TGF: big promises for users, but big risks for VIA Rail

The high frequency train (TGF) project between Toronto and Quebec raises important questions about the future of VIA Rail.

On track to begin operations in about a decade, the TGF promises to carry more passengers, faster and more often. However, the faster service also threatens to divert money away from VIA Rail’s expanded service, which derives the vast majority of its revenue from Canada’s central corridor.

In addition to government funding, VIA depends on the rail segment that connects Quebec City to Windsor, Ontario, to support its operations across the country. Last year, 96% of its riders and more than 80% of its revenue came from this corridor.

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The route envisaged by VIA TGF for its high-frequency train project.

Photo: Radio-Canada

The flow of these revenues is now in uncertainty, both services — the current and the TGF — must operate within the framework of a public-private partnership (PPP).

VIA Rail, which is a Crown corporation rather than a PPPderived 64% of its gross revenue from government funding, with the remainder coming largely from passenger revenue.

The idea behind a PPP is that the efficiency and dynamism injected by private sector players would result in a more fluid, more autonomous business and less dependent on federal coffers. However, the money spent by private companies must also be recovered, with the main objective being to make a profit.

What happens to VIA Rail’s corridor service revenues? Well, they all go to the private partner. And we don’t know how that will play out as to whether there will be anything left to give back to the government at the end of the day.explains the president of the passenger advocacy group Transport Action Canada, Terry Johnson.

We are actually very worried about this scenariohe adds.

Discussions to come… in several years

VIA Rail President and CEO Mario Péloquin says the Crown corporation plans to discuss its business model with the federal government in several years, but says this service will be maintained in Ontario and Quebec — as part of the PPP — as well as on VIA’s long journeys.

Before 2030, many of these aspects will become clearer, more concrete.

A quote from Mario Péloquin, president of VIA Rail

We will have these conversations with the Government of Canada about the funding and revenue generation modelhe said in an interview.

Last week, VIA announced an operating loss that increased 8% to $381.8 million in 2023, even as ridership continues to grow.

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VIA Rail operates 16 rail routes, connecting major cities across the country (except Calgary), primarily using Canadian National (CN) rail lines. (Archive photo)

Photo: The Canadian Press / Andrew Vaughan

Mr. Péloquin is banking on more business passengers and fewer short-haul commuters to increase revenue as part of a five-year strategy to reduce operating costs and replace the fleet for the airline’s long routes. organization, 75 years old.

Benoit Bourdeau, spokesperson for VIA TGF, which is currently an independent subsidiary of the state-owned company, said the new project is being developed to complement existing passenger rail services and that details of the transition will be specified in the years to come.

Nationwide interest

Concerns about passengers and profits arose in March 2022 when Ottawa demonstrated interest in the design and construction of the TGF. Having received little annotation at the time, the document solicited comments from engineering consortia on the financing, operation and maintenance of the proposed TGF.

This specification for the financing and operation of the railway went beyond the initial scope of simple design and planning set out by the government in 2021.

THE TGF and the existing, slower services would also operate under one roof, the then Federal Minister of Transport, Omar Alghabra, indicated in the request: TGF and local services will be treated as an integrated system across the entire corridor.”,”text”:”The operations of new services and local services will be treated as an integrated system across the entire corridor.”}} “>Operations of new services TGF and local services will be treated as an integrated system across the entire corridor.

Martin Imbleau, who heads the VIA TGF project, predicts that the corridor will welcome 17 million travelers per year by mid-century, a figure well above last year’s 4.1 million.

>>Martin Imbleau presents the project in a room.>>

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Martin Imbleau took the helm of VIA TGF in September 2023. (Archive photo)

Photo: Radio-Canada / Erik Chouinard

Despite its location in the two most populous provinces, Mr. Johnson believes the entire country has a stake in the high-frequency line if its revenues are spread across the rest of the rail network, from Halifax to Prince Rupert, in British Columbia.

The initial hope with the TGF […] was that the corridor would start to generate a surplus and that you could create this positive feedback loop where part of that surplus would be reinvested in improving service for the rest of Canada.

A quote from Terry Johnson, president of passenger advocacy group Transport Action Canada

What happens if you take that away?asks Mr. Johnson.

Others are more enthusiastic. Pierre Barrieau, who teaches in the fields of transportation and urban planning at the University of Montreal, fully supports the decision to separate the Toronto-Quebec corridor from the rest of VIA’s activities.

It’s easier to justify a subsidy to serve communities that don’t have roadshe maintains regarding the remote regions served by VIA. Rail.”,”text”:”This does not jeopardize these services, because, on the contrary, these communities could not live without VIARail’s service.”}}”>This does not jeopardize these services, because, on the contrary, these communities could not live without VIA Rail service.

The Confederation Line light rail project in Ottawa and the Eglinton Crosstown Line project in Toronto have highlighted the financial risks faced by the industry and shaken public confidence in the ability of the rail model. PPP to complete projects on time and on budget.

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