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Passenger rail service dependent upon market conditions or government subsidies

During my tenure as president and CEO of BC Rail our priority was to constantly work at improvements in two areas, service to shippers and the financial viability of the railway. British Columbians, and especially those along the BCR route, recognize that the railway is critical to the economic well being of communities from one end of the system to the other. They recognize that industrial sectors like forestry and mining depend on efficient and competitive transportation services. Industrial shippers have always been and will always be the priority of BC Rail regardless of who operates it.

The debate over the future of BC Rail continues but I have confidence that at the end of the day there will be significant improvements to BCR’s operations that will benefit shippers and communities alike.

And now CN and BCR have initiated a process to decide on an operator of tourist passenger services. This is of great interest to me as during my time at BCR we attempted to revitalize passenger service in a number of ways and spent significant resources on equipment and marketing plans to ensure we gave it every opportunity to succeed.

When considering passenger service on BCR a little history is useful. Over many decades BCR operated a Budd Car passenger service that experienced various levels of success but never to the degree that permitted it to pay for its operating expenses, never mind new updated equipment. Throughout its history BCR has been under the fiscal microscope of governments wanting it to be fiscally prudent and to operate on a fully commercial basis. That was always a problem for the passenger service as both the level of usage and the financial losses suggested discontinuance of the service was in order. Five million dollars a year to keep a service going that very few people were using was a tough pill for any government to swallow when there have been such significant demands for money to be spent on other priorities, such as health care and education.

We decided to put make one final push to determine if we could identify a model that would work. We introduced a number of different services from the dinner train operating out of North Vancouver to the higher end tourist train referred to as The North Wind. We also attempted to keep the point-to-point passenger service operating. We brought in several talented and experienced executives from the private sector to assist in developing, marketing and operating these products. While we enjoyed some success it was clear that it would take a number of years of experience to reach profitability and that luxury was not available to us.

The history of passenger services on BCR is a long one and surely one lesson has been learned. Unless governments are willing to subsidize service to the tune of tens of millions of dollars a year we have to encourage the private sector to establish a service that is based on market demand and market conditions. If people will not pay the real cost of point-to-point service, and they do not anywhere in the world, then point-to-point service is out of the question. Let a private operator establish a service based on good solid market conditions and then work with them to grow that business over time. That will ensure that a sustainable service has the opportunity to develop. For those who think that there is enough money to be made in a passenger service to allow a private operator to offer point-to-point passenger service I can only say experience the world over says otherwise. Making this route a success will take years of great commitment.

I hope we are smart enough to recognize that we have to throw the very best talent and experience we have in the business to make service on this route a success. If we do that and allow them the opportunity to build the business over time the BCR route will become an important economic engine for our tourism sector and our province.

Paul McElligott is president and CEO of TimberWest Forest Corp. He was with BC Rail from 1989 to January, 2001, when he resigned as president and CEO of the BCR Group of Companies to join TimberWest.

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