VIA Rail "dying", says former railway executive
VIA Rail “dying”, says former railway executive
Byline: Cole Hobson
Publication: Miramichi Leader
Wednesday September 18th, 2013
MONCTON - With the release of another quarterly report that shows VIA Rail has experienced decreasing ridership revenues as well as increased operating costs, a former president of Amtrak with over 40 years of experience in the North American railroad and transportation industry is straight to the point when asked about the company's future. "My sense of what's happening to VIA is it's dying, to be blunt"' said David Gunn, who served as president of the American railway company Amtrak from 2002 to 2005 and before that worked a variety of jobs in the industry in cities such as Boston, New York, Philadelphia and Toronto.
"I don't think they have any focus at all. There's no question that the extent they try to do anything, at this point they are focusing on Toronto to Montreal, but what have they done? ...They've never focused on any service and made it a really important part of the transportation scene and I think that's a terrible mistake.
"VIA has basically been going out of business. All of the actions from VIA have been basically reducing service since it was set up."
Gunn, who lives in Cape Breton, N.S., said the situation is much different in the United States, where Amtrak has had its challenges, but is a thriving transportation company. 'Amtrak had been struggling in the U.S., but it had a lot of support congressionally and it's actually prospered, amazingly enough,' he said. 'Ridership is setting new records every year, they have been able to build a northeast corridor into a respectable operation, its high speed and it's actually a very good operation.'
VIA Rail's second-quarter results showed revenues decreasing by 2.8 per cent, totalling $66.2 million for the quarter. Meanwhile, operating expenses before corporate taxes and amortization of deferred capital funding increased by 8.6 per cent, amounting to $154 million for the quarter. Operating funding from Government of Canada increased in the quarter by 11 per cent, to $79.9 million.
The results over the six-month period ending June 30, 2013 also saw revenues decrease (2.8 per cent, to $125.2 million), while operating expenses increased (2.7 per cent, to $301.9 million) and government funding increased by 7.7 per cent, to $163.2 million for the period. Gunn said VIA Rail is also struggling with deteriorating railways around the country and said Amtrak has been able to thrive south of the border in part because of the support it is shown by government.
'It's different (in Canada) than the U.S. and if the government doesn't push it as a Crown corporation, it doesn't happen. Whereas in the U.S. Amtrak sort of developed a mindset of its own and it used it’s supporting Congress to move forward,' he said. 'There's a lot of problems with Amtrak, don't get me wrong. I'm just saying they are in much better shape than VIA, because let's face it, the VIA management is totally controlled by the minister. Even though in question period they always say it's a Crown corporation, the reality is that they are totally beholden to the Department of Transportation, of that ministry.'
The quarterly report showed a four per cent increase in passenger miles (total number of miles travelled by all passengers) and a 0.7 per cent increase in ridership, despite the lower passenger revenues. Operating expenses saw a rise of 13 per cent, an increase of $9 million, excluding employee benefits. According to VIA Rail, the increase was due primarily to higher depreciation costs related to the completion of major elements of the capital investment program completed last year and the increase was largely offset by the amortization of deferred capital funding.
“If you just look at the tone of what they do, it's all negative, then they'll say it's positive. For example, when they cut back the Ocean (from six times weekly to three times), they made these public statements they were going to co-ordinate rail with the bus - well, the trains were always co-ordinated with the bus until VIA ran into the slowdowns because of track conditions on the line up through Newcastle and Bathurst and that broke the connection”, Gunn said.
'VIA has this incredible ability to issue press releases with bands playing and flags lying, as they retreat. I always marvel at it.'
In order to turn the tide and fortunes at VIA, Gunn said first they would need more support from the government of the day in order to make it a significant player. He said rail travel in the States has been pushed as a less expensive option as compared to building new roads and highways - to take congestion away from busy thoroughfares.
In the press release accompanying the report, president and CEO of VIA Rail Marc Laliberte said during the second quarter of 2013,”we continued our efforts to develop a train culture in Canada. Our promotional strategies have been making the train more and more appealing for travel within Canada, and have stimulated a growth in ridership, especially within the Quebec City-Windsor corridor. However, our market remains price sensitive”, he said.
Gunn said it's humorous to hear a VIA Rail executive talk about creating a train culture in Canada. "I don't know what he's talking about, creating a train culture. VIA is almost irrelevant, except to rail fans. It really is," he said.
Greg Gormick, a Toronto-based independent transportation consultant, also balked at the assumption of a train culture being built in Canada. "I don't know too many countries that develop a train culture by cutting the number of trains and closing stations," he said. "It's a bust."
Mylene Belanger, a spokeswoman for VIA Rail, said in terms of Atlantic Canada train culture, the company has 'made important investments on (the Ocean) service and promotions are often offered all-year round.' She noted that as of June 15, the Ocean has been equipped with the same Wi-Fi available to passengers on the Quebec City-Windsor corridor. "Available across more than 98 per cent of the route between Montreal and Halifax, the new Wi-Fi connection allows passengers to remain virtually linked to work, friends and family throughout the trip. We are offering our passengers new technological and attractive services, which add to their experience," she wrote in an email. "We also continue to promote our long hauls services: every year, hundreds of thousands are invested to advertise the Ocean and the Canadian."
Gunn said VIA Rail does do some things right, such as their top-notch on-board service, but he said the bad has outweighed the good. "It all goes to the overall strategy of what they are trying to do with passenger rail service. If Marc Laliberte said he's trying to build a train culture in the country, you don't do that by cutting back trains”, he said. “The fact of the matter is I think is the budget is being cut and they don't have a lot of options left”.
The report also detailed figures on specific trains that VIA operates, such as the Ocean, which serves Atlantic Canada three times a week - down from a previous service level of six times a week. In the second quarter, revenues on the Ocean decreased by 40.6 per cent, due to lower ridership (37.4 per cent less passenger-miles) resulting from the frequency adjustments combined with lower yields (revenue per passenger mile) of 5.1 per cent.
In the six-month period ending June 30, Ocean revenues dropped 43.5 per cent, with 40.1 per cent less passenger miles and 5.7 per cent less yield.
“Now the interesting part of the Ocean is that keep in mind they cut 50 per cent of the service, but they only lost 40 per cent of the ridership”, Gormick said. “So as I've often said, the problem with Canadians is you can do the worst to the passenger trains and they still won't go away. This not only proves to government that people want the trains, they will support them”
VIA and the government use this use it or lose it argument - if you don't provide the service, how can you use it? Belanger noted that the adjustments in frequency on the Ocean were made to better reflect customer demand, which was 'necessary to allow VIA Rail to focus resources on improving service and attract more customers on routes where demand is strong and growing.' She noted that despite frequency reductions of 50 per cent, cars were added to some of the remaining frequencies, which resulted in a reduction of overall available capacity by only 36 per cent. She said direct operating costs were reduced by 50 per cent as a result of the cuts.
Gormick remains at work writing a report to look at the implications of the Canadian National Railway's plan to abandon the track between Moncton and New Brunswick's north shore, VIA Rail's reduced frequency of the Ocean passenger service and the collapse of Industrial Rail Services. It was funded at a total cost of $13,000, including $5,000 from the City of Moncton, $2,000 from the City of Dieppe, and $1,500 each from the Town of Riverview, the City of Miramichi, the City of Bathurst, and Enterprise Greater Moncton.
Gormick said he's in the last stage of completing the report and hopes to have a draft of it in the hands of the interested parties by the third week of September.
There's no easy solution to turning around VIA Rail to become a more prominent player in Canada's transportation industry, and while Gormick's report will offer a number of suggestions, one easy and cost-effective idea he has is to install Gunn into the company's board of directors.
Gunn said he appreciates Gormick's vote of confidence but he doesn't believe one extra voice speaking out on the board would create a big impact.
In his tenure with Amtrak, Gunn said he had many dealings with VIA and he believes there are bigger underlying issues. "I met the VIA people, the culture in that company - aside from the good passenger service stuff, which I give them very high marks on, the on-board service stuff - the culture in terms of the business strategy, it's horrendous, it's awful. I couldn't believe it," he said.
"They've got some really tough sledding ahead, but they are not making it any easier on themselves."
“If you just look at the tone of what they do, it's all negative, then they'll say it's positive. VIA has this incredible ability to issue press releases with bands playing and flags lying, as they retreat. I always marvel at it.”
Byline: Cole Hobson
Publication: Miramichi Leader
Wednesday September 18th, 2013
MONCTON - With the release of another quarterly report that shows VIA Rail has experienced decreasing ridership revenues as well as increased operating costs, a former president of Amtrak with over 40 years of experience in the North American railroad and transportation industry is straight to the point when asked about the company's future. "My sense of what's happening to VIA is it's dying, to be blunt"' said David Gunn, who served as president of the American railway company Amtrak from 2002 to 2005 and before that worked a variety of jobs in the industry in cities such as Boston, New York, Philadelphia and Toronto.
"I don't think they have any focus at all. There's no question that the extent they try to do anything, at this point they are focusing on Toronto to Montreal, but what have they done? ...They've never focused on any service and made it a really important part of the transportation scene and I think that's a terrible mistake.
"VIA has basically been going out of business. All of the actions from VIA have been basically reducing service since it was set up."
Gunn, who lives in Cape Breton, N.S., said the situation is much different in the United States, where Amtrak has had its challenges, but is a thriving transportation company. 'Amtrak had been struggling in the U.S., but it had a lot of support congressionally and it's actually prospered, amazingly enough,' he said. 'Ridership is setting new records every year, they have been able to build a northeast corridor into a respectable operation, its high speed and it's actually a very good operation.'
VIA Rail's second-quarter results showed revenues decreasing by 2.8 per cent, totalling $66.2 million for the quarter. Meanwhile, operating expenses before corporate taxes and amortization of deferred capital funding increased by 8.6 per cent, amounting to $154 million for the quarter. Operating funding from Government of Canada increased in the quarter by 11 per cent, to $79.9 million.
The results over the six-month period ending June 30, 2013 also saw revenues decrease (2.8 per cent, to $125.2 million), while operating expenses increased (2.7 per cent, to $301.9 million) and government funding increased by 7.7 per cent, to $163.2 million for the period. Gunn said VIA Rail is also struggling with deteriorating railways around the country and said Amtrak has been able to thrive south of the border in part because of the support it is shown by government.
'It's different (in Canada) than the U.S. and if the government doesn't push it as a Crown corporation, it doesn't happen. Whereas in the U.S. Amtrak sort of developed a mindset of its own and it used it’s supporting Congress to move forward,' he said. 'There's a lot of problems with Amtrak, don't get me wrong. I'm just saying they are in much better shape than VIA, because let's face it, the VIA management is totally controlled by the minister. Even though in question period they always say it's a Crown corporation, the reality is that they are totally beholden to the Department of Transportation, of that ministry.'
The quarterly report showed a four per cent increase in passenger miles (total number of miles travelled by all passengers) and a 0.7 per cent increase in ridership, despite the lower passenger revenues. Operating expenses saw a rise of 13 per cent, an increase of $9 million, excluding employee benefits. According to VIA Rail, the increase was due primarily to higher depreciation costs related to the completion of major elements of the capital investment program completed last year and the increase was largely offset by the amortization of deferred capital funding.
“If you just look at the tone of what they do, it's all negative, then they'll say it's positive. For example, when they cut back the Ocean (from six times weekly to three times), they made these public statements they were going to co-ordinate rail with the bus - well, the trains were always co-ordinated with the bus until VIA ran into the slowdowns because of track conditions on the line up through Newcastle and Bathurst and that broke the connection”, Gunn said.
'VIA has this incredible ability to issue press releases with bands playing and flags lying, as they retreat. I always marvel at it.'
In order to turn the tide and fortunes at VIA, Gunn said first they would need more support from the government of the day in order to make it a significant player. He said rail travel in the States has been pushed as a less expensive option as compared to building new roads and highways - to take congestion away from busy thoroughfares.
In the press release accompanying the report, president and CEO of VIA Rail Marc Laliberte said during the second quarter of 2013,”we continued our efforts to develop a train culture in Canada. Our promotional strategies have been making the train more and more appealing for travel within Canada, and have stimulated a growth in ridership, especially within the Quebec City-Windsor corridor. However, our market remains price sensitive”, he said.
Gunn said it's humorous to hear a VIA Rail executive talk about creating a train culture in Canada. "I don't know what he's talking about, creating a train culture. VIA is almost irrelevant, except to rail fans. It really is," he said.
Greg Gormick, a Toronto-based independent transportation consultant, also balked at the assumption of a train culture being built in Canada. "I don't know too many countries that develop a train culture by cutting the number of trains and closing stations," he said. "It's a bust."
Mylene Belanger, a spokeswoman for VIA Rail, said in terms of Atlantic Canada train culture, the company has 'made important investments on (the Ocean) service and promotions are often offered all-year round.' She noted that as of June 15, the Ocean has been equipped with the same Wi-Fi available to passengers on the Quebec City-Windsor corridor. "Available across more than 98 per cent of the route between Montreal and Halifax, the new Wi-Fi connection allows passengers to remain virtually linked to work, friends and family throughout the trip. We are offering our passengers new technological and attractive services, which add to their experience," she wrote in an email. "We also continue to promote our long hauls services: every year, hundreds of thousands are invested to advertise the Ocean and the Canadian."
Gunn said VIA Rail does do some things right, such as their top-notch on-board service, but he said the bad has outweighed the good. "It all goes to the overall strategy of what they are trying to do with passenger rail service. If Marc Laliberte said he's trying to build a train culture in the country, you don't do that by cutting back trains”, he said. “The fact of the matter is I think is the budget is being cut and they don't have a lot of options left”.
The report also detailed figures on specific trains that VIA operates, such as the Ocean, which serves Atlantic Canada three times a week - down from a previous service level of six times a week. In the second quarter, revenues on the Ocean decreased by 40.6 per cent, due to lower ridership (37.4 per cent less passenger-miles) resulting from the frequency adjustments combined with lower yields (revenue per passenger mile) of 5.1 per cent.
In the six-month period ending June 30, Ocean revenues dropped 43.5 per cent, with 40.1 per cent less passenger miles and 5.7 per cent less yield.
“Now the interesting part of the Ocean is that keep in mind they cut 50 per cent of the service, but they only lost 40 per cent of the ridership”, Gormick said. “So as I've often said, the problem with Canadians is you can do the worst to the passenger trains and they still won't go away. This not only proves to government that people want the trains, they will support them”
VIA and the government use this use it or lose it argument - if you don't provide the service, how can you use it? Belanger noted that the adjustments in frequency on the Ocean were made to better reflect customer demand, which was 'necessary to allow VIA Rail to focus resources on improving service and attract more customers on routes where demand is strong and growing.' She noted that despite frequency reductions of 50 per cent, cars were added to some of the remaining frequencies, which resulted in a reduction of overall available capacity by only 36 per cent. She said direct operating costs were reduced by 50 per cent as a result of the cuts.
Gormick remains at work writing a report to look at the implications of the Canadian National Railway's plan to abandon the track between Moncton and New Brunswick's north shore, VIA Rail's reduced frequency of the Ocean passenger service and the collapse of Industrial Rail Services. It was funded at a total cost of $13,000, including $5,000 from the City of Moncton, $2,000 from the City of Dieppe, and $1,500 each from the Town of Riverview, the City of Miramichi, the City of Bathurst, and Enterprise Greater Moncton.
Gormick said he's in the last stage of completing the report and hopes to have a draft of it in the hands of the interested parties by the third week of September.
There's no easy solution to turning around VIA Rail to become a more prominent player in Canada's transportation industry, and while Gormick's report will offer a number of suggestions, one easy and cost-effective idea he has is to install Gunn into the company's board of directors.
Gunn said he appreciates Gormick's vote of confidence but he doesn't believe one extra voice speaking out on the board would create a big impact.
In his tenure with Amtrak, Gunn said he had many dealings with VIA and he believes there are bigger underlying issues. "I met the VIA people, the culture in that company - aside from the good passenger service stuff, which I give them very high marks on, the on-board service stuff - the culture in terms of the business strategy, it's horrendous, it's awful. I couldn't believe it," he said.
"They've got some really tough sledding ahead, but they are not making it any easier on themselves."
“If you just look at the tone of what they do, it's all negative, then they'll say it's positive. VIA has this incredible ability to issue press releases with bands playing and flags lying, as they retreat. I always marvel at it.”
