[littlewill1166]

I have learned arguing with anyone about HFR being profitable is a waste of time. They all think it will be this massive cash cow for Via and that everything else should be shut down.

I do wonder whether the existing Corridor service between Toronto-Ottawa will be maintained at the same level, or will it be cut back due to a variety of reasons, including the demand at the stops between there. Is there anywhere we can see the boardings/alightings of every station/stop Via serves?

18-1846 - Access to Information Request - FINAL.pdf

Shared with Dropbox

www.dropbox.com

 

[micheal_can]

18-1846 - Access to Information Request - FINAL.pdf

Shared with Dropbox

www.dropbox.com

Thank you. The numbers at the major cities outside of the Corridor are not as horrible as I expected.
How long until they would have the 2019 numbers compiled?

 

[littlewill1166]

Thank you. The numbers at the major cities outside of the Corridor are not as horrible as I expected.
How long until they would have the 2019 numbers compiled?

You have to make an access to information request for 2019. https://corpo.viarail.ca/en/company/governance-ethics

I piggy backed off of someone else's here:

Completed Access to Information Requests | Open Government, Government of Canada

About this information Search the summaries of completed Access to Information (ATI) requests to find information about ATI requests previously made to the Government of Canada. If you find a summary of interest, you can request a copy of the records at no cost. For additional information...

open.canada.ca

.

 

[kEiThZ]

I did say to michael_can that I wasn't sure about the viability of HFR without a published business case. However, based on previous studies, the business case for rail projects focused more on the economic/social benefits over profit.

Perhaps. But you're making a huge pile of assumptions before seeing any business case. There's a $70M effort underway between VIA and the CIB to scope this thing and get a real grasp of the financials and yet here you are jumping to conclusions before any of this has been published.

But again, under a status quo scenario, there is a mismatch between the business/economy coaches VIA is purchasing, and current market demand.

Based on what?

Furthermore, Urban Sky didn't include incremental fixed costs attributable to HFR while maintaining a local service on the current corridor, which could push the IRR negative.

All details for an actual business case. Not something for a forum to discuss.

I have learned arguing with anyone about HFR being profitable is a waste of time. They all think it will be this massive cash cow for Via and that everything else should be shut down.

Strawman. Massive cash cow? No. Profitable enough to hold its own? Probably. And possibly enough to offset some of VIA's other losses.

I do wonder whether the existing Corridor service between Toronto-Ottawa will be maintained at the same level, or will it be cut back due to a variety of reasons, including the demand at the stops between there.

The HFR corridor would run through Ottawa to Montreal. Toronto-Ottawa should see an increase in service. Not less service. I don't why you think there would be less. The lakeshore service would be reduced, and since it's all being rehubbed at Kingston, the service should be Kingston-Ottawa. Not Toronto-Ottawa.

 

[micheal_can]

Strawman. Massive cash cow? No. Profitable enough to hold its own? Probably. And possibly enough to offset some of VIA's other losses.

See, I see it as a break even project. One that won't loose much, but also that won't be that profitable. Part of it is the fact that regardless of HFR or not, a new fleet is coming, and that should be added to the costs. I still feel it should be done.

The HFR corridor would run through Ottawa to Montreal. Toronto-Ottawa should see an increase in service. Not less service. I don't why you think there would be less. The lakeshore service would be reduced, and since it's all being rehubbed at Kingston, the service should be Kingston-Ottawa. Not Toronto-Ottawa.

Right now, all Corridor service must pass through Kingston. So, right now, the Toronto-Ottawa service could be also put as Toronto-Kingston-Ottawa. Once the HFR service is in place, it woould be a different route, passing through Peterborough. So it could be written as Toronto-Peterborough-Ottawa. What I see happening is that the existing Toronto-Kingston-Ottawa service per day will get reduced. So, no, the Toronto-Ottawa service will not be reduced. If anything it will go up. Otherwise, why have a HFR to begin with?

 

[kEiThZ]

See, I see it as a break even project. One that won't loose much, but also that won't be that profitable. Part of it is the fact that regardless of HFR or not, a new fleet is coming, and that should be added to the costs. I still feel it should be done.

I think it'll be slightly profitable. But breakeven or slightly profitable, none of that justifies your assertion that some of us were suggesting that it would be wildly profitable.

So, no, the Toronto-Ottawa service will not be reduced. If anything it will go up.

Right. So why were you wondering if Toronto-Ottawa service would be reduced over here:

I do wonder whether the existing Corridor service between Toronto-Ottawa will be maintained at the same level, or will it be cut back due to a variety of reasons,

Ottawa will see more service. Kingston is likely to see a slight decrease in service. But hopefully better timings can make up for that.

 

[littlewill1166]

Perhaps. But you're making a huge pile of assumptions before seeing any business case. There's a $70M effort underway between VIA and the CIB to scope this thing and get a real grasp of the financials and yet here you are jumping to conclusions before any of this has been published.

Not jumping to conclusions, just analyzing the historical studies and examples around the world to determine a likely outcome as I did with masks in March.

Based on what?

See post 6850.

All details for an actual business case. Not something for a forum to discuss.

Hmmmm,,,,

I am most curious to know how pricing would work. I am hoping for fares competitive enough to kill Greyhound and Megabus.

Also, hoping VIA can pull off air-rail integration at Dorval post-HFR and REM extension to Dorval. It's kinda crazy that Air France-KLM had three buses per day departing from Ottawa's VIA station for PET Airport. Those seem like easy low hanging fruit for VIA. Along with all the other carriers at Dorval that don't have connections with Air Canada to fly passengers to Ottawa and Quebec City.

Kinda difficult to talk about pricing without talking about the business case. In trading I've learnt to watch more and trade less, I think it works on forums as well... read more, write less.

 

[crs1026]

The HFR corridor would run through Ottawa to Montreal. Toronto-Ottawa should see an increase in service. Not less service. I don't why you think there would be less. The lakeshore service would be reduced, and since it's all being rehubbed at Kingston, the service should be Kingston-Ottawa. Not Toronto-Ottawa.

There are two assumptions here that I won’t budge on until we see firm data

1) Will the travel time Montreal-Ottawa-Toronto match, or improve on today’s travel time Toronto- Kingston - Montreal ? If not, why would we project double today’s ridership?

2) Define “Kingston Hub”.I don’t consider adding some siding capacity so that a late night train for each of Montreal, Kingston, and Toronto can lay over and depart in early morning to be a “hub”. That could be done today. How many trains will turn back at Kingston? Will Toronto- Cornwall passengers now change in Kingston? I have seen so many concepts rolled out in some minimalist form.... is there meat to the Hub concept?

I can accept that the primary Toronto-Ottawa-Montreal route will achieve greater ridership and run in the black, which ought to be enough to attract funding somewhere....I still have a harder time believing that, shorn of the overhead revenue from through ridership, a Kingston-centric service can also. The Kingston Hub is a promise that won’t be kept. That won’t hurt HFR any, but this route is a Regiment sacrificed to win a campaign somewhere else.

- Paul

 

[micheal_can]

I think it'll be slightly profitable. But breakeven or slightly profitable, none of that justifies your assertion that some of us were suggesting that it would be wildly profitable.

In other forums, it has been widely touted as being profitable such that Via no longer would need a subsidy for any of the Corridor service.

Right. So why were you wondering if Toronto-Ottawa service would be reduced over here:

Ottawa will see more service. Kingston is likely to see a slight decrease in service. But hopefully better timings can make up for that.

I meant that the existing route would be reduced. Sorry about the confusion.

 

[micheal_can]

There are two assumptions here that I won’t budge on until we see firm data

1) Will the travel time Montreal-Ottawa-Toronto match, or improve on today’s travel time Toronto- Montreal ? If not, why would we project double today’s ridership?

2) Define “Kingston Hub”.I don’t consider adding some siding capacity so that a late night train for each of Montreal, Kingston, and Toronto can lay over and depart in early morning to be a “hub”. That could be done today. How many trains will turn back at Kingston? Will Toronto- Cornwall passengers now change in Kingston? I have seen so many concepts rolled out in some minimalist form.

I can accept that the primary Toronto-Ottawa-Montreal route will achieve greater ridership and run in the black....I still have a harder time believing that, shorn of the overhead revenue from through ridership, a Kingston-centric service can also. The Kingston Hub is a promise that won’t be kept. That won’t hurt HFR any, but this route is a Regiment sacrificed to win a campaign somewhere else.

- Paul

1) If HFR does what it is supposed to, it should.

2) I don't expect that the service will be removed from those various existing routes, but that the level of service will be.

 

[Urban Sky]

If VIA cut its corridor services completely, there are ways for it to cut its fixed costs substantially. It could sell its locomotives and train coaches reducing depreciation costs.

Okay, let's crunch the numbers. My assumptions are the following (if you happen to disagree with any of them, it shall be your obligation to present a better one):

• Linear depreciation (which is the accounting practice adopted by VIA, see page 90 of its 2018 Annual Report)
• Depreciation period of 20 years for locomotives and 40 years for cars (note that Amtrak's average fleet age is 21 years for locomotives and 31 years for cars)
• The replacement value of each of VIA's current fleet type is to be calculated by deflating the unit cost of its new Siemens fleet to the value of the year in which the last year of that fleet type was delivered (ranging between 1949 and 2001)
• It is assumed that the unit cost of a locomotive is twice that of a car
• To calculate the unit cost, it is assumed that the $989 million contract with VIA covers 32 trainsets and that every set includes 1 locomotive and 5 cars, for a total of 32 locomotives and 160 cars
• Consequently, the assumed replacement values would be $4.4 million for a car and $8.8 million for a locomotive

This means that replacing VIA's entire active fleet would cost approximately $2.5 billion, but that when adjusting the replacement value of the various fleet types to the respective years where they were purchased, the initial fleet value decreases to $1.0 billion. Correspondingly, the annual depreciation would be $39.3 million, but note that 4 out of the 7 fleet types (HEP II, RDC, HEP I and F40) would have only a nominal book value (maybe $1), as they have already exceeded their assumed useful life. Therefore, the combined book value in 2018 of VIA's active fleet would have been only $188 million in 2018, which translates to an annual depreciation of $19.1 million:

Compiled from: Fleet counts and delivery dates provided in the CPTDB Wiki, combined with data mentioned in the assumptions stated above this table

This back-of-the-envelop calculation suggests that VIA's annual fleet depreciation costs are $19.1 million for its entire fleet and $15.2 million (if we assume that half of the Renaissance fleet is allocated to the Ocean rather than the Corridor) for the Corridor. As I've explained in Post #6,890, VIA Rail's 2019-2023 Corporate Plan shows a contribution of $77.0 million for the Corridor and of $39.2 million for the entire network. This means that the Corridor's contribution does not just offset the negative contribution of the non-Corridor routes, but also the depreciation of VIA's entire fleet. This is why I insist that VIA's current Corridor operations recover its costs and that it is just the overheads (like the salaries of HQ folks like me) which make it require an annual subsidy.

Therefore, the resale value of VIA's fleet doesn't matter as the Corridor fleet reduces VIA's subsidy need rather than increasing it. Nevertheless, the list prices you quoted only reveal the price at which railroads or rolling stock owners are willing to sell their equipment, not whether there is actually a market at that price (or at all). Given that VIA has repeatedly declared that its fleet has reached the end of its useful life and that it is in dire need of replacement, I wonder what kind of railroad or private car owner would possibly purchase such worn-out cars...

In retrospect it would have been so much easier for me had I said maintenance...

If your brilliant "research" on VIA had gone beyond reading across its Annual Report, you might have realized that VIA operates the by far oldest fleet of any intercity passenger rail operator in the Western world (45 years for cars and 28 years for locomotives, if I calculate the weighted average from the respective "years of last delivery"). But, well, who needs research if you already know everything...?

 

[kEiThZ]

Not jumping to conclusions, just analyzing the historical studies

You're looking at history that is only superficially applicable to a future business model. You really want to argue that a service that is marginally competitive with air on some segments won't have more profitable business?

See post 6850.

Again. None of this can really be used to assess what is being proposed. For starters we know that the air-rail marketshare split is directly proportional to trip time. There's empirical modeling for that. We know that we have substantially higher airfare costs and a rising carbon tax that will have driving and flying more expensive.

1) Will the travel time Montreal-Ottawa-Toronto match, or improve on today’s travel time Toronto- Kingston - Montreal ? If not, why would we project double today’s ridership?

If I'm not mistaken, the forecast HFR ride time is 4.75 hrs. This is 15 mins faster than the express today. Effectively, HFR turns every Toronto-Montreal train into an express by today's standards. I don't think the gains in ridership will mostly come from improved speed on this pair though. A bit from higher frequencies and more seats. I think the big gains are from routes that are somewhat competitive with air (Toronto-Ottawa and Montreal-Quebec City) and from routes that connect cities into exurbs (Ottawa-Montreal).

2) Define “Kingston Hub”.I don’t consider adding some siding capacity so that a late night train for each of Montreal, Kingston, and Toronto can lay over and depart in early morning to be a “hub”. That could be done today. How many trains will turn back at Kingston? Will Toronto- Cornwall passengers now change in Kingston? I have seen so many concepts rolled out in some minimalist form.... is there meat to the Hub concept?

From what I recall, they have promised fewer trains, but to have them originate in Kingston. So yes, Toronto-Cornwall pax will have to transfer in Kingston. The trade-off to providing service that actually lets Kingston residents do business in Toronto, Ottawa and Montreal.

I still have a harder time believing that, shorn of the overhead revenue from through ridership, a Kingston-centric service can also. The Kingston Hub is a promise that won’t be kept. That won’t hurt HFR any, but this route is a Regiment sacrificed to win a campaign somewhere else.

I don't see it as some crazy expensive promise. How much would it cost to base half a dozen short trains in Kingston? And in theory, better timed service should actually improve ridership. The current schedule out of Kingston sucks. It is basically a student service. Serves nobody who has business in a major centre and wants an out-and-back on a reasonable schedule.

In other forums, it has been widely touted as being profitable such that Via no longer would need a subsidy for any of the Corridor service.

That's the goal of the proposal. I don't see why if that is met, it would be characterized as "wildly profitable".

 

[littlewill1166]

Okay, let's crunch the numbers. My assumptions are the following (if you don't like any of them, it shall be your obligation to present a better one):

• Linear depreciation (which is the accounting practice adopted by VIA, see page 90 of its 2018 Annual Report)
• Depreciation period of 20 years for locomotives and 40 years for cars (note that Amtrak's average fleet age is 21 years for locomotives and 31 years for cars)
• The replacement value of each of VIA's current fleet type is to be calculated by deflating the unit cost of its new Siemens fleet to the value of the year in which the last year of that fleet type was delivered (ranging between 1949 and 2001)
• It is assumed that the unit cost of a locomotive is twice that of a car
• To calculate the unit cost, it is assumed that the $989 million contract with VIA covers 32 trainsets and that every set includes 1 locomotive and 5 cars, for a total of 32 locomotives and 160 cars
• Consequently, the assumed replacement values would be $4.4 million for a car and $8.8 million for a locomotive

This means that replacing VIA's entire active fleet would cost approximately $2.5 billion, but that when adjusting the replacement value of the various fleet types to the respective years where they were purchased, the initial fleet value decreases to $1.0 billion. Correspondingly, the annual depreciation would be $39.3 million, but note that 4 out of the 7 fleet types (HEP II, RDC, HEP I and F40) would have only a nominal book value (maybe $1), as they have already exceeded their assumed useful life. Therefore, the combined book value in 2018 of VIA's active fleet would have been only $188 million in 2018, which translates to an annual depreciation of $19.1 million:

View attachment 247380
Compiled from: Fleet counts and delivery dates provided in the CPTDB Wiki, combined with data mentioned in the assumptions stated above this table

This back-of-the-envelop calculation suggests that VIA's annual fleet depreciation costs are $19.1 million for its entire fleet and $15.2 million (if we assume that half of the Renaissance fleet is allocated to the Ocean rather than the Corridor) for the Corridor. As I've explained in Post #6,890, VIA Rail's 2019-2023 Corporate Plan shows a contribution of $77.0 million for the Corridor and of $39.2 million for the entire network. This means that the Corridor's contribution does not just offset the negative contribution of the non-Corridor routes, but also the depreciation of VIA's entire fleet. This is why I insist that VIA's current Corridor operations recover its costs and that it is just the overheads (like the salaries of HQ folks like me) which make it require an annual subsidy.

Therefore, the resale value of VIA's fleet doesn't matter as the Corridor fleet reduces VIA's subsidy need rather than increasing it. Nevertheless, the list prices you quoted only reveal the price at which railroads or rolling stock owners are willing to sell their equipment, not whether there is actually a market at that price (or at all). Given that VIA has repeatedly declared that its fleet has reached the end of its useful life and that it is in dire need of replacement, I wonder what kind of railroad or private car owner would possibly purchase such worn-out cars...

Thank you for completing an insightful analysis of the depreciation of VIA's corridor fleet. There are two key reasons why I did not perform an analysis with as much depth as yours:

I gave you formulas rather than hard numbers because of the many cars have gone through maintenance programs to extend their lifespan. These programs need to be depreciated (as indicated on page 90 of the 2018 annual report). There is limited public information regarding the cost or lifespan for many of those programs. However, they certainly do increases fixed costs through depreciation. By selling the equipment, VIA would face a one time gain/loss on disposal, but wouldn't incur any further depreciation costs on the fleet in the following years.

I'm skeptical of using of the shelf life spans because they don't always indicate the actual lifespan of a piece of equipment and the assumed depreciation period. The LRC's, for example, had an expected operating life of 20 years. Which was extended by what will supposedly be another 20 years (although I'm hearing that the post-ISRI ones didn't get a full overhaul). There were too many uncertainties for me to do a full analysis with the public information available to do an accurate analysis. However, I'd be happy to complete a full analysis if/when I receive the data/time to complete it.

If your brilliant "research" on VIA had gone beyond reading across its Annual Report, you might have realized that VIA operates the by far oldest fleet of any intercity passenger rail operator in the Western world (45 years for cars and 28 years for locomotives, if I calculate the weighted average from the respective "years of last delivery"). But, well, who needs research if you already know everything...?

I definitely see a market for the HEP1s and HEP2s on the corridor with private railcar buyers given their historical value as Budd cars and their availability on the secondary market. I again wasn't comfortable jumping into an analysis without a full slate of data available. It is unfortunately you are the one who seems to know everything. However, I stand by what I said about VIA being able to save on deprecation (if not on the cars themselves then on their retrofits, albeit recognizing a gain/loss on disposal) if it sold its corridor fleet.

You're looking at history that is only superficially applicable to a future business model. You really want to argue that a service that is marginally competitive with air on some segments won't have more profitable business?

Again. None of this can really be used to assess what is being proposed. For starters we know that the air-rail marketshare split is directly proportional to trip time. There's empirical modeling for that. We know that we have substantially higher airfare costs and a rising carbon tax that will have driving and flying more expensive.

Post 6850 was for the base fleet to be used under a status quo scenario. HFR is not yet funded or under construction and the proposed new fleet is currently destined to replace the current fleet on current status quo services on the corridor. The analysis done for post 6850 is not meant for HFR, and I made it very clear in the last paragraph of the post, and I've said that multiple times already. I'm also confused about your obsession that HFR must be a profitable venture for VIA. At the end of the day it's public transportation, and the majority of the value from it will be derived from its social, economic, and environmental benefits as presented in the EcoRail study and numerous studies before it. If it is profitable, then that's a bonus. As I said to michael_can, we must wait for a business case to be released to find out for sure. If you want to produce your own analysis demonstrating the merits of HFR, I encourage you to do so. However, at this point, it seems like you're disagreeing with me out of sheer spite.

 

[kEiThZ]

However, at this point, it seems like you're disagreeing with me out of sheer spite.

No. I'm just allergic to non-factual pessimism and attempts to pass it off as "analysis". I stick what I know about HFR and I wouldn't presume to know the overall business case with any certainty till that $70M study tells us something. You on the other hand, have spreadsheeted a few quick numbers for one segment and decided that the whole business case for HFR is likely flawed. You're just waiting for confirmation.... Now, in the interest of helping along your maturity. How exactly do you think your business career would go if you were this superficial and dismissive in your analysis?

 

[micheal_can]

From what I recall, they have promised fewer trains, but to have them originate in Kingston. So yes, Toronto-Cornwall pax will have to transfer in Kingston. The trade-off to providing service that actually lets Kingston residents do business in Toronto, Ottawa and Montreal.

Why not have thru trains? I Kingston really big enough to do this?