High Speed Rail: London - Kitchener-Waterloo - Pearson Airport - Toronto

[Euphoria]

Anyone who has worked in the public sector knows there is waste worth cutting. There are dubious pet projects that an across the board, say, 10 percent budget cut would quickly eliminate. I agree that tax revenue is not the only or best way of building the infrastructure we need. I'd love to, for once, see a hands-off approach by government where private companies were given carte blanche to build and charge whatever they want on a train or subway line. Let the private sector find the efficiencies needed to make a line profitable. Let companies set the fares based on what markets will bear. I sincerely believe that if we did this with new highways and subways, we'd have a better network. This is how the New York subway was built. Government can't help but step in, overregulate, and pay the employment groups they're beholden to through collective agreements top dollar. I know many of you will disagree.

The counter-argument is that the private sector won't build unprofitable routes to service small towns or villages. That's precisely my point. We're not servicing Nunavut here. We should be building transportation networks where it's profitable to do so. When government does it, profit doesn't really enter the picture. Money-losing departments are given set budgets. Really, if Via can't turn a profit in the busiest part of Canada, why have it? There are probably great entrepreneurs at Via who are sick to death of asking government permission to build a 200 metre spur. Let Via in Southern Ontario and Southern Quebec live or die based on its profits as a private company. Let it compete in the open market with other private companies. Same goes for GO...I know none of that will happen. Too many vested interests. So, since we're stuck with crown corporations and government agencies running transportation, at least see the value in expanding the network as a means of boosting productivity and the economy. One more thing, if we can't have passenger-only train lines that travel at least 200 kph, I will continue to drive my car to London and Kitchener, like most people. I'll drive or fly to Montreal.

 

[steveintoronto]

The counter-argument is that the private sector won't build unprofitable routes to service small towns or villages. That's precisely my point.

I suggest you read the links that were provided and Google for more. You completely miss the proposed plan. And that's "precisely the point". The rolling stock will be owned and run by VIA, the RoW will be owned and maintained by investors. If there's an operating loss, it is VIA's. But since you refuse to read-up on the background to what's being discussed, it's pointless for me to try and educate you on this. VIA has already sunk a fortune into RoW and barely got a return on the investment.

You can start reading here:

VIA Rail looks to private investment for $3-billion dedicated track plan
Eric Atkins
The Globe and Mail
Published Thursday, Jun. 04, 2015 6:38PM EDT

The head of Via Rail Canada Inc. brought his pitch for private investment to Toronto on Thursday, promoting a chance to reshape the money-losing passenger-train service.

Yves Desjardins-Siciliano told a room full of bankers, pension-fund managers and developers the $3-billion proposal to buy and build dedicated passenger train tracks in the busy Toronto-Ottawa-Montreal corridor could bring double-digit returns to a consortium of investors in the Crown corporation.

“We are striving to make Via Rail more relevant to Canadians … while not over overburdening Canada’s taxpayers,” Mr. Desjardins-Siciliano said. “A corollary to that may be a way for the private sector to put its shoulder to the wheel.”

Most of Via Rail’s trains travel on rails owned by freight carrier Canadian National Railway Co., leading to congestion and delays that drive away customers. Mr. Desjardins-Siciliano said passenger trains that travel at 110 miles an hour are incompatible with much slower cargo trains. He pointed to Via Rail’s on-time performance of 63 per cent in the first quarter, compared with 71 per cent a year earlier. In the first three months of 2015, Via Rail’s operating loss was $86-million.
[...]

http://www.theglobeandmail.com/repo...billion-dedicated-track-plan/article24814969/

This is how the New York subway was built. Government can't help but step in,

The three companies in NYC went bust, even though two were dependent on subsidies and grants, and the third an agency owned by the City. The City owned the RoW. This, btw, is the case of almost all major subway systems that predate Toronto's, albeit in the case of London and Paris, the RoW was private.

It's also the case of CN Rail, but I digress...

 

[SaugeenJunction]

Anyone who has worked in the public sector knows there is waste worth cutting. There are dubious pet projects that an across the board, say, 10 percent budget cut would quickly eliminate. I agree that tax revenue is not the only or best way of building the infrastructure we need. I'd love to, for once, see a hands-off approach by government where private companies were given carte blanche to build and charge whatever they want on a train or subway line. Let the private sector find the efficiencies needed to make a line profitable. Let companies set the fares based on what markets will bear. I sincerely believe that if we did this with new highways and subways, we'd have a better network. This is how the New York subway was built. Government can't help but step in, overregulate, and pay the employment groups they're beholden to through collective agreements top dollar. I know many of you will disagree.

The counter-argument is that the private sector won't build unprofitable routes to service small towns or villages. That's precisely my point. We're not servicing Nunavut here. We should be building transportation networks where it's profitable to do so. When government does it, profit doesn't really enter the picture. Money-losing departments are given set budgets. Really, if Via can't turn a profit in the busiest part of Canada, why have it? There are probably great entrepreneurs at Via who are sick to death of asking government permission to build a 200 metre spur. Let Via in Southern Ontario and Southern Quebec live or die based on its profits as a private company. Let it compete in the open market with other private companies. Same goes for GO...I know none of that will happen. Too many vested interests. So, since we're stuck with crown corporations and government agencies running transportation, at least see the value in expanding the network as a means of boosting productivity and the economy. One more thing, if we can't have passenger-only train lines that travel at least 200 kph, I will continue to drive my car to London and Kitchener, like most people. I'll drive or fly to Montreal.

If it made sense for private companies to run passenger rail services, Canadian Pacific and Canadian National would still be doing that. But they're not.

 

[steveintoronto]

If it made sense for private companies to run passenger rail services, Canadian Pacific and Canadian National would still be doing that. But they're not.

Brightline is a case where the host railroad is also the owner. Things may be turning around on this, albeit the US does offer (or did, time will tell with Trump) large operating grants. Interestingly, I noted reading on the Northern Lights Express yesterday that BNSF is the host railroad for most of the distance, and a part owner! You can bet your brake shoe boots that VIA management and the Feds in Ottawa are watching that closely. In the event, the Cdn Class 1s aren't interested in being part of that, but once some pressure is applied, market or regulatory, that may change, and the one most likely to do so is CP, contrary to CN's publicity stunt on the 'Freight ByPass' w/o CP.

Addendum: A note of caution, even though there are positive developments since this was published:

Fortune Magazine
Amtrak
Even Fortress Capital Can’t Privately Fund Passenger Rail
David Z. Morris
Updated: Jan 12, 2016 4:27 PM EST
The passenger rail project All Aboard Florida (AAF) was granted a one-year extension last week on its effort to raise $1.75 billion to build a passenger train between Miami and Orlando. The extension, granted by the U.S. Department of Transportation, is the second for the project.

AAF’s proposed route, now known as Brightline, would be the first privately funded U.S. passenger rail project in decades. With huge capital requirements and uncertain future ridership, such projects are a big risk.

AAF/Brightline aims to mitigate that risk with commercial developments, already under construction, that would anchor the line’s terminals in South Florida. AAF also will be able to leverage existing rail owned by its parent company, Florida East Coast Industries. FECI is itself privately held by affiliates of Fortress Investment Group, a private equity group with over $60 billion under management.

That should be a big advantage as AAF raises money—but so far, it seems, not big enough. As Fortune has previously reported, AAF has faced some local political opposition from communities concerned about noise and safety. But the funding delay has deeper causes, rooted as much in the bond market as in uncertainties about the project itself.

WATCH: After last year's fatal Amtrak derailment in Philadelphia, Fortune editors discussed the balance between infrastructure spending and safety:

The AAF bonds are unrated, and the corporate junk bond market has suffered for much of the past year. Thanks to special status granted by the quasi-public Florida Development Finance Corporation, AAF’s bonds enjoy similar tax benefits as municipal bonds. But municipal bonds have shown weakness too, with issuances dropping sharply since September. As Bloomberg pointed out after AAF’s first bond delay in November, other large infrastructure projects have been having similar funding issues.

Adding to those challenges, though, is the project's uncertain viability. The idea of a new, profitable passenger rail line seems, as one observer put it when the project was announced in 2012, “almost fanciful.” Prospective investors in All Aboard Florida likely can’t help but look at Amtrak, which is unprofitable everywhere but the Northeast—and already runs a Florida line that would parallel AAF’s.

SIGN UP: Get Data Sheet, Fortune’s daily newsletter about the business of technology.

AAF has pointed out that its route is more convenient than Amtrak's, ending in the heart of downtown Miami, while Amtrak drops passengers about 30 minutes away. That may be enough to take business from Amtrak, but making the Brightline viable would require boosting the total number of train riders.

That could be a tough pull. Mass transit ridership within cities is at the highest level in decades, and intercity Amtrak usage has been growing. But that growth hasn't been fast enough to eliminate Amtrak's need for government subsidies—a need it shares with most most of the world's passenger rail systems.

http://fortune.com/2016/01/12/fortress-capital-florida-rail-funds/

 

[TOareaFan]

I am, generally, a private sector guy.....but I never understand the desire to have the private sector run such operations if their involvement is predicated on the governments providing the infrastructure and a large operating subsidy.....what is gained over just running it in the public realm anyway?

 

[Euphoria]

The reason CP and CN aren't running passenger lines is because they don't want to service unprofitable areas. Having the ROW's is a huge advantage. Via basically rents them. The government mandates that Via exist in order to provide service to far-flung, unprofitable areas. Okay, I know it's more complex than that, but by and large that's how it goes.

 

[kEiThZ]

There's some real delusion in these parts. Private sector running HSR?

Any of you ever read the prospectus of CN or CP. Do you have idea how much money they make with cargo?

Why would they use their ROWs for pax services with worse ROI?

Pax services will never be as profitable as cargo simply because most rail shipped cargo is cheap to ship, unlike humans. Cargo doesn't care what time it arrives down to the minute. Nor does it care how tightly it's packed. Or what time of day it's traveling.

You can move all night at 30 mph and make a profit with cargo. You can't do that with humans.

Privatization works in many areas. This isn't one of them.

The major problem that we have is public tolerance for spending. Canadians love to complain about how bad services are until they get a price for what they want. So the only way stuff will ever get built in this country is by incremental improvements.

Or better yet, simply change the definition. You can bet that if Queen's Park actually builds a rail line in this corridor, it will be called high speed rail. Even if it takes 90 min to get to London. The public doesn't care about definitions.

 

[ssiguy2]

As I have stated many times, I think VIA should be run like a business and not a government agency. There are no routes in Eastern or Western Canada that should continue to have service. There should be just 3 lines run by VIA...........Win/Lon/KW/Tor/King//Ott/Mon/QC and Win/Lon/Tor/Mon/QC. The only other route {s} should be Tor/Buf {which may require stop in Hamilton for the Win/QC run} and Mon/NY and even these aren't needed if Amtrak is allowed to travel thru to Tor/Mon. There is only one other route in the country that is viable outside of the main Corridor, Calgary/RD/Edmonton.

If VIA didn't have the MPs getting in their way and created a truly viable train system then the Corridor would have much better and faster service than it does now. The rest of the VIA system bleeds red ink and it's The Corridor passengers who have to subsidize those services. If VIA were sold to a private company with regulations on fares and service {like Hydro} it would take the politics out of rail service.

Rail in the 18th century was designed originally to help get rural/small town people into the cities but unfortunately VIA is still using that concept in the 21st century. Today it is the rural/small town/cities that NEVER use rail but rather people going from just one big city to another. Rural areas already have a highly subsidized transportation network, they are called roads. EVERYBODY in small towns/rural has a car and wouldn't live there if they didn't.

By trying to serve everyone with passable service, VIA ends up serving no one well. VIA needs 21st century technology but also a 21st century business plan if it is to remain relevant or viable. If it is unable to do this due to political influence then it should be sold to the highest bidder.

 

[Northern Light]

As I have stated many times, I think VIA should be run like a business and not a government agency. There are no routes in Eastern or Western Canada that should continue to have service. There should be just 3 lines run by VIA...........Win/Lon/KW/Tor/King//Ott/Mon/QC and Win/Lon/Tor/Mon/QC. The only other route {s} should be Tor/Buf {which may require stop in Hamilton for the Win/QC run} and Mon/NY and even these aren't needed if Amtrak is allowed to travel thru to Tor/Mon. There is only one other route in the country that is viable outside of the main Corridor, Calgary/RD/Edmonton.

If VIA didn't have the MPs getting in their way and created a truly viable train system then the Corridor would have much better and faster service than it does now. The rest of the VIA system bleeds red ink and it's The Corridor passengers who have to subsidize those services. If VIA were sold to a private company with regulations on fares and service {like Hydro} it would take the politics out of rail service.

Rail in the 18th century was designed originally to help get rural/small town people into the cities but unfortunately VIA is still using that concept in the 21st century. Today it is the rural/small town/cities that NEVER use rail but rather people going from just one big city to another. Rural areas already have a highly subsidized transportation network, they are called roads. EVERYBODY in small towns/rural has a car and wouldn't live there if they didn't.

By trying to serve everyone with passable service, VIA ends up serving no one well. VIA needs 21st century technology but also a 21st century business plan if it is to remain relevant or viable. If it is unable to do this due to political influence then it should be sold to the highest bidder.

Uhhh, VIA runs the service to Churchill, MB. There is NO road access.


***

Service in the prairies and the maritime doesn't make financial sense in its current form, though I think both are likely viable (with modest subsidies) in a different form.

The same is true in Northern Ontario.

Sudbury-White River, needs to be Sudbury - Thunder Bay, daily, and there needs to more frequent, twice daily, service from Sudbury to Toronto.

That makes the service useful.

Run times need to drop. Of course HSR would be absurd in that setting; but trackspeeds are often silly low.

Get Sudbury-Toronto down to a 5-hour run time or less (currently in the vicinity of 8 hours) and it becomes usable.

***

Service in Atlantic Canada needs to connect cities within Atlantic Canada, with minimum twice daily service to/from Halifax, Moncton and St. John.

***

Service in the west is logically Edmonton-Calgary, Regina-Saskatoon, Regina -Winnipeg, and arguably (though less so), Winnipeg - Thunder Bay.

The current service is essentially 2 to 3x weekly tourist service (excepting Churchill) and doesn't work for locals.

 

[denfromoakvillemilton]

There's some real delusion in these parts. Private sector running HSR?

Any of you ever read the prospectus of CN or CP. Do you have idea how much money they make with cargo?

Why would they use their ROWs for pax services with worse ROI?

Pax services will never be as profitable as cargo simply because most rail shipped cargo is cheap to ship, unlike humans. Cargo doesn't care what time it arrives down to the minute. Nor does it care how tightly it's packed. Or what time of day it's traveling.

You can move all night at 30 mph and make a profit with cargo. You can't do that with humans.

Privatization works in many areas. This isn't one of them.

The major problem that we have is public tolerance for spending. Canadians love to complain about how bad services are until they get a price for what they want. So the only way stuff will ever get built in this country is by incremental improvements.

Or better yet, simply change the definition. You can bet that if Queen's Park actually builds a rail line in this corridor, it will be called high speed rail. Even if it takes 90 min to get to London. The public doesn't care about definitions.

The private sector already tried transit years ago and left. Great post.

 

[Euphoria]

We lost the Polar Bear Express and no one shed any tears. It's absurd that we have crowded platforms of commuters willing to pay the cost of fast, frequent, reliable service in the GTA, and they can't get it. Government is failing to meet demand with supply. The City of Toronto shutting down the private shuttle bus from Liberty Village to Union says it all: The TTC and GO couldn't meet market demand so they shut down the competition through regulation. They, like Via, have a monopoly on transit. So here we all are, waiting for the apparatchiks in Metrolinx and government to finish their expensive central planning, hoping that they'll meet the glaring needs right before their eyes.

 

[SaugeenJunction]

We lost the Polar Bear Express and no one shed any tears. It's absurd that we have crowded platforms of commuters willing to pay the cost of fast, frequent, reliable service in the GTA, and they can't get it. Government is failing to meet demand with supply. The City of Toronto shutting down the private shuttle bus from Liberty Village to Union says it all: The TTC and GO couldn't meet market demand so they shut down the competition through regulation. They, like Via, have a monopoly on transit. So here we all are, waiting for the apparatchiks in Metrolinx and government to finish their expensive central planning, hoping that they'll meet the glaring needs right before their eyes.

Actually the Polar Bear Express is still operational, and always will be. The province just spent roughly $20 million restoring rolling stock for it. It is the only way to access Moosonee, as no roads exist. The Northlander was the one shut down, and there was TONS of uproar over this, and there are still northern advocacy groups fighting to restore it. Case and point this picture I found on twitter after 5 seconds of searching.

If we simply allocated funding based on pure ridership, there would be northern and rural communities that would really be screwed. The GTA is part of a province called "Ontario", and we have to make sure that everyone gets the support they need, even if it is disproportionate.

I agree with you 100% that public agencies shouldn't shut down private competition. If a company wanted to build a private subway in Toronto, or a private high-speed rail line, I say let them. But we need to keep a strong public system in place.

 

[kEiThZ]

I think VIA should be run like a business and not a government agency.

That's nice and all. But the majority of voters disagree with the idea that the national rail service should not be run in their vision of public benefit.

You will never get VIA to "run like a business" at least not with the subsidies it needs. And if it ever ran like a business, you can all but guarantee that HSR won't happen. The business case would be extremely risky for any private investor. And if they ever did, they'd charge higher fares to get the risk premium they need to justify that investment.

HFR is actually an attempt at a business like approach. It's based on maximum IRR. And it's because the rate of return is being considered, that it'll be much easier to get non-governmental financing.

 

[ssiguy2]

Too bad if the people in these little places have no rail or road access, that's their problem. They can fly and if they can't afford to do that then they can damn well move. There are a of of Outports in NF that have no road or ferry access so should we build them a new hospital, school, and provide a new ferry service or maybe just a new airport with subsidized fares to boot?

I live in an area of 600,000 but I don't have the nerve to ask for a subway. Life is about choices and all places have their good and bad points but to expect services to be provided at an outrageous and unjustifiable cost to the taxpayer is indefensible. This however is part of VIA's problem, it's at the mercy of political influence and intelligent policy be damned. If VIA has to continue on this path then it should be dismantled and sold off and let the businesses run it.

 

[crs1026]

Too bad if the people in these little places have no rail or road access, that's their problem. They can fly and if they can't afford to do that then they can damn well move. There are a of of Outports in NF that have no road or ferry access so should we build them a new hospital, school, and provide a new ferry service or maybe just a new airport with subsidized fares to boot?

I live in an area of 600,000 but I don't have the nerve to ask for a subway. Life is about choices and all places have their good and bad points but to expect services to be provided at an outrageous and unjustifiable cost to the taxpayer is indefensible. This however is part of VIA's problem, it's at the mercy of political influence and intelligent policy be damned. If VIA has to continue on this path then it should be dismantled and sold off and let the businesses run it.

So, how do you feel about the 401 being run as a public sector enterprise and not a private operation?

Dragging NL outposts into this is apples and oranges. We are debating how to construct transportation backbones in the nation's most densely populated area. Today's backbone, the 401, is reaching the point of filling up. Expansion is underway as far west as Highway 6, but it's pretty obvious that this is just halfway down the slippery slope. Are we happy with the price of driving construction of twelve lanes all the way to London? Do our suggestions and various opinions look extravagant in comparison to that project? Are we insisting that any highway expansion happen within the private sector? How inclusive can our new projects be to smaller communities, can we meet their needs as well as the big cities? Nothing wrong with having the public sector be part of that solution.

BTW I have visited some pretty nice isolated fishing villages that have substantial investment in schools and hospitals. Iceland and Norway come to mind. It's not a bad model for this country, it just comes at a tradeoff in terms of taxation and size of government.

- Paul