Via Rail gauges interest in passenger track
Freight congestion threatens to deepen rail carrier’s losses
For Via Rail Canada Inc. chief executive Yves Desjardins-Siciliano, the biggest challenge facing the country ’s passenger rail service can be explained with a Grade 5 math question.
Two trains — one passenger, one freight — are moving in the same direction on the same track; the passenger train is cruising at 110 miles an hour, the freight train plodding along at 40 miles an hour.
“If they’re 100 miles apart, when will they catch up?” Desjardins-Siciliano, said in an interview at Bloomberg ’s Ottawa office last week. “That’s just a grade- five question.”
Just under 86 minutes is the correct answer on a math quiz. For Desjardins- Siciliano, the answer is too soon and too often.
Congestion on the country’s rail network spurred partly by rising crude oil shipments is making it tougher for Via Rail to get passengers to their destinations on time. That’s eroding the appeal of train travel and threatens to deepen operating losses for the carrier’s only shareholder — the federal government.
Desjardins- Siciliano, 58, who took over as CEO in May after more than four years as chief legal officer, is holding informal discussions with investors and bankers to gauge interest in a $ 3 billion dedicated passenger track. Having its own line would allow Via Rail to ply the Montreal- Toronto- Ottawa corridor without having to dodge Canadian National Railway Co.’ s freight cars. Montreal- based Canadian National, whose carload shipments jumped 8.3 per cent last year, owns the tracks, and calls the shots for Via Rail.
It’s a bit like renting a house when the owner still lives there, Desjardins- Siciliano said.
“How often do you think you are going to get to use the bathroom?” he asked, adding he believes dedicated tracks on the main corridor will increase traffic threefold.
Via Rail traffic fell from 4.2 million passengers in 2010 to 3.8 million in 2014. The company’s on- time performance in the first nine- months of 2014 fell to 76 per cent from 84 per cent a year earlier, according to a quarterly report. Losses have been mounting too, rising to $ 307.6 million in 2013, up 17 per cent from 2010.
Created in 1977, Via Rail operates from British Columbia to Nova Scotia. While it serves remote communities such as Churchill, Manitoba, which bills itself as the “polar bear capital of the world,” the bulk of its ridership moves between Windsor, Ontario and Quebec City, the country’s main commercial corridor that includes Toronto and Montreal.
Canadian National “has a close working relationship with the passenger carrier and considers it a valuable customer,” Mark Hallman, a spokesman, said in an email. The railway “continues to invest in additional rail capacity where necessary to accommodate grow- ing freight traffic and to promote greater network fluidity and efficiency for all traffic.”
If he can generate enough investor interest in the plan, Montreal-native Desjardins- Siciliano plans to approach the federal government by year end to authorize a call for tenders. Via Rail isn’t mandated to borrow money on its own.
The rail project would probably be run as a so- called publicprivate partnership, similar to the Canada Line train that connects Vancouver to its international airport. That link was designed, built and operated by a consortium of SNC- Lavalin Group Inc., the British Columbia Investment Management Corporation and the Caisse de depot et placement du Quebec as part of a 35- year concession.
Under Desjardins- Siciliano’s plan, private investors would own the track and signalling stations. Via Rail would continue to run as a state- owned railway, and pay the investors to use the tracks. The government would own the land.