Monday, June 30, 2008


Why is VIA Rail so expensive? I mean, at $140/barrel you'd think that passenger rail would be more competitive with buses, even in Ontario. But every time I check, it's usually almost twice as much to take the train from Toronto to Ottawa and back as it is to take the bus, provided I book 7 days in advance. Hypothesis?

1) Greyhound doesn't have to pay for its own roads. True, but neither does VIA -- it uses CP's rails. Though presumably not for free.

2) Greyhound buys its diesel in long-term contracts, and has been isolated from recent price spikes. Plausible, but we should have seen some movement.

3) VIA rail is a monopoly. More likely, but Greyhound is damn close to one on the Ottawa-Toronto route. I would assume both companies treat the Montreal-Windsor corridor as the cash cow, and price accordingly.

4) Unions? Both companies have to rely on heavily unionized workforces. Per passenger seat, I would assume VIA has the advantage here.

5) As always, I could be doing something wrong.

I don't know, I'm not convinced by any of the reasons I can think of (except of course #5.) If, only by booking a week in advance, I can get a ticket to Ottawa for <$100, it seems unreasonable that VIA can't offer similar rates, especially with the rapidly-escalating price of fuel and the inherent fuel efficiency of rail.

1 comment:

David Graham - said...

I would say (1) is closest - Via primarily uses CN's rails (not so much CP's) and pays very heavily for the privilege. If Greyhound had to pay as much to use the roads as Via has to pay to use the rails per passenger mile, my bet is Greyhound would be priced out of the market. Via's costs more accurately represent the true cost of moving someone. So while I would love to see Via's rates come down, if we were charging true cost it would be more likely that bus ticket prices would skyrocket.

It doesn't help that our last prime minister was once the owner of Quebec's largest bus company, Voyageur, through CSL. The bus lobby has long insisted that Via cost as much as possible, on the ridiculous pretense that bus companies are not subsidised (never mind roads) so why should Via be?

Via Rail receives an annual subsidy of about $170 million for its entire network. Greyhound uses most of the country's major roads.