Excuse me for my ignorance, but if a project must be financially self-sufficient without any subsidies in order to get financed through the CIB or receive funding from private investors, then how did the REM get funded, which depends on an
operating subsidy of 72 cents per passenger-kilometer? Had VIA Rail received that level of subsidies in 2017 for its Corridor East (i.e. Quebec-Montreal-Toronto) operations, the resulting subsidy payment of $755.6 million ([652,090,156 passenger-miles = 1,049,437,380 passenger-km]*$0.72) would have exceeded the operating
costs for its entire (!) network ($630.9 million).
Yeah right, VIA increased its ridership between 2014 and 2017 by 30.5% (or 11 times population growth, if extrapolating from the annualized growth of the combined population of Ontario and Quebec between 2011 and 2016) while investing “only”
$359.1 in capital expenditure (and only part of that in infrastructure), but investing 11 times that amount in a dedicated infrastructure will surely increase ridership by only 29.0% by 2030 (or just 2.3 times population growth)…^^
I struggle to understand what’s so shocking about a business plan becoming unviable if you arbitrarily remove more than half of its projected ridership. If you take the 9.9 million projected by VIA, then your per-passenger contribution for capital costs decreases from $50 to $20.20, thus a total operating cost of $100.20 per passenger or 140% rather than 181% of the current fare...
I believe that we’ve also reached the point where we need to talk about Generalized Journey Time (GJT), but before we can do that we need to somehow distribute VIA’s ridership from Corridor segments to the individual routes: The least arbitrary way I could find was to reallocate the passenger miles provided in the
2017 Annual Report (by multiplying the “Shortfall” figure with the “subsidy per passenger-mile”) according to the train mileage calculated from the 2017/05/29 timetable (i.e. the timetable which was valid for the largest part of 2017).
The second step is to adjust the ridership by the average of the annualized growth rates observed between 2011 and 2016 in the respective CMAs at both ends, which increases the passenger-mileage by 14.6% on average (which happens to achieve already half of the entire growth rate you only seem capable of imaging).
![](https://i.imgur.com/sT5kvrD.png)
Source:
Victoria Transport Policy Institute (2018, p.23)
Step three is to multiply the change in generalized journey time (see my table in my
previous post) and multiply it with the applicable elasticity: As you can see in above table, the elasticity for intercity rail travel demand in respect to its travel time is -1.58, which means that demand will decrease for every 1% increase in travel time by 1.58%, while it will increase by the same margin for every 1% decrease in travel time. This means that travel demand can be expected to increase by between 22.9% (Toronto-Montreal) and 61.1% (Montreal-Quebec) for an overall increase of 38.5% in the Corridor East or 32.6% over the entire Corridor (note that GJT stays unchanged for Southwestern Ontario). This means that the
combined effect of population growth and reductions in GJT on passenger mileage equals an increase by between 14.7% for Southwestern Ontario (i.e. the pure population growth effect) and 79.5% (Montreal-Quebec) for a total growth of 58.6% on the Corridor East and 51.9% on the entire Corridor. Similarly, dividing the passenger-mileage by the average trip length in 2017 yields the same 58.6% as increase in passenger figures on the Corridor East, but (due to the longer trip lengths on the Corridor East) a slightly lower 47.8% for the entire Corridor – for an increase in total passenger count on the Corridor East from 3.1 million in 2017 to 5.0 million in 2030 and total Corridor ridership from 4.1 to 6.1 million:
![](https://i.imgur.com/2vVAB7E.png)
Note: The respective growth rates for Southwestern Ontario (SWO) are taken from Toronto (CMA) as start of route and Ontario (Province) as end of route.
Compiled from:
VIA Rail Annual Report 2017,
VIA Rail's travel time projections for HFR,
Passenger Demand Forecasting Handbook, and
Victoria Transport Policy Institute (2018).