High Speed Trains for
Canada: Technological
Excellence, Groundless
Conviction, or
Bureaucratic
Obsession?

Richard M. Soberman

Introduction

PSYCHIATRISTS GENERALLY AGREE that people would be better adjusted if "they could do more" of the things they like and fewer of the things they dislike. Many Canadians dislike flying, but they take more than 14 million domestic trips by air each year anyway; most Canadians like trains, but they take less than 4 million trips every year. The reasons for not following good psychiatric advice with respect to these travel decisions are fairly obvious - most of the time individuals make their travel decisions on the basis of perceived differences in travel time, cost, and convenience, to name probably the most important. Consider, for example, a recent round trip from Toronto to Ottawa: one way by VIA Rail (club), the return by Air Canada (economy).

For this business trip, the two hour time saving by air works out to about $82 per hour, an indication of the value some people place on their time, even for a trip that is less civilized by almost any measure. Of course, if someone else is paying for the trip, or if the fare is tax deductible, the cost differential is almost meaningless. Moreover, VIA Rail was on time, an increasingly usual occurrence, and Air Canada was delayed, not an unusual occurrence. The flexibility of departure times, on the other hand, was much greater for air travel than for travel by rail.

The case for high speed train service on this route (or similar routes where rail travel, other than for purely recreational purposes, can be considered as a realistic alternative to air), therefore, really rests on the question of how much the time differential can be reduced, and at what cost. After all, merely doubling the current average speed of about 100 km per hour, not a very tall order for today's railway engineers, entirely eliminates Air Canada's travel time advantage.

Background

General interest in high speed passenger trains derives from a variety of factors, including concerns about the environment, government spending on roads and airports, highway safety (and, to a lesser extent, aviation safety), as well as some degree of nostalgia related to the lore of trains and the importance of railways to the cultural heritage of this country. Interest has been heightened over the last twenty years by the remarkable technical advances made, first by the Japanese with their "bullet trains" and, most recently, by the French with their TGV (Train à Grande Vitesse). Canadians who have travelled on these trains marvel at the experience and, understandably, wonder why such superb services cannot be provided in this country. There are, of course, other examples of fast trains in the U.K. and elsewhere in Western Europe and, much closer to home, the very respectable Metroliner operated by Amtrak between Washington and New York. While these Japanese and European experiences have created a degree of envy on the part of many Canadians, such envy might be better directed at Amtrak which operates in a demographic and competitive market that more closely resembles the Canadian scene. By Canadian standards, Amtrak has achieved considerable success. From 1981 to 1988, for example, Amtrak increased its operating cost recovery from 48 to 69 percent, compared to VIA Rail's overall system operating cost recovery of 28 percent in 1988. Amtrak's Northeast Corridor services already show a healthy operating profit. The entire system is projected to break even by 2000 and begin to make a contribution to capital. By contrast, 1990 revenues for the TGV Sud-Est amounted to 163 percent of costs, yielding a net profit after covering all debt service costs. Ten years after opening, the entire cost of the new line is expected to be "paid back." See Gérard Mathieu, "Ten Years TGV Sud-Est - A resounding success," Railway Engineering International, Vol. 20, No. 3 (1991), p.7.Note

On this continent, the first serious look at high speed ground travel began in the early 1960s. Concerned about highway and airport congestion throughout the entire seaboard between Boston and Washington, the U.S. government embarked upon a series of Northeast Corridor High Speed Ground Transportation studies. These studies examined the feasibility of a wide range of existing and emerging technologies, including monorails, tracked hovercraft, gravity vacuum tubes, turbotrains, and modern electric trains. Millions of taxpayer dollars were dissipated on inventors who typically overstated performance capabilities and understated costs. When the dust settled, electric trains reaching speeds of 200 kmh were introduced between New York and Washington in 1976. Since that time, however, no other high speed trains have been placed in regular commercial service elsewhere in America.

In Canada, interest in high speed ground travel was motivated by similar concerns about road and airport congestion, as well as some desire on the part of Ottawa transport officials to "keep up with the Joneses," in this case, their counterparts in Washington. Prior to Expo '67, Canadian National had leased four Turbotrains, built by United Aircraft in the U.S., for service between Montreal and Toronto. Though capable of higher speeds on existing track than conventional trains, the Turbotrain failed almost entirely to live up to its performance claims, experienced severe reliability problems, and quietly disappeared from the scene in both Canada and the U.S.

In 1969, the Canadian Transport Commission (CTC) embarked upon its own technology assessment study for the highest density travel corridors in southern Ontario and Quebec, and eventually coined the phrase "Quebec-Windsor Corridor," still identified today by VIA Rail as its Corridor Services. Richard M. Soberman, George Clark, and Tom Parkinson, Intercity Passenger Travel Study, (Ottawa: Canadian Transport Commission, 1970).Note In part, that study was also motivated by events in France and pressures from the inventor, Bertin, who had developed an experimental tracked, air cushion vehicle on a test track too short to measure its real speed potential. The Aerotrain was an aircraft-like vehicle, supported on a cushion of air, like a hovercraft, wrapped around a concrete structure for guidance, and driven by a rear mounted aircraft engine and propeller.Note After comparing a number of alternative technologies, including Short Takeoff and Landing (STOL) air service, Interest in STOL services and the subsequent Montreal-Ottawa STOL demonstration, funded by the federal government, was, of course, motivated to assist DeHaviland in marketing Twin Otters and, subsequently, the Dash series of short haul aircraft. At the time, proponents of STOL technology, including the then prestigious (but now defunct) Science Council of Canada, argued that high speed trains would never "fly" and that for short haul intercity transport, STOL would be an outstanding success that would reap immeasurable industrial benefits for Canada and displace the need for passenger trains.Note using the best available data on travel markets in the Corridor, the CTC study concluded that the most cost effective solution would likely involve modest investments in existing track in order to permit higher speed operation and more frequent service.

The CTC recommendation never really went very far, partly because Ontario government officials expressed concerns that high speed service could only be achieved at the expense of service to intermediate points that would be by-passed. More importantly, the federal government was too busy wrestling with the ever increasing losses on rail passenger services operated by Canadian National and Canadian Pacific throughout the country. Although the National Transportation Act of 1967 included measures for reducing the huge bill for rail passenger services by eliminating those money losing services that were not deemed essential, successive governments lacked the intestinal fortitude to make any serious cut-backs in service. However, the Act did transfer most of the burden of those losses (80 percent) from the railways to the government, a measure intended to improve the general competitiveness of Canadian railways for freight traffic.Note Dissatisfied with the increasing subsidies demanded by the railways and faced with considerable public discontent over the quality and reliability of these services, the government of Canada began toying with the idea of establishing VIA Rail as a national rail passenger crown corporation, mimicking similar moves taken in the U.S. by the creation of Amtrak. Though similar in concept, the conditions requiring the creation of a national rail passenger corporation in the U.S. were, and are, far different than those in Canada. The U.S. railroad network of the day consisted of a very large number of separate, private companies, the large majority of which were in serious financial difficulty, including such now defunct giants as the New York Central and Pennsylvania railroads. There were no single transcontinental railroads and, other than the Alaska Railroad, the U.S. federal government owned no rail facilities. Some integrating unit was thus necessary if rail passenger service was to be provided as a matter of public policy. In Canada, there were basically two transcontinental railways serving almost the entire country from coast to coast, the largest of which is still owned by the government of Canada. Creating VIA under these quite different conditions, if nothing else, was an admission of the inability of the federal government to effectively control its own crown corporation.Note

During the 1970s and 80s, however, the Canadian government showed very little interest in any serious appraisal of the potential for higher speed rail service. A few studies touted the virtues of rail travel. In a report entitled Alternatives to Air, the Canadian Institute for Guided Ground Transport (a research centre at Queen's University, funded by Transport Canada, both major railways, and, subsequently, VIA Rail) concluded that train service in the Quebec-Windsor corridor could compete favourably with the airlines and be profitable.

Although generally based on some rather optimistic projections of potential passenger markets, the Queen's report did inspire VIA Rail to embark upon a series of costly feasibility studies, largely employing consultants who would tell them what they wanted to hear and ignoring consultants who might introduce some degree of realism into the process. Through these studies, VIA hoped to convince the federal government that massive capital investment and improved train service for the Quebec-Windsor corridor represented a politically and economically sound endeavour. The government responded with a series of cyclical decisions to eliminate, restore, and again eliminate a large number of existing VIA Rail services. Although not the subject of this paper, government schizophrenia on rail passenger policy has certainly muddied the waters and deserves some mention. In the summer of 1981, faced with growing VIA losses, the Liberal Minister of Transport, Jean Luc Pepin, eliminated about 30 percent of VIA's service, without parliamentary debate. When the Liberals were routed by the Conservatives, Don Mazankowski lived up to an election promise and restored most of these services, and then some, in 1984. Mazankowski also prepared a very reasonable piece of rail passenger legislation which established targets for financial performance based on a "use it or lose it" policy for determining which services would be continued. The proposed legislation, however, was never introduced due to internal wrangling within the Conservative Caucus. Five years later, when VIA's losses had climbed to more than $650 million (about $100 per passenger), the Minister of Transport, Benoit Bouchard, proclaimed even more severe cutbacks than those originally initiated by Jean Luc Pepin. Bouchard's January 1990 policy statement reduced VIA service by about 50 percent and established specific annual limits for government spending of $350 million, to be phased in over four years. While no data are publicly available on the specific allocation to Corridor services, these services accounted for about 58 percent of all 1991 expenses and about 83 percent of all passengers.Note

The current stimulus for consideration of modern train services in the Quebec-Windsor Corridor basically derives from the industrial sector, encouraged by the euphoria surrounding the French National Railway's (SNCF) tremendous technological success with high speed trains. As the North American licensee for the TGV, Bombardier, in association with a group of private financiers, began promoting the concept of a financially viable, truly high speed train service in the Corridor on the basis of its own pre-feasibility study. Bombardier's interests, of course, were self-evident: by successfully demonstrating the application of this technology in Canada, larger markets could, presumably, be opened in the U.S.

Bombardier's proposal was based on an estimated capital investment of between $5 and $6 billion for the entire Corridor, about one third of which was expected to come from government sources as a quid pro quo for the indirect benefits that would accrue to the general public. These benefits allegedly include reduced highway and airport congestion, environmental protection, the reduction of operating subsidies for VIA Rail's Corridor services, and, of course, employment creation in the manufacturing and construction sectors. The environmental arguments certainly have merit, provided reasonable utilization of rail services can be achieved. ABB, for example, estimates fuel consumption at 1.7, 17, and 33 litres per passenger between Toronto and Montreal by rail, automobile, and air, respectively. Since CO2 emissions, acknowledged to be an important cause of ozone depletion, vary directly with fuel consumption, there would be environmental benefits derived by diverting large numbers of passengers from more fuel intensive modes of transport to a well-utilized rail service, regardless of improvements in fuel efficiencies achieved by these modes.Note At about the same time, another interesting proposal was announced by a competing supplier, ASEA Brown-Boveri Canada (ABB), based on its lower speed Sprintor, a Canadianized version of ABB's X2000 train, now successfully operating in Sweden.

Bombardier's successes in other areas of transport technology, such as aircraft and rapid transit systems, was not to be taken lightly and in response to its proposal, the governments of Quebec and Ontario established the Quebec-Ontario Rapid Train Task Force to study the matter in greater detail. (Concurrently, the federal government established its own Royal Commission on National Passenger Transportation with a much broader mandate.) The Quebec-Ontario task force completed the first round of its deliberations in 1991 by recommending more study, which led to an agreement by Quebec, Ontario, and the federal government to share equally in a $6 million detailed feasibility study, now under way.

A primer on high speed

Before turning to the possible relevance of high speed rail service in the Quebec-Windsor corridor, a capsule description of high speed train services may provide an understanding of the basic issues involved. First, one must recognize that existing rail passenger vehicles are already capable of achieving higher speeds than those offered in commercial service almost anywhere in North America. In order to achieve rapid acceleration and higher cruising speed, obviously, a high power propulsion system is necessary. Setting aside the propulsion requirement, however, performance is limited or affected by a number of fundamental factors, namely: condition of the track, frequency of stops, geometric design standards (grades and curves), other traffic using the same facilities, and the number of grade crossings with highways.

•Frequency of stops or station spacing influences the maximum speed that can be attained and the duration of travel at that speed before it is necessary to slow down and stop at a station to load and unload passengers.

•Given the necessary locomotive power, operation at high speeds also requires a high quality track structure that must be maintained at a very high standard. The quality of track is dictated by such factors as the rigidity of the entire track structure, soil conditions, and the size of rail.

•Maintenance involves retaining the original geometry of the track (for example, gauge, the distance between rails). If the same track is used by heavy freight trains with much less sophisticated suspension systems, it is extremely difficult to maintain track for high speed, except at prohibitively high cost.

•Geometric design is particularly important on curves. Railway curves are banked to compensate for the centrifugal forces that act on a vehicle as it rounds a curve. The degree of banking (superelevation) depends on vehicle speed and the sharpness of the curve (curvature). Here, there is a basic incompatibility between high speed and normal speed trains using the same track; if high speed trains use a track that is not adequately banked, there is a safety hazard. If a slow freight train uses a track that has been banked for high speed, there is a tendency for the train to "fall off" the track or, at least, severely damage the lower rail.

•Other traffic using the same facility also influences the maximum speeds that can be attained from the standpoint of safe traffic control, particularly where overtaking is involved.

•Frequency of grade crossings is probably the single most important impediment to increasing speed on existing track. As long as crossings are not grade separated, train speeds must be limited to permit safe stopping in the event of any obstruction on the track, such as a stalled motor vehicle. For this reason, a 90 mph speed limit is imposed on all railways in Canada. In view of its allegedly superior braking characteristics, the speed limit was increased to 100 mph for the experimental Turbotrain. On its inaugural run, however, the Turbotrain, equipped with a nose-mounted closed circuit video camera for the benefit of invited media representatives, successfully demolished a milk truck which had stalled on a grade crossing.Note

Putting these key factors together, there are basically two fundamental and somewhat related choices to be made in the actual design of a high speed rail system. One is whether the system is electrified or relies on a train-mounted power supply such as a diesel-electric locomotive. The other is whether the service is to operate on dedicated track or track shared by slower speed passenger and freight trains.

These choices are not entirely independent. For dedicated track, the capital investment is so large as to be justifiable only for very high traffic volume and train frequency. It is precisely under such conditions that the operating economies gained by the use of electrical energy outweigh the additional capital costs of installing the power supply and distribution system. Practically speaking, therefore, dedicated track and electrification go hand in hand. In the case of shared track, electrification may also be necessary as well as cost effective for high speed service.

Very high speeds (about 300 kmh), such as those achieved by the TGV, clearly require electrified service operating on dedicated track, completely separated from other rail traffic that can damage the track and interfere with operations, fully protected from accidents at grade crossings, and adequately designed in terms of standards for grades and curves. (Curves for 300 kmh service, for example, require a radius of not less than 6,000 metres, compared to about 2,500 metres for 200 kmh service.) Satisfying these requirements is unquestionably more costly than accommodating lower speed service on existing, rehabilitated track typical of the X2000 trains in Sweden and the Metroliner trains in the U.S. Obviously, there are opportunities to mix and match. For a particular route, there may be some segments of operation on completely dedicated track, whereas other sections may involve operation on shared track, possibly including grade crossings at reduced speeds. Depending on the length of reduced speed operation, overall travel times may not be affected significantly.

On a worldwide basis, advances in high speed train technology are most frequently identified with the achievements made by national railways in Japan and France. The first significant breakthrough occurred in 1964 when the Shinkansen or Bullet train commenced regular service between Tokyo and Osaka with a maximum operational speed of 210 kmh, subsequently increased to 275 kmh in the late '80s. (According to recent news releases, 350 kmh service may be introduced shortly in Japan.) In 1981, the French National Railways (SNCF) inaugurated TGV service between Paris and Lyons with a maximum operational speed of 260 kmh. By 1989, the new Atlantique service between Paris and Le Mans/Tours reached an operational speed of 300 kmh. One year later, on an experimental run, the TGV established the current world record of 515 kmh!

Though nothing yet equals the French achievements, there are other interesting examples of high speed services in Germany, Sweden, Italy, the U.K., and the U.S. which have generally not attracted as much attention. Comparative information on these systems is summarized in table 1. Table 1 compares only technical characteristics. Unfortunately, comparative data on costs, revenues and financial performance of these different services is not readily available. As noted previously, however, according to the SNCF, at least one of the TGV services operates on a full cost recovery basis. Differences in the regulatory and public policy environment within which these services operate, particularly regulations and policies related to domestic aviation, may also affect the "success" of these services.Note As shown, several systems operate on track that is shared by conventional passenger trains and, in some cases, even by freight trains. The Amtrak experience between Washington and New York is particularly interesting from the standpoint of potential applications in the Canadian corridor. With twelve Metroliners (powered by ABB locomotives) and twelve conventional trains operating daily in each direction, Amtrak now carries 38 percent of the total air/rail market. Because this distance is shorter than the route between Toronto and Montreal, the speed difference between the Metroliner and the TGV is of lesser concern. The New York-Washington service shows an operating profit. The capital cost of rebuilding the existing line to permit reliable operation at 200 kmh on some segments was of the order of $2.5 billion (1976), however, or an average cost of about $6 million per km. See W. Graham Claytor, "Amtrak on Target to Break Even by 2000," Rail Gazette International, Vol. 147, No. 12 (December 1991), p. 863-868.Note

In examining these examples, from the Metroliner to the TGV, it is important to note that while speed is undoubtedly the single most important attribute of service, these systems all involve what is almost a quantum jump in rail passenger marketing attitudes. The whole travel experience involves novel designs for stations and terminals, user friendly ticketing and reservation systems, and a variety of on-board amenities and services. Trains do not just move faster; passenger handling and conveniences more resemble a good airline operation (with greater comfort) than they do a typical Canadian rail passenger operation.

Current Canadian initiatives

Compared to the existing high speed systems noted above, there are two serious proposals in Canada for the Quebec-Windsor Corridor, with some suggestion of applications in a second corridor between Calgary and Edmonton. Bombardier's proposal involves TGV technology at 300 kmh, operating on electrified, completely new, dedicated track between Quebec City and Montreal, Montreal and Toronto via Ottawa, and Toronto and Windsor via London. ABB's X2000, or Sprintor, would operate at 200 to 250 kmh on electrified, rehabilitated, existing track, first between Toronto and Montreal, with subsequent extensions to Quebec City and Windsor. In both proposals, smaller communities at intermediate points, such as Cornwall, Brockville, Belleville, and even Kingston, would not be served directly, due to the time losses involved.

Present interest in these proposals has reached a high level in a few select circles which include officials in the transport ministries of Quebec and Ontario, potential equipment suppliers, VIA Rail itself, and those consulting firms selected to carry out a number of costly studies. Special interest groups, including environmentalists and railway nostalgists, while not in the main stream of action, certainly endorse the case for high speed rail in periodic articles which appear in the daily press.

In a recent editorial, for example, the Toronto Star (September 1, 1992) urged immediate government action to introduce "supertrains" in the Quebec-Windsor corridor, largely on the basis of the employment potential created by such a massive project. The Star is not unique in advocating major public spending in these recessionary times and using employment creation as the justification for massive capital projects. Certainly, many economists support the notion of public spending in recessionary times, as long as such investments represent a prudent use of tax dollars. What is surprising is that both journalists and consultants are so quick to jump on this particular bandwagon. After all, employment can also be created by building pyramids which, though admirable from an architectural point of view, do not represent a particularly cost-effective use of public funds. Most major public capital works tend to be highly labour-intensive, a fact that accounts for a significant portion of total costs; if employment benefits are used to offset these costs, any labour-intensive project, however ridiculous, can be shown to have an attractive cost-benefit ratio.Note The Star's decisiveness is based on the complete absence of any realistic information on the costs and benefits of such an undertaking, totally in keeping with the various pronouncements made by government officials. The major difference, of course, is that editorialists only argue for massive public spending; bureaucrats actually make liberal use of taxpayer dollars.

To understand how we arrived at this situation, it is useful to go back in history about twenty years and consider a simple decision made in an almost totally unrelated field. After years of controversy, in 1971, the Cabinet of Ontario overturned decisions reached by Metropolitan Toronto and the Ontario Municipal Board regarding construction of the Spadina Expressway. When he cancelled the Expressway in his now famous "Cities are for People" speech, Premier William Davis promised new provincial initiatives in the field of public transportation, including increased capital and operating subsidies and the development of advanced, state-of-the-art transit technology.

Based on experimental developments in Germany, magnetic levitation was the new technology recommended to the Premier by his advisors and consultants. The government owned Urban Transportation Development Corporation (UTDC) was created to accelerate the application of this technology. Although magnetic levitation was shortly abandoned as a practical application within urban areas, the UTDC did develop and market a number of vehicles and systems - new streetcars (or light rail vehicles) for Toronto, as well as an advanced light rail system using linear induction propulsion and advanced train control systems. Subsequently, the provincial government provided Metropolitan Toronto with strong financial incentives to choose this technology over conventional streetcars for the Scarborough RT, largely for its demonstration value, eventually leading to sales in Detroit and Vancouver (where it is known as Skytrain). This tactic, incidentally, has not been lost on the proponents of TGV in the Canadian corridor, the successful introduction of which would presumably open up new markets elsewhere in North America.

Unfortunately, for all its achievements, UTDC was perceived as a Tory creation that always served as a good target for the opposition during Question Period. When, to everyone's surprise, the Liberals eventually took charge of Ontario after almost a half century of Tory rule, it came as no surprise that UTDC was put on the block for privatization. During the period of government ownership, UTDC had established a test track and manufacturing facility in Kingston and had also acquired Hawker Siddley's subway and commuter rail car manufacturing plant in Thunder Bay. Eventually "sold" to Lavalin, with the demise of that firm, UTDC ultimately ended up within the Bombardier family of companies. As the North American licensee for the TGV and the new owner of the UTDC's manufacturing facilities in Kingston and Thunder Bay, Bombardier deserves and receives serious attention from officials and politicians of both provincial governments. In addition, Bombardier is now involved in preparing an offer for the implementation of TGV service between Dallas/Forth Worth and Houston, the only high speed rail application under serious consideration in the U.S. at this time.

Bombardier's interest and influence are totally understandable. Bombardier obviously views the Quebec-Windsor market as one of several potential applications of a technology that will add to its manufacturing activity. In its own pre-feasibility study, Bombardier concluded that, with some government participation in financing capital costs, TGV service would be commercially viable from the standpoint of potential private investors. Similar conclusions were reached by ABB in their pre-feasibility study of the Sprintor. In view of Bombardier's favoured position in both provinces, however, it is not surprising that ABB has been given far less recognition and support by the governments of Ontario and Quebec, as well as by the government of Canada. In some respects, Bombardier already has the inside track while ABB is on the outside, looking in. ABB, however, is faring better in the U.S. The original supplier of Metroliner electric locomotives, ABB imported an X2000 for demonstration service in Amtrak's Northeast Corridor in the Spring of 1993 between New York and Washington and between New York and Boston. Between Hartford and Boston, the X2000 was hauled by diesel electric locomotives because the line is not electrified (as was the case for limited demonstrations of the same train in Canada).Note

Aside from suppliers, VIA Rail Canada, the crown corporation responsible for rail passenger services from coast to coast, is hardly a dispassionate observer in the current dialogue on high speed. Although VIA's history, performance, and expectations are really the subject of another discussion, VIA's role cannot be ignored, even though its participation in any high speed service that may be introduced is highly questionable. According to the Minister of Transport (La Presse, September 3, 1992), the federal government would have, at best, minimal involvement in high speed service which would preclude VIA's participation as the operating authority.

A capsule description of the organization may be useful in explaining VIA's interest in high speed rail. VIA Rail is basically a concept conceived in the minds of senior federal government bureaucrats. Emulating what they saw in the U.S., these bureaucrats convinced the government to establish VIA Rail in the late 70s as a means by which better rail passenger service could be delivered to Canadians at lower public cost. At first, the concept was opposed by both Canadian National and Canadian Pacific, then legally responsible for operating passenger trains. But it did not take long for railway officials to realize the bonanza that the establishment of a national rail passenger corporation would provide for off-loading redundant equipment, facilities, and, in some cases, personnel.

Although VIA is a railway, it owns no track. It does purchase track "rights" and other services from CN and CP on a "cost plus" basis. Both railways are entitled to recover all costs associated with the operation of passenger service on behalf of VIA according to the CTC Costing Order, certainly an improvement over the conditions of the National Transportation Act of 1967 under which the railways were still burdened with 20 percent of the losses on these services. VIA, in turn, sells service to the public on routes prescribed by the Minister of Transport. Under such conditions, the railways have little or no incentive to improve either efficiency or quality of service, VIA has very little bargaining power with the railways, and VIA cannot even make its own marketing decisions, which are dictated by political expediency.

Over the years, VIA's dependence on CN and CP has declined inasmuch as CN operating labour became VIA employees and VIA built, at great cost, its own under-utilized maintenance facilities, through no fault of its own. At the time, VIA planned these facilities as an alternate means of getting out from under CN's monopoly pricing for equipment maintenance. However, in 1985, the Nielsen Task Force did urge consideration of contracting out for equipment maintenance either with Ontario's GO Transit (also in the process of building maintenance facilities for the same reason) or with private equipment manufacturers. Nevertheless, the federal Ministry of Finance approved VIA's request to fund five new maintenance centres in the late 80s, just a few years before the Minister of Transport reduced VIA's fleet and services by half. This sequence of events may be illustrative of the proverbial communication problems between left and right hands.Note However, VIA's independence has also been greatly reduced by the 1990 policy which essentially dictates what routes are to be served, as well as the number of trains to be operated on each route.

Unlike Amtrak which receives financial directives from the U.S. Congress, VIA has never been given any cost recovery targets as the basis for determining service priorities. Although the 1990 VIA policy statement did establish total subsidy limits, no cost recovery targets were established. In the absence of such financial discipline, VIA has little leverage to negotiate with its own labour force, which is compensated according to antiquated rules (featherbedding) that would have to be totally overhauled and streamlined for high speed services. Amtrak, for example, successfully negotiated collective agreements in which locomotive engineers are paid by the hour rather than by mile, which is the case for VIA's locomotive engineers. The threat of discontinuing services that could not achieve financial targets for cost recovery, imposed by Congress, allowed Amtrak to obtain such concessions. In Canada, the less than five-hour trip between Montreal and Toronto still earns 3.5 days salary under VIA's collective agreement, clearly a horrific cost for a travel time that could easily be cut in half with TGV service.Note The net effect of this combination of factors is that, except for coastal ferries in remote regions, rail passenger service has the poorest financial performance of any mode of intercity passenger transportation in Canada. Setting aside some rather curious assumptions regarding cost allocation, findings of the recently completed Royal Commission on National Passenger Transportation, shown in figure 1, suggest that rail passengers pay less than 25 percent of average costs compared to 96 percent for bus, 82 percent for airlines, and 91 percent for private automobiles. Royal Commission on National Passenger Transportation, Directions (Summary), (Ottawa: 1992), p.10Note

Under these conditions, VIA's continued interest is certainly curious. VIA's management obviously believes its organization to be a prime candidate for the operation of TGV service in the Corridor, despite the Minister's statements to the contrary. Ministers (Pepin, Mazankowski, Bouchard, Young) change, of course, as do rail passenger policies (1981, 1984, 1990). Nevertheless, recognizing that many communities within the Corridor would be by-passed in the advent of privately operated high speed trains, VIA could be in the unenviable position of being deprived of its most important source of revenue and left only with the residual, local service function.

Finally, the consulting industry is another important constituency encouraging government interest in high speed rail. In these times of economic recession and frequent bankruptcies, a select number of consultants have been doing quite well due to the generosity of various federal and provincial bureaucrats. What is not clear, however, is how well the public interest is being served by this philanthropic use of taxpayer dollars.

The Ontario-Quebec Rapid Train Task Force

When the right pressures are put on the right politicians and when bureaucrats have no real answers, the usual practice is to undertake a study. More often than not, the practice is also to place individuals who know little about the subject in charge. In this way, objectivity is assured. In Ontario and Quebec, government response to renewed interest in high speed rail and claims of financial self-sufficiency led to the establishment in late 1989 of the Ontario-Quebec Rapid Train Task Force, created to undertake an in-depth assessment of the political, economic, and financial feasibility of high speed rail passenger service in the Quebec-Windsor corridor.

The outcome of the Task Force was predicable even before it held its first meeting. Hearings would be held that would be dominated by "rail fans," Task Force members and senior staff would have an opportunity to visit the world and accumulate frequent flyer points, a list of options would be developed for assessment to provide an impression of comprehensiveness, and the Task Force would eventually conclude that more study would be required.

In its final report of May 1991, the Task Force certainly could not be accused of humility, labelling their findings as "the most thorough review to date of high speed rail in the Ontario/Quebec corridor." Ontario/Quebec Rapid Train Task Force (Task Force), Final Report, May 1991, p. EXECSUM-3.Note Naturally, the Task Force members travelled extensively in Europe, Japan, and the United States. The Task Force also retained "independent consultants...after a deliberate and competitive search." One consultant was involved in three of the eight studies commissioned. The evaluation of socio-economic impacts and the analysis of potential ridership was entrusted to American consultants, while a major review of previous studies was awarded to an organization that had already publicly argued the commercial viability of high speed rail services in the Corridor. Prior and well-known biases certainly did not disqualify any consultants from participation, provided, of course, those biases were what the Task Force wanted to hear.Note Of the ninety five submissions received over eleven days of public hearing, the vast majority came from municipal councils who would never have any financial stake in the outcome, from objective organizations with such names as Think Rail, from potential suppliers, and from organized labour.

The Task Force report is bulky and, since its own executive summary runs on for twenty seven pages, it would be difficult to provide a detailed assessment here. However, a few points characterize the rather unfortunate lack of objectivity in its deliberations. For example, the analysis is restricted to three distinct technologies: a 200 kmh non-electrified option on improved track, a 300 kmh electrified option on new dedicated track, and a 400 kmh maglev option involving an entirely new guideway concept. The maglev option is the typical "strawman," included to create an impression of comprehensiveness, analyzed, and subsequently discarded on grounds that it is still too futuristic with no meaningful available data. It is also interesting to note that after a globe-trotting review of existing systems, Amtrak's Metroliner service between Washington and New York, a 200 kmh electrified service on existing, improved track, receives no more than a passing glance.

The fundamental bias of the Task Force is also reflected in its treatment of markets and potential ridership. Basic ridership data, essential to any meaningful market analysis, are extremely crude and highly questionable - certainly no fault of the Task Force. The paucity of reliable data on market shares for intercity passenger travel, particularly for automobiles, has plagued analysts for years. Such data are difficult and expensive to collect and, even where they do exist, they are usually treated as confidential or proprietary. Weaknesses of the data base, however, did not prevent the Task Force from stating that "use of available transportation services . . . reveals . . . the relative popularity of rail." Ibid., p. 1-10.Note How do the data presented, even with the above noted limitations, support this language?

Table 2 shows certain ridership data extracted from the Task Force report for 1987. Automobile dominance is clear (85 out of 95 million trips), even allowing for significant errors in the raw information. However, considering carrier ridership estimates alone, even though VIA does account for a large component of all Corridor trips (3.4 out of 9.5 million trips), these data hardly support the notion of VIA's "relative popularity" in the key markets for high speed rail shown in figure 2.

For the Toronto-Montreal and Toronto-Ottawa markets, airline travel is more "popular" than VIA, whereas for the Montreal-Ottawa (where government travel policies prohibit travel by air for civil servants), Montreal-Quebec, and Toronto-Windsor markets, bus service is more "popular." Naturally, improvements in speed can be expected to change this picture considerably, changes that can only be predicted through a reasoned and objective analysis of the data and causal factors that now exist.

The economic analysis, or quasi cost-benefit analysis, used by the Task Force to justify its key recommendations raises additional doubts as to the objectivity of the entire exercise. Cost-benefit analysis involves comparing a range of alternatives in terms of the incremental benefits and costs associated with each. Properly carried out, one fundamental principle of cost-benefit analysis is to compare all options against the null or "do nothing" alternative. Aside from manipulation of the raw assumptions and data, a cost-benefit analysis can easily be turned into a "project justification" manoeuvre by enhancing the preferred alterna- tive through the inclusion of unrealistic options and the exclusion of other realistic alternatives. The classic example of cost-benefit analysis in transportation is typified by the now shopworn story of the teenager who proudly announces that she saved fifty cents by walking home from school instead of taking the bus, whereupon her father responds by asking why she didn't save three dollars instead by not taking a taxi. This mentality still finds its way, in a more sophisticated form, into many cost-benefit analyses of transportation projects, particularly in the case of rapid transit in urban areas.Note

The data of table 3 reflect the key measures that find their way into the cost-benefit analysis presented in the Task Force final report, based on operating estimates for 2010. (Note the difference between maximum speed, which describes the technology, and average speed, based on the total trip time.) The ridership estimated for the 300 kmh service is obviously much higher than for the 200 kmh service due to shorter travel time, but it is also due to the 50 percent increase in frequency. For a service which is 50 percent faster and 50 percent more frequent, however, estimated operating costs increase by only 15 percent. Costs for operating labour alone could be expected to increase by more than this amount, assuming comparable work rules. In addition, energy costs at 300 kmh would be considerably higher than those at 200 kmh and, as shown in many studies of track maintenance costs, maintenance of way expenditures generally increase almost exponentially with speed. The difference in operating cost estimates between the two alternatives is simply not defensible.

However, what is really missing from this cost-benefit analysis is any comparison with either the status quo or moderate improvements to the status quo services. A review of VIA Rail annual reports over the last decade, for example, shows a slow but sure improvement in both cost recovery (still very low) and on-time performance (now quite respectable). There is no reason to believe that this trend will not continue, recognizing, of course, that some capital investment will be required to maintain even the existing level of service on a deteriorating infrastructure with an aging vehicle fleet. Estimates of the capital investment needed to maintain existing service, as well as estimates of ridership levels and revenues for such service, are essential elements of any meaningful cost-benefit analysis. In fact, attempts to estimate financial rates of return, as in the Task Force report, without reference to the status quo are entirely meaningless.

The Task Force's conclusions with respect to environmental issues offer a final footnote on its overall objectivity. Environmental concerns are serious issues today (and rightly so) and it never hurts to play this theme whenever possible. Admitting that results are "more qualitative than quantitative," the Task Force concludes that of the three options, "the 300 kph (kmh) service was found to have the best overall environmental effects." Ibid., p. EXECSUM-20.Note Presumably, that conclusion reflects the greater diversion of passengers from less environmentally friendly modes. Since the 300 kmh option requires several hundreds of kilometres of entirely new right-of-way acquisition through both rural and urban areas on as yet undetermined alignments, that conclusion certainly cannot be substantiated at this point in time.

Eventually, the Task Force concluded that there were insufficient data and information upon which to base a firm government decision. This weakness in the data base, however, despite the very significant cost differentials, did not deter the Task Force from recommending that:

there should be a full examination of the feasibility of introducing, in the future, a high speed passenger rail service based on technologies capable of speeds well in excess of 300 kmh.

In so recommending, the Task Force basically precluded any subsequent consideration of significant improvements in existing rail passenger service in the corridor that might be more affordable in the Canadian context, and which have already been successfully demonstrated both in the United States and in a number of Western European countries.

Aside from closing the door on any serious, objective cost-benefit analysis of a comprehensive range of alternatives, the Task Force also set in motion, on the basis of such flimsy data, a rather curious procurement process for the next round of consultant studies, financed this time by the federal government, as well as by the Ontario and Quebec governments. Even before the release of its report at the end of May 1991, word spread within the consulting community that $6 million would be divided up for detailed feasibility studies of the TGV. In fact, the inner sanctum of consultants who would eventually be selected to undertake these studies played no small role in helping the bureaucracy draft both the terms of reference and the budgets for the various sub-studies, in a kind of "share the wealth" process.

For example, it was common knowledge during the summer of 1991 that one consultant would be retained as a project manager responsible for managing and integrating various sub-studies including surveys, ridership forecasts, location studies, and technology assessments. Originally, about $350,000 was allocated for the task. Winning that contract, however, would preclude participation in other, more lucrative tasks and, apparently, the bureaucrats became somewhat uneasy about being able to attract sufficient consultant interest for such a paltry sum. By the time the "official" request for proposals was issued a few months later, the budget had increased to $650,000. So much for the concept of "value for the taxpayer dollar."

During the summer and fall of 1991, telephones were literally ringing off the hook in both Montreal and Toronto as consultants attempted to form liaisons that would present an image of Quebec-Ontario cooperation. Obviously, there are cases in which joint venture responses to a solicitation for proposals make sense on the basis of complementary skills. Here, however, complementary geography appeared to play a more important role and, in some cases, the collaborators themselves only met for the first time after contracts had been awarded. Individual consultants, of course, cannot be faulted for abiding by the rules of a game in which one of the prime motivations of those entrusted with the responsibility for awarding contracts is frequently to dispense largesse, or spread the money around, in as trouble free a manner as possible. In fairness to the Quebec-Ontario-Canada study, the $6 million to be dispersed among the favoured few pales by comparison with the public funds spread around by the federal government's separate Royal Commission on National Passenger Transportation which also managed to find time for some serious globe-trotting.Note

Setting aside the propriety of the whole process for the ongoing studies, and even setting aside the question of whether, at the end of the day, good value will be obtained for the $6 million expenditure, two fundamental issues remain. The first concerns whether the right questions are being asked or will the outcome of this entire effort be dictated by the clear lack of objectivity. The second issue is why governments, in the face of claims of financial self sufficiency made by at least two potential private sector investors, should be involved at this stage at all.

A realistic approach

Technological achievements of the Japanese and French railways may indeed have relevance, if not throughout the entire Quebec-Windsor Corridor, then at least on selected segments of the route. Obviously, there are differences that apply in the Canadian context that would affect financial viability, some of the most important of which concern population densities, collective agreements with operating labour, and both federal and provincial requirements for environmental impact assessments. There is also the question of what role, if any, VIA Rail should play in the delivery of such service, given its poor track record to date, albeit for reasons largely beyond its control.

Under these circumstances, rather than selecting a particular technological solution and attempting to arrive, in the words of the Task Force, at a "go or no go" decision, there is an obligation if government funding is involved to examine the full range of realistic alternatives, beginning with the existing services. After all, if the final conclusions of the current round of studies are that TGV type service is not financially viable, does that mean that no improvements are justified?

Consider, for example, that the federal government subsidized all VIA services (excluding services to remote communities) to the tune of about $330 million in 1991. Probably, at least half went into Corridor services, although there is no way to substantiate this figure from publicly available information. Capitalizing $160 to $180 million per year is equivalent to a government buyout that could be worth $1.5 to $2 billion. Future policies could certainly further reduce total subsidy limits with corresponding reductions in a potential "buyout" sum.Note Alternatively, a guaranteed stream of revenue could reasonably be made available to a private sector operator in return for upgrading existing services or constructing a new system and taking over most, if not all, Corridor services. Here, there is a fundamental problem inasmuch as current proposals for high speed service by-pass many communities now served by VIA. Leaving VIA with responsibility for these residual services while the high speed service skims the only real revenue potential makes very little sense. As discussed elsewhere, these by-passed communities could be tied into the high speed system with integrated feeder buses, particularly if a bus company were to be included in any high speed rail private sector consortium. See R. Soberman and A. Cubukgil, "A Model for the Privatization of Rail Passenger Services in Canada," in Proceedings of the Canadian Transportation Research Forum (Halifax: May 1989), p. 111-123.Note The question, then, is what kind of service improvements could be acquired for that level of public investment, or less, that would make it financially attractive for private investors to relieve the federal government of responsibility for these services. Would it be improved service for the same government expenditure or the same service for lower public cost?

Answering this question involves examining the effects of a range of possible improvements, characterized by higher speeds, on both benefits and costs. The main objective of higher speed, of course, is to sufficiently reduce travel time in order to attract large volumes of passengers from other modes of transportation and, in addition, to generate new demand for intercity travel. In simple terms, any feasibility study requires, as a minimum, estimates of how costs and benefits are likely to be affected by increases in average speed. This approach can be illustrated by considering the proposed Toronto-Ottawa-Montreal combined service.

For the cost side of the equation, the process is straightforward, at least conceptually. High speed can only be achieved by investing capital in infrastructure and the acquisition of new rolling stock. Modest increases in average speed should involve modest capital investment and for large increases in average speed, larger capital investment. Operating costs will also change with increasing speed; both energy and track maintenance costs will obviously increase with speed, but, depending upon work rules, the costs of operating labour could decline. As suggested in figure 3, however, the total cost function (including both debt service on the investment and operating costs expressed in terms of either annual costs or present discounted values) should increase more rapidly at higher speed. Naturally, there is a limit to the average speed that can be achieved.

On the benefit side, revenue is a rather important consideration, particularly for potential private sector investors, but it is not the only benefit to be taken into account where partial government funding is a possibility. Clearly, there would be a variety of secondary or indirect benefits that could justify some level of government expenditure, even though such benefits are typically overstated by their proponents. Few would disagree that it is worth something to reduce road fatalities, improve air quality, and stimulate economic growth in some manner. Aside from the kind of economic stimulus that regional scientists deal with, there may be real impacts on manufacturing which derive from economies of scale and which cannot be ignored by governments concerned with employment creation. For example, there has not really been any serious innovation in either rail transit or railway passenger vehicle technology in North America since the 1930s that did not involve government support, either direct or indirect. As a result, Bombardier in Quebec and Hawker Siddley in Ontario were both able to compete in U.S. and Mexican markets for subway and commuter cars by piggy-backing orders on large volume sales in locally protected markets. (Both, incidentally, were required to defend themselves in court against dumping charges filed by U.S. manufacturers.) Some economists argue that government procurement practices which divert resources from the private sector into the public sector provide no greater stimulus to economic growth than if the funds had been left in the private sector. Nevertheless, governments throughout the world do spend in order to stimulate employment, a practice that does not absolve them of the responsibility to invest wisely.Note

Regardless of how they may be assessed and valued, benefits of this type are, more or less, directly proportional to ridership. Thus, ridership and, correspondingly, revenue can be used as a reasonable proxy for a multiplicity of private investor and public interest benefits. Although there would be a variety of fares, there will be an average "yield" per passenger carried. If the average speed between Toronto and Montreal (currently about 110 kmh for the fastest trains) were to be increased, then it would be reasonable to expect an increase in ridership, average yield, and total revenue.Note On balance, modest increases in average speed should have little effect on ridership. (Here, improvements in reliability, scheduling, and the ease of ticketing and reservations are probably more important.) However, the impacts should be more dramatic for larger increases in speed, up to the point where most of the potential market for all intercity trips is captured.

Since VIA does not recover costs on the current Montreal-Toronto service, in relative terms, the starting point for the revenue function shown in figure 3 is lower than the starting point for the cost function. Beyond that point, there are two possibilities for the general shape of the revenue function. In Case A, there is no combination of speed and price that generates revenues in excess of costs. In other words, the revenue and cost functions never intersect. In Case B, there is at least one combination of speed and price for which revenues and costs are equal - a breakeven point beyond which there are profits to be made. For investors, at a bare minimum, some estimate of the maximum revenue potential and the shape of the total cost function would provide a higher comfort level for any assessment of financial viability.

Placing real dimensions on these cost and revenue concepts is, of course, not an easy task. The Bombardier and ABB proposals represent two points on the cost function which are still very preliminary. Their estimates reflect particular assumptions about the rolling stock and infrastructure improvements required. Both Bombardier and ABB assume full electrification. As already noted, Bombardier assumes train operation on completely dedicated track without grade crossings and without interference from other trains. On dedicated track, there would be no limits on train frequency, capacity, or performance dictated by other traffic. Estimates prepared by Bombardier in 1990 suggest a capital investment of about $5.3 billion (including a $1.6 billion government contribution) for the 829 km route from Quebec City to Montreal to Ottawa to Toronto. For the Toronto-Ottawa-Montreal route, the Task Force estimated a capital investment of $3.5 billion.

The ABB proposal for the same general route, at about $1.6 billion ($250 million more than the Task Force estimate, which does not include the costs of electrification), is designed to operate on existing, improved track. In this case, however, other traffic imposes limits on train frequency, capacity, and overall performance.

The impact that increased average speeds would have on costs between existing service and those proposed by either ABB or Bombardier is less clear. It could be argued that moderate increases in average speed (and corresponding improvements in reliability) might provide higher returns. For example, both proposals allow about $250 million for electrification since the TGV and the Sprintor are electric trains. Diesel-electric trains, however, are capable of maximum speeds in the range of 200 kmh and turbo powered locomotives, perhaps 250 kmh. (There may be good environmental and economic reasons for dismissing these alternatives, but the tradeoffs should be examined.) Again, as noted earlier, the (electrified) Metroliner between New York and Washington reaches an official maximum speed of 200 kmh only on one section of the entire route. As noted earlier, feasibility studies by the Canadian Transport Commission which preceded the advent of the TGV concluded that intermediate improvements in speed and reliability would probably produce larger payoffs than "quantum leaps" in speed.Note Yet, the Metroliner is perceived to be very successful.

VIA's express trains now make the Montreal-Toronto trip in four hours (about 130 kmh). Prior to offering this faster service, the typical train averaged about 110 kmh with considerable variation in average speed over various segments of the route, as shown in figure 4. The short distances between some stations obviously contribute to lower speed. In addition to these station stop delays, some segments have speed restrictions due to frequent grade crossings, sections of excessive curvature, or poor track condition. There are, for example, numerous grade crossings that restrict speed on the present route. Proponents of the TGV proposal argue that the costs of constructing a new, completely dedicated right of way would be lower than the costs of eliminating all grade crossings on the existing track.Note By eliminating some of the more serious speed restrictions through selective improvements, it would be possible to achieve average speeds somewhere between those of existing service and those of the overall service improvements suggested by ABB and Bombardier.

Therefore, the real question is, if an investment of $1.6 billion produces an average speed capability of 157 kmh, what increase in average speed could be achieved by an investment of perhaps one-third that amount on a more selective basis? For example, to save 10 minutes between Montreal and Dorval may require a much larger investment than would be required to save 30 minutes elsewhere on the route. Such intermediate average speeds do not preclude the use of TGV or Sprintor technology at their full potential over selected segments of the Montreal-Toronto route. If the cumulative effect of selective improvements reduces trip times by one hour, then that option may well turn out to be more cost effective than attempting to reduce trip times by two hours, relative to realistic assessments of the potential market. Furthermore, what impact would such improvements have on revenue, as well as on other benefits, that might justify public spending?

Depending upon the magnitude of the increases in speed, frequency of service, and fares, new rail passengers will come from competing bus and airline services, as well as from private automobiles (by far, the largest unknown potential market). An interesting example of such effects is shown in figure 5 for a high speed, electrified service between Hamburg and Frankfurt, a route of over 950 km with a maximum speed of 250 kmh. Eberhard Jansch, "Integration of High Speed Rail Services on German Federal Railway," Rail Engineering International, Vol. 21, No. 1 (1992), p. 14.Note Although similar data are unavailable for the Corridor, Task Force estimates of traffic increases in moving from an average speed of 157 kmh to 200 kmh can be compared for purposes of illustration. Over this speed range, the German experience indicates an actual growth rate that is well below the Task Force estimates, although it is obviously more difficult to penetrate the airline market over a 950 km route than it is over the 630 km Montreal-Toronto route (via Ottawa).

For the Montreal-Ottawa-Toronto route, the potential market involves three basic components, namely: those who are now travelling by all modes, increases in the total number of intercity passengers resulting from population growth, and new, or induced, trips. In fact, proponents of high speed rail argue that the existence of such service will generate a large number of entirely new trips that would not otherwise be made. Assuming that any significant increase in average speed is accompanied by a substantial increase in fares, high speed rail service is also likely to lose some of the more price-sensitive passengers, who now use VIA, to buses and automobiles.

Unfortunately, few data are available to estimate the magnitude of the total potential market and those data and forecasts that do exist present a rather confusing picture. To cite only one example, the Task Force reports just under one million airline passengers between Montreal and Toronto for 1987, shown above in table 2. Yet, three years later, all airlines combined offered 57 daily trips in each direction, equivalent to a total of about 3.4 million seats. Obviously, not all seats were filled, but the resulting load factor of only 29 percent is too far below the 60 percent considered as a minimum in the industry. Some of the difference can be attributed to in-transit passengers (e.g. Winnipeg to Montreal with a stopover in Toronto), but it is unreasonable to expect that these in-transit passengers are equivalent to the total number of originating passengers.Note There are other significant anomalies in recent reports by VIA, consultants, and the federal government. About the only point of agreement among these various estimates of the market is that automobile travellers represent the largest single element of the existing market. As a result, the largest unknown is the extent to which high speed rail services could penetrate the automobile market, particularly for groups of two or more travelling together and/or in cases where an automobile is required at the destination end of the trip.

Since there are really no reliable data on the actual investment needed to increase rail speeds, nor any forecasts of the passenger volumes that would be attracted to such services, there may be room here for a little reverse psychology. In other words, if forecasts of passenger volumes and system costs are so uncertain, is it possible to examine the reasonableness of volume and investment combinations required to achieve financial self sufficiency?

To determine the passenger volumes needed to achieve cost recovery at different levels of investment, assumptions have to be made about fare levels (and the likelihood of attracting the required passengers at each fare level). According to the Task Force, in 1987, VIA fares averaged $52 for the one-way trip between Toronto and Montreal. At increased speeds, certainly some increase in fares would be realistic. The Task Force assumed a 21 percent increase in fare for a 30 percent improvement in travel time and a 31 percent increase for a 45 percent improvement.

Figure 6 shows the annual number of passengers required to achieve cost recovery, for a range of capital investment ($1 billion to $4 billion) and a range of "average" fares on the Toronto-Ottawa-Montreal segment of the proposed Corridor network. For purposes of illustration, these investments have been amortized at 11 percent over 30 years in order to obtain equivalent annual costs (for both infrastructure and rolling stock). These calculations can obviously be shown for other interest rates, as well. In a more detailed analysis, of course, present discounted values of both costs and revenues should be compared over a reasonable time period. However, for purposes of illustration only, the annual cost basis can be used to determine breakeven volumes in a "typical" year.Note Task Force estimates of annual operating and maintenance costs have been added to the amortized capital investment despite the reservations noted earlier about these estimates. The volume and weighted average fare (about $41) which corresponds to 1987 VIA ridership for the Montreal-Ottawa-Toronto network is also shown in figure 6. Since the proposed route for high speed rail between Montreal and Toronto includes Ottawa, there is some difficulty in comparing data for existing services that involve distinct segments, namely, Montreal-Ottawa, Montreal-Toronto, and Ottawa-Toronto. The weighted average fare is not a particularly meaningful figure except that it does reflect the average yield per passenger carried on the system.Note

The level of capital investment is basically a proxy for average speed. For higher investments, better, and thus more attractive, service can be delivered. Presumably, this means that at a given fare, higher volumes will be achieved or, at a given volume, average fares can be increased. For an investment of $1 billion, for example, the increase in speed would have to be sufficient to attract about 1.9 million passengers who are willing to pay, on average, $100 per trip. The question, then, is whether such an investment would increase average speed sufficiently to attract 1.9 million passengers, at that fare. In other words, to justify a $1 billion investment, both ridership and fares would have to double from their 1987 levels.

This approach can also be used to examine the ABB and Bombardier proposals specifically, as shown in figure 7. Again, using the Task Force conclusions, for a fare of $100, the Sprintor, averaging 157 kmh, would have to attract about 2.3 million passengers, and the TGV, averaging 200 kmh, would have to attract about 4.7 million passengers. These figures are consistent with comparable estimates made for similar conditions in a recent U.S. study. See Transportation Research Board, In Pursuit of Speed, New Options for Intercity Passenger Transport, (Washington: 1991), Appendix B.Note Allowing for diverted trips, population growth, and generated trips, these breakeven volumes represent 63 percent for the Sprintor and 128 percent for the TGV of the 1987 combined VIA, bus, and airline passenger volume. In 1987, at an average speed of 110 kmh, VIA carried 23 percent of the same total carrier volume.

While such expectations might appear somewhat optimistic, no allowance has been made for government contributions on the basis of "public interest" benefits. The net effect of such contributions would be to alter the breakeven analysis considerably, an argument that is not lost on the proponents of these high speed systems. For example, if the costs shown in figure 6 were to be reduced by say, 30 percent, through a government contribution to capital consistent with the "buyout" argument suggested earlier, either the necessary breakeven volumes or fares would be reduced correspondingly. Assuming no change to the $100 average fare, the breakeven volumes fall to about 1.6 million for the Sprintor and 3.3 million for the TGV. A one-time government contribution thus considerably enhances the financial feasibility of investing in high speed services from the standpoint of private sector interests. The justification for such continued government subsidy of Corridor rail services is another matter. It has been argued elsewhere, and even by the current government, that Corridor services should achieve full cost recovery. See Adil Cubukgil and Richard M. Soberman, The Need for Rail Passenger Service and Opportunities for Modal Substitution, (Ottawa: Canadian Transport Commission, 1986) and Nielsen Task Force, Transportation, A Study Team Report of the Ministerial Task Force on Program Review, (Ottawa: 1985). In this regard, draft rail passenger legislation prepared by the current government in 1984, but never tabled, proposed full cost recovery for Corridor services.Note

This approach simply attempts to establish some reasonable range of investment in improved rail services that can be justified on the basis of realistic fares and market share, with and without government subsidies. If there is insufficient information to determine that reasonable range, it may perhaps be easier to establish the unreasonable range. In other words, it may be easier to conclude that 3.3 million passengers is an unrealistic target than it would be to estimate what a realistic target might be.

A recent U.S. study, however, does shed some light on the combination of fares and ridership that makes high speed rail affordable, suggesting that annual volumes of 6 million passengers are needed to break even for city pairs in the 150 to 500 mile range. For the highest density Northeast Corridor, that study concludes that:

prospects for an HSGT (high speed ground transportation) system to break even would be good if...capital costs are kept below $18 million per mile, if operating costs are kept below $0.12 per seat-mile, and if fares are comparable with current air fares.

For other less dense corridors, the same study concludes that the necessary "combination of circumstances, though possible, is remote." Transportation Research Board, op. cit., p. 117-118.Note

The role of government

If governments are to consider improving and operating rail passenger services in the Corridor, then, in spending taxpayer dollars for feasibility studies, there is an obligation to examine the full range of alternatives, including those that may be more affordable for population densities and conditions within the Canadian Corridor. If, however, consideration is to be limited to two (and, realistically, only one) private sector proposals, then why, in these times of government deficits, should Quebec, Ontario, and the federal government spend taxpayer dollars on studies which really should be undertaken by the private sector in the first place?

It is unlikely that the entire cost of building and operating a high speed rail service in the Corridor will be carried by government alone, if for no other reason than the fact that the Corridor is already well served by transportation facilities and systems including frequent airline and bus service and the most extensive network of highways in Canada. On this point, the Royal Commission itself argues:

High speed rail systems have high fixed costs and low variable costs.... The key issue is whether there would be enough riders in any Canadian corridor to pay the costs.... There are already buses, airplanes and cars operating in these corridors and a subsidized high-speed rail service would have unfair advantages. . . . Any high-speed rail system . . . should be paid for by transportation system users who benefit and not by the taxpayer. Royal Commission, op. cit., Vol. 1, p. 282-283.Note

In addition, private sector proponents have already stated that with only partial government support, the balance of the capital investment needed, as well as operating costs, can be financed by anticipated revenues. Moreover, despite the best of intentions, VIA Rail, itself a government owned enterprise, is very unlikely to play any significant role in high speed Corridor services. Aside from statements by the Minister of Transport as to VIA's role in high speed service, private investors simply will not invest for profit in an entity that is managed, operated, and maintained by civil servants. VIA Rail carries too much historical baggage to be seriously considered for operating a profit-driven, commercially viable system. Government owned bureaucracies do not adjust well to the commercial world.

Both Bombardier and ABB have argued the financial viability of improved rail passenger services in the Corridor on admittedly different bases, recognizing that further detailed feasibility studies are required. Realistically, however, private investors can only be convinced of the profitability of the undertaking on the basis of their own assessments of costs, revenues, and risks. Certainly, they cannot be expected to act on the basis of forecasts and conclusions derived from government studies. Over the last 20 years or so, for example, government agencies and their consultants:

•justified the need for Mirabel Airport on the basis of tremendous growth in airline traffic and the inability of Dorval to accommodate such growth, leading to a $600 million investment in an airport that no one wants to use.

•constructed Terminal 2 at Pearson International Airport for international carriers, eventually occupied by Canada's largest domestic carrier, on the premise that Terminal 1 could not handle the new generation of jumbo jets.

•concluded in 1972, that a 56 mile network of magnetic levitation vehicles could be constructed in Toronto (as well as in Ottawa and Hamilton) in 5 years, using readily available "off the shelf" technology (yet to be placed in commercial operation anywhere in the world, 20 years later) at about 30 percent of the cost of conventional rapid transit.

Based on this record, are private investors going to line up to invest in a high speed rail system because consultants to government conclude that such service will be profitable? In fact, can anyone remember any government sponsored feasibility study that failed to justify the initial hypothesis? Justification or profitability aside, even basic cost estimates have little credibility these days. Recent initial government estimates of $5 billion for promised expansion of Toronto's rapid transit system have now risen by more than 40 percent in less than two years.

The only meaningful feasibility studies will be those undertaken by potential private sector consortia themselves so that they can determine the level of government support that they would require in order to proceed. That is the process followed by other investors to satisfy their own shareholders, whether it involves a new automotive assembly plant or a new real estate development. If it turns out that high speed rail cannot pay for itself and that prospective investors need government funding and guarantees to proceed, then that is the proposition which should be made to the relevant governments by the individual consortia. At that point, governments could carry out their own studies as to justification from the standpoint of serving the public interest. In this regard, one useful role that government can play concerns data collection, which is essential to estimating both commercial viability and a variety of public interest benefits. Collecting data, after all, is one of the primary activities of brigades of civil servants.

Conclusions

Over the last twenty years, interest in high speed ground transportation for Canadian "corridors" has surfaced and waned periodically in response to potential developments and promises such as tracked air cushion and magnetic levitation vehicle technology. Recently, however, cutbacks in VIA Rail service in the face of the astounding technical achievements of the TGV in France, has generated renewed interest in the potential application of high speed rail technology in Canada. This interest has been coupled with claims of economic feasibility and a willingness on the part of certain private sector firms to invest in such service.

The two most serious proposals, by Bombardier and ASEA Brown-Boveri, both promise to provide rapid and frequent service to selected communities in the Quebec-Windsor Corridor. Both proposals say very little about costs, ridership, and revenues. It is readily evident that both proposals would require a complete overhaul of the current institutional, decision making, and work rule structures under which existing rail passenger services are now provided.

Clearly, it would be splendid to have supertrains operating in the Canadian Corridor but, equally as clear, much more information and data are required by the proponents themselves as to actual costs and potential markets, under Canadian conditions, before such service could be implemented. The possibility of massive government support cannot be discounted entirely. An unpopular government could throw caution to the wind and decide to engage in any form of pre-election public spending that creates employment, regardless of the costs.Note Such information should be developed in the course of detailed feasibility studies that consider the full range of improvements, from increased existing average speeds to the full potential of the TGV technology.

What are the prospects? Probably, no one is yet in a position to say. More importantly, we are unlikely to be in a better position even after millions have been invested in the current round of feasibility studies. There are several fundamental reasons.

First, we must recognize that not all technology is easily transferable from one society to another, if for no other reasons than those attributable to differences in economic, demographic, and geographic factors. Densities within the Canadian Corridor, for example, differ by an order of magnitude from those of the Tokyo-Osaka corridor. Land is so scarce in Japan that airports are being designed on offshore structures; domestic air travel is almost non-existent. In Europe, passenger service is the dominant function of the railways. In both Japan and Europe, large cities are more closely spaced and reliance on transit within cities is more predominant than it is in Canada. It comes as no surprise, therefore, that the really significant advances in rail passenger technology have emerged in Japan and those countries of western Europe where passengers are such an important part of the railway business.

Second, all of the successful high speed rail examples involve very advanced and sophisticated railway technology, as well as highly trained and experienced professionals from government, the railways themselves, and, of course, manufacturers. High speed rail is not a playing field for amateurs, however well intentioned. Do government ministries in Ontario and Quebec have similarly skilled individuals and, if so, are they placed in charge of the necessary studies? Ever since the Glassco Commission convinced the federal government that good managers can manage anything, regardless of what they know, the concept has slowly percolated down to provincial (and municipal) governments. In fact, being professionally proficient now seems to be one of the least important qualifications for career advancement in the civil service. More often than not, managers are appointed so as to diversify their experiences on the way to even better positions, rather than because their talents and substantive knowledge are relevant to the particular tasks. These "generalist" managers are expected to rely on advisors and consultants for "details," provided they know what questions to ask, which is perhaps one reason why senior bureaucrats and their advisors were able to assure the Premier of Ontario, twenty years ago, that "off the shelf" magnetic levitation technology could, inexpensively, solve all the problems of urban traffic congestion. Here, there is an important distinction to be made. Those experts who offered assurances of technical feasibility and low cost for maglev simply had no sound basis for doing so, but they certainly had some strong vested interests. High speed rail, whether TGV or Sprintor, does not fall in the same category of technological achievement. These rail technologies, without doubt, do work and represent significant technical achievements.Note

This rather cynical view of how well the public is being served by its senior bureaucracy is widely, but more privately, held by an ever increasing circle of observers. Carol Goar of the Toronto Star (August 15, 1991) in commenting on a study by Barbara Wake Carroll, Barbara Wake Carroll, "The Structure of the Canadian Bureaucratic Elite: Some Evidence of Change," Canadian Public Administration, Vol. 34, No. 2, 1991, p. 359 - 372.Note cites, "a trend toward (government) managers with...less experience in the areas for which they are responsible for providing policy advice and program management," as they "department-hop" their ways to the top. In Goar's words, the post-Glassco approach stresses, "the importance of managerial competence over the need for substantive understanding of what a government department actually does." In fact, these trends are increasing at a frightening rate all over the world, not only in the transport field, but in other sectors, as well. Prestigious international aid agencies, for example, typically castigate Third World governments for massive waste on investments in technology originally recommended by their own articulate experts on finance. In a word, therefore, government officials now entrusted with the responsibility for the current assessment of a truly high technology application have questionable qualifications for doing so themselves or even for selecting those who might be able to do so, objectively.

Third, setting aside the value and importance of professional expertise, there are some serious motivational issues which permit governments and their senior officials to turn a blind eye to the propriety with which taxpayer dollars are spent. The "old boys" network is alive and well in the consultant selection process for studies of major capital projects in transportation. Those who stand in line for feasibility studies also stand in line for implementation - a practice that is prohibited in many other jurisdictions. How else can objectivity be assured? Within this network, bureaucrats who award contracts, naturally, want to be fair and treat everyone in turn, with almost complete disregard for fairness to the taxpayer. Such practices are not prescriptions for solid, objective, and technically sound assessments; they are prescriptions for trouble free spending and guarantees of the need for "further study." David Lewis Stein, commenting on the use of consultants for rapid transit projects in Toronto, is less kind, labelling such procurement practices as bordering on a "Consultants' Relief Act." David Lewis Stein, "The Waste on Transit Studies Would Make You Weep," Toronto Star, September 18, 1992.Note

In summation, however, the course is clear. Unless in a fit of desperation governments in Ottawa, Ontario, and Quebec decide, collectively, to embark on a spending frenzy, high speed rail in the Corridor will not emerge as a result of government studies. Private sector proponents have argued that with some degree of front-end, government participation, they are prepared to build and probably operate a high speed system. Undoubtedly, some degree of government funding is justifiable, if only as a buyout from existing, money-losing services. Other public interest benefits such as reduced expenditures on airports and highways, or even benefits that possibly contribute to national unity, likely add to the case.

The primary onus, however, falls to the private sector proponents to carry out their own studies, using their own consultants and their own funds to assess the degree of government participation needed as a prelude to implementation. Sailing enthusiasts are familiar with the adage that anyone who has to ask the price of a boat is probably not a serious customer. Likewise, if private firms considering investment measured in terms of billions have to ask government to underwrite studies costing a few millions, how seriously should they be taken?

References

Sources for Table 1

Bachman, J. "HSR Vehicle Performance Characteristics." Journal of Transportation Engineering 115, no. 1 (1989): 48-56.

Bondada, M. and J. Harrison. "High-Speed Ground Transportation (HSGT) Systems in the United States." Journal of Transportation Engineering 115, no. 1 (1989): 1-2.

Brand, N. and M. Lucas. "Operating and Maintenance Costs of the TGV High-Speed Rail System." Journal of Transportation Engineering 115, no. 1 (1989): 37-47.

Claytor, W. Graham. "Amtrak on Target to Break Even by 2000." Railway Gazette International 147, no. 12 (1991): 863-868.

Fairweather, V. "A Supertrain Solution?" Civil Engineering (February 1990): 50-53.

Heard, B. D. "High and Very High Speed Operation in British Railways." Rail International (November 1988): 31-36.

Hughes, M. "NAFA Poised to Launch at 300 km/h." Railway Gazette International 148, no. 4 (1992): 265-266.

Jansch, E. "Integration of High-Speed Rail Services in German Federal Railway." Rail Engineering International 21, no. 1 (1992): 13-16.

Klein, H. "IC91 Offers a Taste of Speed." Railway Gazette International 147, no. 5 (1991): 291-293.

Kurono, M. "JR Sell-Off Still Awaited." Railway Gazette International 148, no. 7 (1992): 471-472.

Linder, H. R. "Special Aspects of Production Planning for High and Very High-Speed Passenger and Freight Traffic." Rail International (November 1988): 37-42.

Mathieu, G. "Ten Years TGV Sud-Est: A Resounding Success." Rail Engineering International 20, no. 3 (1991): 7-8.

Mathieu, G. "The European High Speed Network - Current Developments and Future Outlook." Rail Engineering International 21, no. 1 (1992): 3-6.

Okada, H. "Ingenuity Allows Shinkansen to Grow Again." Railway Gazette International 148, no. 4 (1992): 251-254.

Perez-Beato de Cos, M. "The Madrid-Seville High-Speed Line." Rail Engineering International 21, no. 2 (1992): 13-15.

Pintag, G. "Capital Cost and Operations of High-Speed Rail System in West Germany." Journal of Transportation Engineering 115, no. 2 (1989): 57-67.

Shen, L. and A Farooqi. "Florida High Speed Rail: An Ambitious Plan for the Future." ITE Journal 59, no. 9 (1989): 11-14.

Sicking, Karl. "SK 10bn Investment Programme Disappoints Operators." Railway Gazette International 147, no. 2 (1991): 75-81.

Smith, C. H. "Florida's High-Speed Rail and Maglev Projects." ITE Journal 60, no. 4 (1990): 17-20.

Tanaka, S. "Railway Speedup Technology and Related Problems." Quarterly Report of RTRI (The Japanese Railway Technology and Research Institute) 33, no. 1 (1992): 12-18.

Taylor, C. "World Speed Survey." Railway Gazette International 147, no. 9 (1991): 633-638.

The Subcommittee on High Speed Rail Systems of the Committee on Public Transport of the ASCE Urban Transportation Division. "High Speed Rail Systems in the United States." Journal of Transportation Engineering 111, no. 2 (1985): 75-94.

Vranich, J. "High Speed Hopes Soar." Railway Age (May 1992): 22-242.

Other References

Carroll, Barbara Wake. "The Structure of the Canadian Bureaucratic Elite: Some Evidence of Change." Canadian Public Administration 34, no. 2 (1991): 359 - 372.

Cubukgil, Adil and Richard M. Soberman. The Need for Rail Passenger Service and Opportunities for Modal Substitution. Ottawa: Canadian Transport Commission, 1986.

Nielsen Task Force. Transportation. A Study Team Report of the Ministerial Task Force on Program Review. Ottawa, 1985.

Ontario/Quebec Rapid Train Task Force. Final Report. May 1991.

Royal Commission on National Passenger Transportation. Directions (Summary). Ottawa, 1992.

Soberman, Richard M., George Clark, and Tom Parkinson. Intercity Passenger Travel Study. Ottawa: Canadian Transport Commission, 1970.

Soberman, R. and A. Cubukgil. "A Model for the Privatization of Rail Passenger Services in Canada." Proceedings of the Canadian Transportation Research Forum, Halifax (May 1989): 111-123.

Soberman, Richard M. "High Speed Rail and the Real World." Proceedings of the Canadian Transportation Research Forum, Quebec (May 1991): 15-21.

Transportation Research Board. In Pursuit of Speed, New Options for Intercity Passenger Transport. Washington, 1991.

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