One idea I've had is that VIA could carve out a very useful niche for itself in economy overnight travel in the 1000km/8-12h range. Instead of the land-cruise-type service which appeals mostly to tourists, a low-cost, no-frills sleeper would be very competitive with the bus and driving.
For example, I had to get from Ottawa to Halifax last week for some meetings;
- Fly: $600 round. Fastest, but takes half a day per way when you factor in getting to the airport and security. 2pm - 7:30pm.
- Car rental: $300-400 round. Fast, but takes up a full day per way. 9am - 9pm.
- Bus: $250 round. Overnight, but in very cramped seats. 9pm - 6pm.
- Current VIA economy: $300 round. Overnight, but in a seat. 7pm - 6pm.
- Current VIA sleeper: $700-1000 round. Overnight with an individual cabin and dining. 7pm - 6pm.
- "Economy sleeper": $300 round. Overnight with a bed in a shared cabin. 6pm - 12pm.
Currently, the train is basically a slightly more comfortable version of the bus. But unlike the bus, the train allows you to put beds in. The problem is that currently, VIA only offers two extremes of service; either nothing or total luxury. The no-bed option isn't viable for anyone older than 30 (and under that, it's only tolerable), and the bed+luxury is so expensive that you may as well fly unless you're on vacation.
An economy sleeper could be the perfect middle, offering a product which is both comfortable and affordable. With improvements to speed (perhaps by cutting through Maine and/or improving tracks to allow for higher speeds), a 6pm-12pm train would also be competitive in terms of how many daylight hours it takes (only 6-8h compared to 12h for driving and 5-6h for flying).
Europe has a number of these, such as Thello's Paris-Venice trains which offer these 6-person couchettes for $150-200 round trip for the same distance as Montreal-Halifax.
I think that a service like this could make rail competitive in the 1000-km range. Routes like Halifax-Montreal, Montreal-NYC, Toronto-NYC, Toronto-Chicago. Perhaps some of the regional routes like Montreal-Jonquière, and Montreal-Abitibi. It could even offer a completely new product in the sub-800 range, like an slowed-down overnight between Montreal-Ottawa-Toronto, allowing people to spend a full day and evening in one city before overnighting back.
It may be a bit ambitious, but in any case, I think that VIA should better leverage the inherent advantages of its mode to offer products that others can't.