VIA Rail

[Urban Sky]

Aviation is subsidized, but in indirect ways. For example, the governments have bailed out Air Canada in the 2008 recession. The government is bailing out airports all over Canada. That is the act I have a problem with when we see much of the Via network shuttered.

Small reality check: VIA has already scaled up its operations back to more than 40% of its regular pre-Covid schedule since September 2020. The only services which haven't resumed service so far are the two transcontinental routes, the restoration of which would undermine the travel restrictions in place for travelers arriving from cities like Montreal or Toronto into Manitoba or New Brunswick. Nevertheless, the Canadian is going to restart tomorrow with a weekly service between Vancouver and Winnipeg.

We did not sell the CP transcontinental. We gave the money to the corporation. They have not given it back to us. With inflation and interest accumulating for about 140 years it would be in the Trillions.

Small reality check: Canada's GDP is approximately US$1.7 trillion (C$2.1 trillion) and the upkeep for maintaining a railway line over more than a century dwarfs the right-of-way's initial construction costs.

 

[kEiThZ]

Aviation is subsidized, but in indirect ways. For example, the governments have bailed out Air Canada in the 2008 recession. The government is bailing out airports all over Canada. That is the act I have a problem with when we see much of the Via network shuttered.

There are plenty of sectors getting a bailout during the pandemic. Including VIA itself is recently. And plenty of companies got bailouts in 2008 during the aftermath of the Global Financial Crisis. Governments aren't willing to see services vital to the economy collapse and tens of thousands of jobs cut. Shocker.

We did not sell the CP transcontinental. We gave the money to the corporation. They have not given it back to us.

We didn't "give" them anything. We subsidized (partially) construction because it was in the national interest to do so and since then have enjoyed over a century of economic benefits enabled by the completion of that line. We got what we paid for.

Let's be clear here. The problem isn't the freight cos. The problem is that we (as a society) aren't willing to pay to build passenger rail. As Urban Sky has pointed out, Europeans subsidize passenger rail by tens of billions of Euros annually. As he pointed out, this would be like Canada spending $3-4B annually on just the construction of passenger rail. If VIA, GO and AMT had those kinds of budgets, their relationships with CN and CP would be very different. Heck, if we had $3-4B to spend on passenger rail annually, we'd be building high speed rail in places like Saskatchewan and the Maritimes just because we could afford it.

Have a look at what Urban Sky wrote about how much the Europeans spend annually:

In short, Germany (a country with very decent passenger and freight rail services, but decade-long and ongoing under-investment in its rail infrastructure) has invested 64 Euros ($93) per capita in public funds in 2016 into its passenger rail network and Switzerland (a country considered the gold standard for passenger and freight rail service and infrastructure) has even invested 378 Euros ($551), which would be equivalent to $3.27 billion (Germany) or $19.37 billion (Switzerland) of taxpayer money invested into the Canadian rail network. Unfortunately, there is no short-cut to building an efficient and performant rail network which circumvents using tons of your own (i.e. taxpayers') money...

The good news is that with HFR and GO RER we may finally be doing a serious fraction of what the Europeans and Asians have been doing for decades. This is why we should all be cheering VIA and HFR instead of moaning, bitching and criticizing from the cheap seats. More investment will only come if HFR and GO RER are successful. If they aren't, it'll be the end of intercity passenger rail in Canada.

 

[nfitz]

I'll be happy if by 2035, they can have cumulatively spent $7-8 billion on the Toronto-Ottawa-Montreal portion. That would get Toronto-Montreal to 4 hrs.

$7-$8 billion to get Montreal to 4 hours - slow that VIA can already do it if it wasn't for the freight issues?

How much would it cost to simply buy CN, take over the Toronto to Montreal trackage, restrict freight operations to overnight, and sell the rest of the CN network?

 

[Urban Sky]

$7-$8 billion to get Montreal to 4 hours - slow that VIA can already do it if it wasn't for the freight issues?

How much would it cost to simply buy CN, take over the Toronto to Montreal trackage, restrict freight operations to overnight, and sell the rest of the CN network?

CN’s market capitalization seems to be just under $100 billion (which would be equivalent to approximately 5% of national GDP)...:

 

[Northern Light]

CN’s market capitalization seems to be just under $100 billion...:
View attachment 288162

Not to be confused with endorsing the purchase of CN...............

But I observe that the federal government has allocated 100B for 'stimulus' beginning in 2022.

I would then add, however, I consider a PE of 29.3 to be excessive and would not purchase CN Stock at that valuation.

Of course, the Federal government has the means to depress that valuation; say, announce a surtax on freight railways earnings of 20%.

Then watch the PE fall, nationalize the asset; then announce that you wont' implement that tax after all.

Sell space in the CN Mainline corridor to VIA while you're the owner, allowing a continuous single track own by VIA from Durham Junction to Montreal; with space for passing tracks as meet VIA's needs.

Retain the balance, and sell the asset at a tidy profit...............

 

[Allandale25]

$7-$8 billion to get Montreal to 4 hours - slow that VIA can already do it if it wasn't for the freight issues?

How much would it cost to simply buy CN, take over the Toronto to Montreal trackage, restrict freight operations to overnight, and sell the rest of the CN network?

It's not just the cost. It's the amount of time battling it out to make it happen.

Sure, it's still 4 hours. But if there are more trains to choose from and the travel time is consistent, it's a bigger picture than just the end-to-end time.

 

[crs1026]

^@nfitz That’s a good start to how to look at things. I have the back of an envelope handy.

Let’s assume that 40% of that CN capitalization is in the track - the rest pertains to locomotives, railcars, yards, and other things that VIA doesn’t encroach on. CN has 19,500 route miles. The Kingston Sub is double track and high quality, so give its capitalization a factor of 2x the average per-route mile value. On that back of envelope basis, the market value of the Kingston Sub is about 3% (600/19,500) of CN’s market value for track of $39.8B (40%x $99.5B). or roughly $1.22 B.

If one assumes that expropriating CN (and presumably) forcing it onto CP will not hurt CN’s ability to attract customers and earn an equal return, then there is no need to compensate CN for loss of future opportunity. And so long as we assume that the Kingston line will always be a railway, and has no potential growth in property value,, the loss of the land itself has no opportunity cost. So it would be reasonable to guesstimate that expropriating the 300 miles of the Kingston Sub, in its current condition, would cost Ottawa $1.22B.

That leaves two issues. One is how much CP would expect to share its line with CN. We could do a similar per-mile market assessment of CP’s assets and determine what it would cost CN to become a 50% partner with CP between Oshawa and Dorval. CN would likely come out ahead. We would have to pay to enlarge sidings on the Belleville Sub to assure CP of no adverse operational impact and assure CN of roughly equal freight throughput and velocity. Let’s assume that is 50 miles of new sidings at $10M per mile - $0.5B Having made that gift to CP and CN, we have effectively made them whole and provided wVIA with a high quality, freight-free right of way that is vastly superior to the Havelock Sub.

The second issue is, what should we do about the potential for the shared freight line to fill up and require a second freight line.... say, in 40-50 years. In theory one would force that issue into local land planning today, before land is developed in other ways, dealing with any property owners’ claims for harm now while their land remains relatively cheap.( Let’s call that initiative “Pickering Airport 2.0”). To be conservative, let’s budget $1B for that new ROW. There are two options - the new route becomes HSR some day, and CN gets the Kingston Sub back, or the new ROW becomes a super-quality freight line perhaps with totally different technology in 40 years.

This scenario does not offend any principle that I hold dear, and it is not an intrusion into free enterprise or capitalism as generally practised in Canada. I don’t believe CN’s shareholders would claim hardship (although they might perceive the imposition of greater risk, due to CP’s involvement....railways are not that good at cooperating) The only obstacle I can see is that the legal work to declare the expropriation, haggle with CN over final price, and then to haggle with CP over its compensation, would take a JPO full of lawyers and force a decade of delays.

So yes, I think the cost is roughly comparable to HFR, and would deliver a higher-performing infrastructure to VIA without harming freight railways.....it is a more rational and economical solution. Unfortunately there is no public appetite for this, and no political will. So VIA’s HFR strategy is the only option we have that has a realistic chance of success. So I’m learning to love it.

-Paul

 

[micheal_can]

There are plenty of sectors getting a bailout during the pandemic. Including VIA itself is recently. And plenty of companies got bailouts in 2008 during the aftermath of the Global Financial Crisis. Governments aren't willing to see services vital to the economy collapse and tens of thousands of jobs cut. Shocker.

It is not a shocker. However, the government is willing to give money to the private corporations and let all government owned enterprises struggle. That is where I have a problem. Maybe it is time for some of those companies to fail. Maybe it is time that shareholders learn what it is like to loose big. Maybe it is time that people learn that if the company is doing shady things, or cannot balance their books, they shut down.I know that will never be allowed to happen, but it would help everyone realize the mess we are in.

We didn't "give" them anything. We subsidized (partially) construction because it was in the national interest to do so and since then have enjoyed over a century of economic benefits enabled by the completion of that line. We got what we paid for.

Let's be clear here. The problem isn't the freight cos. The problem is that we (as a society) aren't willing to pay to build passenger rail. As Urban Sky has pointed out, Europeans subsidize passenger rail by tens of billions of Euros annually. As he pointed out, this would be like Canada spending $3-4B annually on just the construction of passenger rail. If VIA, GO and AMT had those kinds of budgets, their relationships with CN and CP would be very different. Heck, if we had $3-4B to spend on passenger rail annually, we'd be building high speed rail in places like Saskatchewan and the Maritimes just because we could afford it.

Have a look at what Urban Sky wrote about how much the Europeans spend annually:

Comparing us to Europe is a straw man argument. We have much less population, and move more freight over rail, and really only have 2 freight operators.

Most of Canada's rail lines are not at capacity. The issue is that freight operators prioritize their cargo over passengers. A simple solution could be that the owner of the lines get fined for a passenger train being late. Fine them something like $1000/minute per station that any scheduled passenger train is late. You would quickly see some changes. Mind you, they would try to push to make the schedule longer so that they don''t have to yield to passenger trains.

The good news is that with HFR and GO RER we may finally be doing a serious fraction of what the Europeans and Asians have been doing for decades. This is why we should all be cheering VIA and HFR instead of moaning, bitching and criticizing from the cheap seats. More investment will only come if HFR and GO RER are successful. If they aren't, it'll be the end of intercity passenger rail in Canada.

I agree. I am looking outside of the sections that can be HFR and looking there.

It's not just the cost. It's the amount of time battling it out to make it happen.

Sure, it's still 4 hours. But if there are more trains to choose from and the travel time is consistent, it's a bigger picture than just the end-to-end time.

It is why people like having a subway/LRT route over a bus. It comes down to reliable service.

 

[Urban Sky]

Comparing us to Europe is a straw man argument. We have much less population, and move more freight over rail, and really only have 2 freight operators.

Just a quick reminder that I wasn't comparing Canada to Europe. All I did was to point out how deeply the taxpayer is involved in funding rail infrastructure upgrades in countries which (unlike Canada) prioritize passenger over freight operations.

Most of Canada's rail lines are not at capacity. The issue is that freight operators prioritize their cargo over passengers. A simple solution could be that the owner of the lines get fined for a passenger train being late. Fine them something like $1000/minute per station that any scheduled passenger train is late. You would quickly see some changes. Mind you, they would try to push to make the schedule longer so that they don't have to yield to passenger trains.

I guess you could fine CN for every minute they delay a passenger train, but the most significant change would be that CN sues the government for compensation, as you can't just sell (privatize) something and then redefine the fundamental principles upon which that property may be used. Also, they will fight you in court over every minute of delay they feel like being the fault of the passenger operations and not of themselves - or simply lengthen the passenger schedules until they match the average speed of their freight trains...

 

[roger1818]

$7-$8 billion to get Montreal to 4 hours - slow that VIA can already do it if it wasn't for the freight issues?

How much would it cost to simply buy CN, take over the Toronto to Montreal trackage, restrict freight operations to overnight, and sell the rest of the CN network?

You are forgetting the cost of having to add 4 lanes to the 401/A20 (among others to allow them to get to their origin/destination) to accommodate all the extra trucks to compensate for the reduced rail freight capacity (plus the hit to the economy stemming from the extra cost required to transport goods by trucks).

You are also forgetting the HF in HFR. The big advantage of the proposed HFR route is that it that the same route is used for Montreal-Ottawa, Montreal-Toronto and Ottawa-Toronto trains. This allows for double the frequency on all three routes. With a dedicated lakeshore, you need separate trains on all three routes (unless you use the Toronto-Ottawa-Kingston-Montreal route, but that is significantly longer). As a result it is compromising speed for improved frequency.

An improved lakeshore does nothing to fix the winding route between Ottawa and Toronto. People often complain about travel times on HFR between Montreal and Toronto since the route will be about 9.6% longer (in distance) than the existing route (or maybe a bit less if they can shorten the current Montreal-Ottawa route), but forget that HFR will be about 9.5% shorter between Ottawa and Toronto. Even at that, the lakeshore isn't the shortest route between Montreal and Toronto either.

 

[kEiThZ]

It is not a shocker. However, the government is willing to give money to the private corporations and let all government owned enterprises struggle. That is where I have a problem. Maybe it is time for some of those companies to fail. Maybe it is time that shareholders learn what it is like to loose big. Maybe it is time that people learn that if the company is doing shady things, or cannot balance their books, they shut down.I know that will never be allowed to happen, but it would help everyone realize the mess we are in.

You seem to think there's no consequences to the economy or actual survival in some parts of the country, if we let our airlines fail. You may believe this. Most of the country, economists and politicians don't. And again, aviation brings in far more money to the government that whatever they have paid out in subsidies and bailouts, which is exactly why there's bipartisan consensus across the political spectrum on supporting the sector.

Comparing us to Europe is a straw man argument. We have much less population, and move more freight over rail, and really only have 2 freight operators.

I don't think you understand what a strawman argument is. It is highly relevant that our two major freight operators move more cargo in a country of 38 million than all of the freight operators in the European Union (~446 million) COMBINED. And it's not even close. They move substantially more. And this is something that has a massive environmental benefit for this country. Moving that much freight by trucks as the Europeans do would be massively expensive and extremely polluting. As much as we fantasize about European passenger rail, they are desperately trying to build a freight rail network like ours, both to be economically competitive and to reduce emissions. We have a better shot of providing decent rail services in our dense population corridors than they will ever have of building freight rail networks like what we have.

Most of Canada's rail lines are not at capacity.

Source? Freight traffic is up substantially over the last few decades. Tracks have also been removed and lines decommissioned. So capacity utilization is most definitely higher than it has been in the past.

The issue is that freight operators prioritize their cargo over passengers.

Which is exactly why we should build a rail network exclusively for passengers. So we don't have to rely on CN and CP to move passengers. As a bonus we get rail corridors that are actually designed for faster passenger operations instead of the carnival ride that is most freight rail corridors. Trying to run trains on freight rails is always going to be a compromise solution, that where possible we should avoid.

People need to understand that moving cargo by rail is far more profitable, economically vital and environmentally friendly than moving people by rail. In no small part because there's no need to move freight quickly. As such, there is no government (of any party) in power that is going to start demanding that CN and CP take massive financial hits to facilitate VIA. We will have to spend more money to pay for the track we need for passengers. In dedicated passenger rail corridors, or in CN and CP's corridors. It's just that simple. And once everyone finally gets around to accepting this reality, we can get around to building more dedicated passenger rail corridors where it makes economic sense, finally leaving sharing freight rail corridors to tourist trains and infrequent regional services.

 

[kEiThZ]

$7-$8 billion to get Montreal to 4 hours - slow that VIA can already do it if it wasn't for the freight issues?

Unless you're willing to end freight services completely, you would never get both the speed and frequency on a shared rail corridor that $7-8 billion spent on a dedicated passenger corridor. That money isn't just buying speed. It's buying capacity for service. Given enough passing tracks, or double tracks, VIA could run half hourly service if they wanted to.

Of course, the Federal government has the means to depress that valuation;

Ah yes killing all foreign (and substantial domestic) investment by telling investors you're willing to apply rules targeting their assets specifcally is going to do wonders for our economy.

You know what would be cheaper and less appropriate to a banana republic? Simply raising taxes a little bit and paying for the infrastructure we need, like the rest of the developed world.

 

[lenaitch]

The issue is that freight operators prioritize their cargo over passengers.

That is the business they are in; to move the product of their customers on their own property, and turn a profit. VIA is a tenant when operating on their property. This condition will exist unless some legislation changes that, and it would be interesting how any hypothetical legislation would square prioritizing (or increasing the priority) of passenger over their core business without subsidy. Dragging up the argument that they were built with public money or backing 150 years ago won't carry much weight. We got our money back in settlement and economic activity years ago.

 

[Northern Light]

Unless you're willing to end freight services completely, you would never get both the speed and frequency on a shared rail corridor that $7-8 billion spent on a dedicated passenger corridor. That money isn't just buying speed. It's buying capacity for service. Given enough passing tracks, or double tracks, VIA could run half hourly service if they wanted to.



Ah yes killing all foreign (and substantial domestic) investment by telling investors you're willing to apply rules targeting their assets specifcally is going to do wonders for our economy.

You know what would be cheaper and less appropriate to a banana republic? Simply raising taxes a little bit and paying for the infrastructure we need, like the rest of the developed world.

Did you notice I started that post by saying 'this is not to endorse'?

I simply put out a hypothetical; and to be clear it is a realistic one........we're doing right now in discussing taxing digital services like Netflix.

The only difference is no one is suggesting the government purchase Netflix stock if their announcement impacted stock prices.

****

I endorse @crs1026 idea as a more realistic scenario.

 

[kEiThZ]

we're doing right now in discussing taxing digital services like Netflix.

Before someone like Michael gets excited....

Big difference between applying taxes to collect revenue to a service that may not have been taxed appropriately (or at all). And putting on a tax aimed at specifically sinking the market capitalization of a company to enable a government takeover. The Government of Canada isn't trying to devalue Netflix to buy it out. And I'm going to guess that any such unfairly targeted tax on freight, aside from severely damaging the economy, is most assuredly going to end up at the Supreme Court, who I'm sure won't look that kindly on an attempt at targeting a private enterprise for solely public benefits that could be done in many other ways.