I've indeed answered this question many times, but I'll try it again:
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Why some routes are still served by VIA, whereas others aren't anymore
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Transcontinental Mandate
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This leaves 4 services (Ocean, Atlantic, Super-Continental and Canadian), of which 2 survive until today: the Ocean and the Canadian (though with the latter using the historic route of the Super-Continental).
But how did we get from these 4 full-scale transcontinental services to only 2? First, the overlapping branches of the Canadian and Super-Continental were rationalized in 1978 (at the expense of Ottawa-Capreol via CN and Toronto-Sudbury via CP) in order to stop operating two parallel branches, each, to Montreal and Toronto. Then, the Canadian (or at least its route) was eliminated in January 1990 (together with the Montreal branch). To understand this decision, one has first to acknowledge that VIA's mandate only specifies that it has to run a transcontinental service, but not at which exact route or frequency. This has been exploited by the federal government in 1989/90, by testing to the extreme how much VIA's operational expenses (and thus its federal subsidy) could be reduced without failing to deliver on its mandate.
[Regardless of whether] one agrees with the requirement to reduce VIA's transcontinental services (and its subsidy) to the bare minimum, this logic clearly favored focusing on one single route and ditching the CP route: West of Winnipeg, because the CN route connected with the Skeena, thus avoiding to extend that service to Edmonton and to either build a maintenance facility there or to pay CN market rates to either maintain VIA's equipment at their own facilities or to deadhead equipment across the country to VIA's other maintenance facilities (all of which would have needlessly escalated the operating costs). And east of Winnipeg, because it reduced the length over which a remote service would need to be operated (by only operating over one line, the remote sections of the other line would need to be covered by a separate remote service) from 1499 km (Capreol-Hornepayne-Winnipeg) to 484 km (Sudbury-White River, i.e. by two-thirds), which allowed the service to be operated with one single trainset formed by frugal RDC's rather than by two trainsets of HEP cars with sleeper facilities (given the scheduled travel time between Capreol and Winnipeg of approximately 24 hours).
To highlight this, I've extrapolated from VIA's current per-train-km subsidy figures what simply rerouting the Canadian onto CP route would cost and while it would save just over a $1 million in operating costs by itself, the obligation to extend the Skeena to Edmonton and run a separate Capreol-Winnipeg sleeper service (like between 1981 and 1990) would increase the annual subsidy need of all 3 services by $16.5 million (or more than a quarter):
Therefore, I'm inclined to agree with equire that the calculations which led to the decisions of which transcontinental route to keep was driven by cold mathematical considerations much more than by any political motivations.
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