Taxpayers
can only absorb so much when it comes to subsidizing Via Rail, Peter Hadekel writes.
Tory MPs are said to be lobbying against the service cuts that have taken effect at Montreal-based Via Rail Canada over the past several months.
But the federally owned passenger rail service seems more determined than ever to focus on its business in the Montreal-Toronto-Ottawa triangle, the only part of its operation that has any hope of breaking even.
Now, it’s true that when you look around the world, the passenger rail business is supported by state subsidies, and Via Rail is no different in that regard.
You can’t really argue that the federal government has disengaged from Via when you consider that close to $1 billion has been invested in the past five years on refurbishment of locomotives and cars, the renewal of stations, the addition of siding tracks and development of an information technology platform that includes extensive Wi-Fi service for customers.
Still, there are limits to what taxpayers can reasonably be expected to absorb.
As president Marc Laliberté pointed out at a rail industry conference in October, Via serves three distinct markets.
Service to remote communities — such as Churchill, Man., White River, Ont., and Senneterre in Quebec — is heavily subsidized and loses $45 million a year. Cross-country service on he Canadian, from Toronto to Vancouver, and The Ocean, from Montreal to Halifax, doesn’t get much ridership — just 243,000 passengers last year. Combined, the two routes lost $81 million.
Finally, there’s the main piece of business, the corridor between Quebec City and Windsor that accounts for more than 90 per cent of passenger traffic. Even here, with 3.8 million passengers last year, the loss was $135 million.
When you look at the subsidy required to carry one passenger 100 miles, you get a better idea of the problem Ottawa faces.
On the remote routes it’s $42 per 100 miles, on the longdistance routes it’s $42 and in the corridor it’s $21.
Laliberté has argued that Via is getting closer to breakeven on key routes. He says that “any transformation strategy must aim at realizing the full revenue potential of routes” and that the focus must be on routes where “market demand can sustain the cost of operation.”
That doesn’t bode well for several parts of the service. Via has cut frequency by half between Montreal and Halifax and by one-third between Toronto and Vancouver.
Even within the OntarioQuebec corridor, stops have been reduced at several cities along the way.
It’s a rude awakening for rail advocates who’ve hoped for a while that passenger rail service in Canada will take off as a “green” alternative.
As airport delays and costs mount, and as concern grows over highway congestion and greenhouse gas pollution, rail does seem like the smart choice.
But it’s run into a fiscal wall in Ottawa. The federal government is focused on getting its deficit to zero and subsidized rail service looks like a luxury.
The dream of high-speed rail has now been exposed as impossibly costly, given the relatively small size of the Canadian market.
Instead, Via wants to add some frequencies and options in the corridor; this year it’s added four additional trains between Toronto and Ottawa and plans to introduce direct service between Ottawa and Quebec City.
For decades, Via has gone head to head against intercity bus lines, prompting frequent charges that it’s engaging in unfair, subsidized competition with the private sector.
Now, it’s trying to work with, rather than against, bus companies by promoting what it calls “inter-modality” — co-ordinating schedules and services so that passengers can connect more easily.
That kind of approach is extending to airlines, with recent service agreements signed with Air Transat and other carriers.
The bigger question is not how much more the government will invest in Via, it’s how much less.
The railway is looking for private-sector partners, whether it’s to run a station, to supply connecting buses or air service, or even to invest in new infrastructure.
Laliberté holds out the hope that big institutional investors like pension finds, which increasingly favour infrastructure investments, might consider funding dedicated new track for Via in the corridor.