VIA’s thwarted Vancouver-Jasper service increase

In late 1996 VIA Rail announced that it wanted to increase summer service on the busy Vancouver-Jasper segment of the Vancouver-Toronto Canadian to six days a week from three. This raised strenuous objections from the Great Canadian Railtour Company, a private company which had taken over VIA’s Canadian Rockies by Daylight service when it was privatised by the Mulroney government in 1990. While Transport Action Canada and Transport Action BC firmly felt that approving VIA’s planned service increase was in the best interest of the travelling public and would improve VIA’s financial state without threatening the viability of GCRC’s Rocky Mountaineer, on February 14, 1997 then Minister of Transport David Anderson announced that he would deny VIA’s request to increase their service. This page details our communications with the minister on this issue.

Readers should be aware that a new Minister of Transport was appointed on June 11, 1997, The Honourable David M. Collenette, P.C., M.P.


Transport Action BC’s November 10, 1996 letter to David Anderson

November 10, 1996

The Honourable David Anderson
Minster of Transport
House of Commons
Ottawa, Ontario K1P 0A6

Re: Increased VIA Rail service between Vancouver and Jasper

Dear Mr. Anderson:

We understand that VIA Rail requires your permission to increase its summer service from three trains per week to six trains per week on the route of The Canadian between Vancouver and Jasper. Transport Action BC encourages you to allow VIA to increase its service, despite the objections of the Great Canadian Railtour Company (GCRC), for the reasons we provide below.

VIA currently earns 130 percent of its operating costs on this route in the summer and is frequently forced to turn away passengers for lack of capacity; hence the desire to improve the service and the bottom line by expanding service on this profitable route. From personal experience within our group, we know that sleeping car space must be reserved at least two months ahead of time during the busy summer season. Additional earnings which VIA gains by increasing service can be used to help offset losses on other routes, such as the Skeena, and the Malahat Dayliner on Vancouver Island. VIA must be permitted to find ways to increase its revenue if it is to reduce its level of subsidy from $300 million to $170 million over the next couple of years. Expanding Vancouver—Jasper service is an ideal opportunity to help achieve this aim.

While the route of The Canadian between Vancouver and Jasper is the same as that used by GCRC for a section of its Rocky Mountaineer service, we do not feel that VIA and GCRC are in direct competition for the same market given the distinctions between the two products provided. The Rocky Mountaineer caters almost exclusively to tourists who desire a leisurely trip allowing them to travel entirely in daylight. This requires a two-day trip with an overnight hotel stay in Kamloops. The same trip on VIA is only 18 hours, with the spectacular Fraser and Thompson River canyons passed through in darkness. VIA also provides service to intermediate destinations such as Port Coquitlam, Abbotsford, Chilliwack, Hope, Boston Bar, Ashcroft, Clearwater, Blue River and Valemont, as well as Kamloops. The Rocky Mountaineer does not permit boarding and alighting at any of these communities as it functions solely as a ‘land cruise’. It must also be added that GCRC still provides the only passenger train service on the more scenic and popular CPR route via Rogers Pass and Banff.

VIA has also found that it has difficulty accommodating high levels of through traffic from points east of Jasper to points west. Expanding service west of Jasper to six days a week should help ease this constraint.

It is obvious, given that both VIA and GCRC have plans for expansion, that their market assessments indicate considerable unsatisfied demand in the Vancouver—Jasper corridor. At present, the two companies combined are only carrying about one-third of the traffic which existed before VIA’s Western Canada services were cut drastically in 1990. Studies by the Alberta Department of Economic Development in 1989 showed there is a market for a daily regular train from both Edmonton and Calgary to Vancouver, as well as a three times per week tour and tourist train like the Rocky Mountaineer. We believe that this evidence supports our belief that there is room for both VIA and GCRC to grow and continue to generate profits on this route. With more capacity will come more tourists, many from out of the country, and the valuable economic benefit they provide in terms of spin-off spending. Local reports state that the average tourist stays for three days and spends $200 each day. On this basis, additional train passengers could create $40 million in spin-off benefits to the economy and generate over 1,000 needed summer jobs in the service sector.

Great Canadian’s complaints that VIA is a bureaucratic Crown corporation run amok is simply not supported by the evidence. Rather, VIA is making a sound business decision which will help it to continue to provide service to the public while providing better value for its shareholders, the citizens of Canada. We strongly encourage you to support VIA in its efforts to simultaneously improve its service and financial position by permitting it to expand its summer Vancouver—Jasper service.

Sincerely,

Ian Fisher,
President,
Transport Action BC


David Anderson’s December 18, 1996 reply

(note how this letter could be sent to either VIA or GCRC supporters)

December 18, 1996

Mr. Ian Fisher,
President,
Transport Action BC

Dear Mr. Fisher:

Thank you for your recent letter regarding passenger rail service on the Jasper to Vancouver portion of the transcontinental route.

Personally, I believe that the future of rail tourism in Canada is excellent, Indeed, the prospects for rail tourism over the next two decades may well be as bright as that which has been enjoyed by the cruise ship industry on our coast over the past twenty years. We have a great product with outstanding potential.

I appreciate that you have taken the time to apprise me of your views on this matter. My officials are currently reviewing the implications of both VIA’s proposal and the material provided by the Great Canadian Railtour Company (GCRC). Furthermore, as this issue is commercial in nature, I have met twice with Mr. Peter Armstrong, President and Chief Executive Officer of GCRC, and with Mr. Terry Ivany, VIA’s President and Chief Executive Officer, and have asked that they present options to me to resolve this matter.

I can assure that, in making a decision, I will carefully consider your views as well as the discussions between Messrs. Armstrong and Ivany.

Again, thank you for writing.

Yours sincerely,

David Anderson, P.C., M.P.


Transport Action BC’s March 10, 1997 letter to David Anderson

March 10, 1997

The Honourable David Anderson
Minister of Transport
House of Commons
Ottawa, Ontario K1P 0A6

Dear Mr Anderson:

I would like the express the disappointment among the membership of Transport Action BC following your announcement that VIA Rail’s request to increase its Vancouver—Jasper service was rejected.

It is our belief that the services offered by VIA and the Great Canadian Railtour Company (GCRC) are sufficiently differentiated that VIA’s request should have been approved. My contacts in the local tour business indicate that they do not feel that VIA’s product is interchangeable with that of GCRC. For many travellers, GCRC’s service is simply too time-consuming to consider. I have discussed this issue with Mr. Peter Armstrong of GCRC and Transport Action BC does not agree with his position that VIA is in direct competition with his company.

In addition, VIA’s government-mandated efforts to increase its cost recovery have been thwarted by the very government that has claimed that VIA must act in a more businesslike manner if it wishes to survive. It is ironic that the press release that accompanied your announcement included the sentence, “Via has been given a mandate by the federal government to reduce its operating subsidy while maintaining services.” Expanding VIA’s Jasper—Vancouver service presented an ideal opportunity for VIA to improve its economic sustainability to help meet this mandate given that VIA projected being able to recover at least 130 percent of the marginal costs of operating more frequent service.

Past market analysis and historical evidence indicates that the market would not suffer a glut of supply if VIA were permitted to increase its services. Before the Mulroney cuts to VIA there were 15 trains a week leaving Vancouver to travel through the Rockies, this summer there will be no more than half that number. It is unfortunate that a proper market analysis was apparently not done to evaluate the current situation. What impact, if any, of VIA’s operation of six-day-a-week service in this corridor in the summer of 1991 should be examined. It has also been suggested that VIA’s proposed increase would only help to meet the latent demand for through-trips on The Canadian from points east of Jasper. Currently tour groups book space on VIA well in advance meaning that individual travellers, frequently Canadians, are unable to purchase a through ticket. Since these travellers are then unable to experience the most scenic part of the trip, it is likely that they choose other travel modes and so bring the cost recovery of The Canadian east of Jasper below optimal levels.

This decision and the protracted process leading up to it has generated a considerable amount of ill will between VIA Rail and GCRC, as well as causing substantial inconvenience to tour operators who must plan and promote their products well ahead of time. Public and political perceptions of this issue were heavily shaped by the considerable number of misrepresentations made by GCRC and its allies made in the press. These statements were then perpetuated by the press as facts, leaving most reports on the issue a patchwork of half-truths. For example, GCRC certainly did not appear to do anything to dispel the mistaken impression that VIA was planning to resume service on the more lucrative CPR route to Banff when VIA only proposed to increase service on its existing route. Even the House of Commons Standing Committee on Transport perpetuates the myths put forward on this issue. In their report on the seemingly unrelated topic of renewing the national highway system, they state that the, “private sector must be protected from government re-entering a market to compete with the private sector after divesting itself of the service or infrastructure.” Since VIA never ceased to operate Vancouver-Jasper service since the Rocky Mountaineerbegan service, this is highly misleading. As well, VIA’s plan to increase service did not propose any new infrastructure but rather better use of that which is already in place.

Ideally VIA and GCRC could co-operate in marketing their services. No doubt there are many travellers who would like to travel in daylight in one direction and by overnight train in the other. However, given the current poisoned climate, such co-operation seems a distant possibility.

In the February 27th issue of the Victoria Times-Colonist you make a number of comments that suggest that the future of VIA Rail is not bright. I would agree that this is the case if reductions in financial support for VIA continue in combination with government micro-management that prevents VIA from taking advantage of opportunities to increase its revenue. As there will be an election in the near future, I suggest that the government be honest about its plans for VIA rather than perpetuating current uncertainties. If you have not already had the opportunity to do so, I would suggest that you meet with David Glastonbury, president of Transport Action Canada, to discuss the matter.

Sincerely,

Ian Fisher,
President,
Transport Action BC


David Anderson’s May 30, 1997 reply to our letter of March 10

May 30, 1997 (a few days before the federal election)

Mr. Ian Fisher,
President,
Transport Action BC

Dear Mr. Fisher:

Thank you for your letter of March 10, 1997, regarding my decision with respect to VIA Rail Canada’s proposal to increase the frequency of its service on the Jasper to Vancouver portion of the transcontinental route. I have noted your views on this issue.

I can assure you that I carefully considered all of the views and information I received on this matter prior to deciding not to authorise VIA to proceed with its plans. In arriving at this decision, I was particularly concerned about the effect the extra frequencies would have on the private sector company also serving this route, especially at a time when this company has already invested heavily to increase its own capacity.

VIA has made great strides toward being one of the best passenger rail services in the world, and I am confident that it will continue on this path.

I trust that you will understand my position. Again, thank you for writing.

Yours sincerely,

David Anderson, P.C., M.P.