rail
[VIA Rail turns 40/Fred Lum/The Globe and Mail]

This month marks 40 years since the federal government under former Prime Minister Pierre Elliott Trudeau spun passenger rail services out from under the Canadian National and Canadian Pacific Railways to the newly minted banner VIA Rail.

At least partially inspired by the 1971 creation of Amtrak to the south, the Liberal government had promised to create its own iteration during the 1974 election campaign. Federal Transport Minister Otto Lang announced the crown corporation in February 1977 and by April 1978, VIA Rail took over the Quebec City to Windsor corridor that to this day still represents the highest ridership of its train lines.

In 2015, the most recent annual report for the crown corporation, inter-city travel on that corridor accounted for 94 per cent of VIA’s trips and 77 per cent of passenger revenue. Network-wide, there were 3.8 million passenger trips on one of the 444 operational trains. Revenue for the year hit $297.8 million, the highest in at least five years, while operating expenses swelled to $577.8 million requiring a $377.9 million dollar injection of government funding. Between 2011 and 2015, government funding slipped from $485.7 million down to $377.9 million.

ADVERTISEMENT

If you ask VIA Rail’s president and chief executive officer Yves Desjardins-Siciliano, things are looking up. In the company’s third quarter 2016 report, VIA hit record highs for ridership in July and August and growing 5.5 per cent across the network overall compared to Q3 2015. Revenues increased 10.3 per cent over the same period.

“Thanks to VIA Rail’s continued growth and success, we are now in a position to optimistically plan for the long term,” said Desjardins-Siciliano in the financial release. “VIA Rail is proposing two projects that have the potential to completely transform our company and our passengers’ rail experience: the renewal of the Québec City – Windsor corridor fleet, and the creation of a dedicated passenger rail corridor.”

But the rose-lensed outlook is more complicated than VIA, which failed to respond to requests for comments before press-time, might have you believe.

The plan to bring new “high-frequency,” electric-hybrid trains and tracks along the Windsor-Quebec City corridor, focusing first on the Montreal-Ottawa-Toronto route would cost $4 billion, boosting the six daily departures to 18 over the course of the next couple years.

But some have argued ridership, though seeing modest spikes, isn’t seeing the surge in interest this sort of project might warrant for the price tag. VIA has been operating around 55 per cent average passenger load factors over the last half decade. On-time performance has also been crippling, deteriorating from 85 per cent in 2010 to a staggering 33 per cent in 2014.

“I admire the way management has run VIA Rail, they get an ‘A’ for effort,” says Nick Mulder, a former federal deputy minister of transport and a senior associate with Global Public Affairs. “The only problem is they get a ‘D’ for success because over the last four or five years, the number of passengers they have handled hasn’t really gone up at all, it’s been flat despite the fact they’ve improved a lot of services.”

Building off his father’s legacy, current Prime Minister Justin Trudeau is looking to sort out what’s going on. The 2016 Liberal government budget set aside $3.3 million over three years to study the viability of VIA’s dedicated line proposal. But Trudeau said nothing about paying for the line.

Mulder admits he “feels Mr. Desjardins-Siciliano’s pain.”

“The trouble is that the stuff he’d like to do, the government hasn’t approved it – and he needs a lot of money in order to make it happen,” he says. “The private sector will fund it but it wants a return and if the return isn’t there, the government has to subsidize it – so he’s kind of stuck between a rock and a hard place now… he’s got lots of ideas but no authority to go ahead.”

That’s why Mulder, an outspoken proponent for privatizing the crown corporation, has advocated overhauling the 40-year-old service.

“You relieve them of all the remote routes… you either scrap half of them or get somebody else to run them because they really are money losers,” he says. “And then transcontinental you turn them into tourist trains – anybody nowadays that can afford four or five days to go from Toronto to Vancouver certainly isn’t using it for transportation purposes, they’re using it because they want to have a scenic tour of Canada.”

It’s a slide from the commuter heydays of the seventies when Trudeau Sr. spun the services out but Mulder says he’s convinced it’s the ones who would remember those days – the Baby Boomers – that will be most inclined to use the service. Of course this ignores the millennials, the hip, rail riders of the future that feature prominently in VIA’s imagery and new marketing campaign “Why Don’t You Take the Train?” which aims to make consumers question their habits.

The problem is, VIA isn’t just competing with the bus lines and municipal transit systems of yesteryear, it’s competing with an onslaught of technology-supported ride-sharing and car-sharing and low-cost airlines.

And like the industries impacted by the sweep of technology, the pace of change may be hard to keep up with. Especially if the past couple of years are any indicator says Mulder.

“No matter how hard they try, they don’t have much of an impact on getting people out of their cars and out of airplanes and so on,” he says. But for now, even on the most-used corridor, Mulder says he’s personally come across staggeringly low load factors. “It’s still a money loser.”