Taxpayer-Funded VIA Rail on Track to Lose $411 Million in 2023

VIA Rail trains are seen parked at VIA Rail's Toronto Maintenance Centre at Union Station in Toronto, Ontario, on Feb. 14, 2020. (Carlos Osorio/Reuters)

Taxpayer-funded Crown corporation VIA Rail will run at an estimated operating deficit of $411 million this year, according to the company’s newest corporate plan. Despite layoffs and service cuts to try and slow steep losses, the railway is expected to continue to lose money for at least two more years, according to the report.

The railway lost $370.5 million in 2021 and $415.8 million in 2020.

“Demand for travel may only return to or exceed the level seen in 2019 sometime in 2024,” said a Nov. 8 report, Summary of the 2022–2026 Corporate Plan and 2022 Operating and Capital Budgets. “Under such conditions VIA Rail, while continuing to prudently provide needed transportation services to Canadians as it has done throughout 2020 and 2021, will be forced to seek funding.”

Government Bailout

Cabinet gave VIA a $187.5 million COVID bailout to cover losses and ongoing deficits in 2021, spread over three fiscal years instead of one.

“VIA Rail drew on $90.4 million in 2020–2021 and $67.5 million in 2021–2022. The remaining $29.6 million will be returned to the Government,” said the VIA report.

The Ocean, Via Rail's Halifax-to-Montreal passenger train, sits at the station in Halifax in June 2012. (Andrew Vaughan/The Canadian Press)

The railway also received $490.1 million in the 2021 federal budget, according to the report, which will be used in Montreal on “targeted investment projects.”

The 2022 federal budget awarded another $212 million to VIA Rail “so that it may maintain, and upgrade stations and maintenance centres in the Windsor to Quebec City corridor,” according to the report.

The railway provides its CEO a salary of up to $529,280 including 28 percent bonuses, and an additional $45,000 in extra benefits such as a car allowance and “sport club memberships,” according to Blacklock’s Reporter.

The report stated that the train had over 5 million passengers in 2019, making that year the highest yearly number of riders on the train in the last 30 years. In 2020 and 2021, the rail said “exceptional challenges” were faced due to COVID-19.

Low Ridership

VIA Rail adopted and enforced a COVID-19 vaccine requirement policy and vaccination passports for passengers and employees, as well as rapid testing, on Oct. 30, 2021. Any passenger over the age of 12 years and 4 months was required to be “fully vaccinated” and wear a mask to board a VIA train.

The vaccination passport requirement was suspended sometime after the federal government removed COVID-19 border entry restrictions, testing, quarantine, and proof of vaccination to travel. A specific date was not provided by the report.

In a normal year, VIA runs 450 trains per week across 12,500 kilometres of rail tracks. In 2021, VIA only had 1.5 million passengers compared to 2019 ridership of 5 million passengers at the height of its success. The report stated VIA rail “has made significant efforts to contain the growth of its operating deficit and thus, its reliance on government funding.”

“The Crown corporation thinks operations could return to pre-pandemic levels in 2024 but there remains an important risk this assumption may not materialize,” wrote VIA management, according to Blacklock’s Reporter.

The railway stated it had “poor on-time performance” and was using rail cars more than 65 years old in some cases. “All have aged well beyond the industry norm of 30 to 40 years,” said the report. The railway report stated it requires “a new fleet.”

Layoffs

Faced with mounting losses, the railway took steps to lay off workers; from pre-COVID payroll numbers, it cut 14.5 percent of its workforce, going from 3,234 employees to 2,763.

The report, tabled in Parliament, stated: “Financially, the company has stretched itself in the past few years to grow revenues, contain the operating deficit and the reliance on government funding and improve on the cost-recovery ratio. However due to the Covid-19 crisis VIA Rail’s financial performance was significantly affected.”

According to Blacklock’s Reporter, federal transport minister Omar Alghabra testified on May 30, 2022, at a Commons committee meeting that there was no question “of privatization of VIA.”

The Crown-owned railway has been in existence since 1978. There was also no mention of selling VIA.

Ian Madsen, a senior policy analyst at the Frontier Centre for Public Policy, penned an editorial last year for the Hamilton Spectator, stating, “By any criteria, Via Rail, a federal Crown corporation, is not a good investment.” He said the railway’s “chronic cash-burning condition offers no economic value to any potential buyer” and it should either be sold or liquidated.

“The federal government should embark on setting Via Rail, a truly underperforming asset, on either a sale or liquidation track. Using the cost of federal debt, the present value of Via Rail is about negative $16 billion. There must be a better use of taxpayers’ money,” said Madsen.

Editor’s note: A previous version of this article misstated the value of the deficit. The estimated operating deficit is $411 million. The Epoch Times regrets the error.