Making tracks
Via seeks investors to build dedicated rail lines,
Via Rail is looking at raising $3 billion in private investment to buy and build its own dedicated passenger tracks from Toronto to Ottawa and Montreal, a move that could speed up service dramatically.
“We think there is enough money in the Canadian market to fund this type of investment,” said Yves Desjardins-Siciliano, Via Rail’s president and chief executive officer, interviewed Monday at Union Station. He pointed to pension plans or insurance funds as likely investors for the proposal.
He would go out to the global market to find interested investors — possibly as a public-private partnership, promising “double-digit” returns. Or it could be bonds, or even green bonds.
“It’s an excellent time to raise money for infrastructure,” Desjardins-Siciliano said, pointing to low interest rates.
Institutional investors have slowly diversified from equity investments and fixed income into long-term infrastructure, such as toll highways, airports and even rail infrastructure.
He argues that Canada and its passenger rail tracks would be a good investment, given that those who invest in infrastructure for 30- to 40-year terms want to ensure their money is in a good economy with a stable political situation.
Desjardins-Siciliano cautioned that Via Rail is still working on its business case strategy and will take its proposal to its main shareholder, the federal government, later this year.
If the plan is approved, Via Rail could be raising money in Canada and around the world by this time next year, with dedicated passenger tracks in place in four to seven years.
Even though Via Rail receives an operating subsidy of more than $300 million a year, it won’t ask the federal government for more money.
Currently, Via Rail uses tracks owned mostly by CN Rail, CP Rail and Metrolinx, which operates GO commuter trains in the GTA.
But Via Rail’s trains can never get up to full speed because of congestion on the rails, especially as freight trains get longer and carry heavier loads.
“We are always coming up behind a freight train,” he said, often forcing passenger trains to slow down or wait in bypass areas.
As a result, the railway’s on-time performance has been steadily falling.
It was in the low 80-per-cent range since 2010, but fell to 77 per cent in 2014, and dipped to 62 per cent in the first quarter this year, blamed in part on the winter’s extreme cold.
Freight trains run at speeds ranging from 50 to 80 km/h, while Via’s trains could go as fast as 175 km/h, though its average speed is only 116 to 119 km/h.
With dedicated passenger rail, the trip between Toronto and Ottawa could take between 21⁄ hours and 2 hours and 45
2 minutes, shaving as much as 75 minutes off the current run — and easily beating the time it would take in a car.
The trip between Toronto and Montreal could run between 31⁄ hours and 3
2 hours and 45 minutes, an hour improvement from today.
Desjardins-Siciliano says fares wouldn’t have to increase at all — because increased demand and use would bring in the profits, noting Via’s trains are operating at only 60-per-cent full.
He estimates with dedicated passenger tracks, annual passengers in the Toronto-Ottawa-Montreal corridor could grow from current 2.1 million to 7.3 million. “That’s where the profitability comes in,” he said, adding it could eventually trim the federal government’s annual subsidy.
The key will be to offer lots of trains during peak times, and enough frequency throughout the day, and add extra trains during events such as the Pan Am Games, hockey playoffs or the Toronto International Film Festival.
Desjardins-Siciliano says Via’s main competition is the car — not airlines.
“The car is always available,” he said. “But you take your chances (of traffic jams) when you’re on the highway.”
This is to the train’s advantage, if it runs frequently enough and arrives as scheduled. Demographics will also work to Via’s advantage, with an aging population who may prefer the train to driving, as well as millennials who are environmentally conscious, he added.
Even though people have bandied about the idea of bringing high-speed rail, or bullet train with its estimated $10-billion price tag, Desjardins-Siciliano said the key should be just bringing dedicated passenger rail here.
He added if someone is travelling between100 to 250 kilometres, in that short distance, speed is not an advantage. “You will miss the points in between,” he said.
“We’re saying let’s start by building conventional speed,” he said, adding future generations can decide later whether to upgrade to high-speed rail.
He conceded there would be challenges to acquire and build the dedicated passenger rail, noting it could be unused existing right-of-ways or buying more land, mostly from farmers, as Via has done in the past.
“It’s doable. It’s not putting a man on the moon,” he said. “But if it was easy, it would have been done.”