On Mar 23, 2011 when Min. of Northern Development & Mines Rick Bartolucci announced the divestiture of Ontario Northland, he stated "while the business is good, the model is not" As is the case in "spin" politics, when you are trying to justify what should not be done, the truth can be very inconvenient. In this case, it was necessary to twist the truth 180 degrees to justify a sale that would not achieve what it was purported to do. The business model of the crown corporation has enabled it to last for 110 years, from its formation as the very first provincial agency until the business was ripped away by the same government that abandoned it.
The sale of ONTC would not bring $265M into the provincial coffers, as Minister Bartolucci claimed, nor was the normal annual cost of $25M a debilitating strain on the provincial treasury, especially when one considers the value of the services provided. The annual cost had risen dramatically over the past year, based on some one-off costs and some revenue cuts that had not yet been responded to, but it is the average annual cost that must be evaluated.
The model was, and is, still good. Ontario Northland is an operational enterprise agency under the Ministry of Northern Development and Mines providing commercial and non-commercial services in Northern Ontario.
The commercial services are rail freight, telecommunications, refurbishment and bus services, while non-commercial services are rail passenger, the entire line between Cochrane and Moosonee, and the Moosonee barge (freight service between Moosonee and Moose Factory)
In theory, the commercial operations are supposed to be profitable and able to generate sufficient profit to "subsidize" the non-commercial ones. In practice this has not proven to be the case and additional funds were required from the provincial treasury to balance the books. The reasons for the inability of Ontario Northland to "break even" are varied and in most cases, as clear as mud.
It is important to note that all of Ontario Northland's business activities were started without any competition. The private sector did not go into northern Ontario initially, it was only after the crown corporation started development that others began to compete. The mandate of the ONTC was "to provide efficient transportation and telecommunications services in Northern Ontario as directed by the Government of Ontario through the Minister". The highlights are my own and reflect the main problem with the mandate.
Within the commercial operations of ONTC are hidden requirements and roadblocks to provide economic development to Northern Ontario. For instance, within Motor Coach services, which receives no subsidy, there is the need to provide service to all the small communities within reach of their routes. This means the higher volume passengers from major centres must make the sidetrips into all the small communities between Timmins and Toronto, thereby lengthening their trip and making the automobile or airplane more attractive. A private sector operator would institute express runs and bypass the low ridership in the smaller centres. It is vital to the region that Ontario Northland DOES provide service to these small communities and it must continue, but the idea that commercial operations are required to subsidize their own division, plus contribute to a profit margin needs to be reconsidered.
Charter service was started as a way to improve the utilization rates of buses needed to meet service demand peaks. There is great opportunity for charter business in southern Ontario, but ONTC is held back from competing in those markets because it has been deemed unfair to the private sector operators there and in fact, may be held back from all charter work now to protect Northlander weekend loads.
There are many other examples, Ontera's operation of small local telephone exchanges, rail freight service levels, and refurbishment's limited ability to secure contracts, all facets of their business that may be restrictive or may not be cost effective, but under direction of the Minister, are deemed essential to the provision of service. That service needs to be protected, enhanced and reviewed to find ways of documenting the value of them, at the same time benchmarking the process to ensure efficiency. Once the government is assured of good value from their investment, it becomes possible to expand the operation westward and take in all of northern Ontario.
If Ontario Northland were truly free to enter into whatever businesses would generate additional revenue, they would have developed an intermodal service that would prove to be of exceptional value to the forestry industry now. If those companies are going to expand their market, ONTC would be perfectly situated to assist with intermodal services from their door. The fact that no private sector operator has seen fit to start one up is further evidence that Ontario Northland needs to be kept intact, with all revenue streams from its marginal business operations feeding an efficient, central administration.
If ONTC, or any of its divisions were to be sold off, the administrative burden on what is left would become more onerous and require more government financial support. Ontario Northland, as it exists today, has been abandoned as an instrument of public policy in the economic region in which it operates. It should be used as a means to bring new technologies and innovation into the economy of Northern Ontario, instead of constantly being attacked for consuming public money.
The private sector may want some of the business that ONTC conducts, but they will not take the responsibilities that go with it. The model was not broken, but the relationship between the Minister and the company was, now we need to see the will to repair it, or transfer the assets and let the federal government develop the New Deal.
NORTHERN ONTARIO - POLITICAL ISSUES An opinion on the issues affecting the province and primarily Northern Ontario
Monday 29 April 2013
Wednesday 24 April 2013
Economic Development in Northern Ontario
Employment in Northern Ontario - 2003 372,700
2011 360,900
11,800 Less jobs in Northern Ontario
Source - MNDM - Northern Ontario - A Profile
NOHFC Mandate under MNDM
Established June 1, 1988, The Northern Ontario Heritage Fund Corporation (NOHFC) is a crown corporation and development agency of the Ontario government that invests in northern businesses and municipalities through conditional contributions, forgivable performance loans, incentive term loans and loan guarantees.
Between 2003 and 2010 the Northern Ontario Heritage Fund Corporation claims to have created (or maintained) 13,300 jobs at a cost of $523M or almost $40,000 per job.
That amount does not include annual administration costs which were $5.2M in 2010 (up $1M from 2009) nor the pension cost for the administrative employees which is recorded separately. NOHFC Annual Report 2009-2010
Ministry of Economic Development and Innovation
Budget of $983.9M for 2012 and their mandate, although Ontario wide, is
The Ministry of Economic Development, Trade and Employment supports a strong, innovative economy that can provide jobs, opportunities and prosperity for all Ontarians.
Budget of $768.6M for 2012
Ministry of Tourism, Culture and Sport
Budget of $1,200M for 2012
This ministry works closely with the tourism sector to help stimulate economic growth and investment and create an environment that allows Ontario to compete successfully in the rapidly changing world of travel and leisure. Among our activities to strengthen Ontario as an internationally-recognized tourist destination:
The budget amounts listed above are not totally devoted to "Economic Development" but they are all expenditures of the Provincial Government. There is more money spent on economic development by the federal and municipal governments also.
Now I understand that it takes money to make money, but I would really like to see an independent review and analysis of all the government money spent on "Economic Development" and what the return on investment is. Or better yet, why not take a portion of this money and invest it in something that will return hundreds of jobs and create new industry in the North...the New Deal.
2011 360,900
11,800 Less jobs in Northern Ontario
Source - MNDM - Northern Ontario - A Profile
NOHFC Mandate under MNDM
Established June 1, 1988, The Northern Ontario Heritage Fund Corporation (NOHFC) is a crown corporation and development agency of the Ontario government that invests in northern businesses and municipalities through conditional contributions, forgivable performance loans, incentive term loans and loan guarantees.
Between 2003 and 2010 the Northern Ontario Heritage Fund Corporation claims to have created (or maintained) 13,300 jobs at a cost of $523M or almost $40,000 per job.
That amount does not include annual administration costs which were $5.2M in 2010 (up $1M from 2009) nor the pension cost for the administrative employees which is recorded separately. NOHFC Annual Report 2009-2010
Ministry of Economic Development and Innovation
Budget of $983.9M for 2012 and their mandate, although Ontario wide, is
The Ministry of Economic Development, Trade and Employment supports a strong, innovative economy that can provide jobs, opportunities and prosperity for all Ontarians.
The ministry delivers a range of programs, services and tools to help businesses innovate and compete in today’s fast-changing global economy, including business support and youth entrepreneurship programs, strategic investments and international trade and export expertise.
Through the government’s Open for Business initiative, the ministry helps make investing in Ontario more attractive for businesses, while protecting the public interest.
Through the Accessibility Directorate of Ontario, the ministry works with the disability, private and public sectors in the interest of promoting accessibility for all.
Ministry of Northern Development and MinesBudget of $768.6M for 2012
Northern Development
By providing a northern perspective, the Northern Development Division helps northerners build stronger, more prosperous economies and sustainable communities while addressing the unique regional circumstances of our vast, resource-rich land.
- We deliver Ontario government programs, services and information across the North.
- We promote economic growth, infrastructure enhancements and investment in Northern Ontario. We also market the North on the global stage to attract investment dollars and open new export opportunities for northern businesses.
- We ensure that government policies and programs reflect a northern perspective by gathering input from northern citizens and providing a voice for them in government decision-making.
Ministry of Tourism, Culture and Sport
Budget of $1,200M for 2012
This ministry works closely with the tourism sector to help stimulate economic growth and investment and create an environment that allows Ontario to compete successfully in the rapidly changing world of travel and leisure. Among our activities to strengthen Ontario as an internationally-recognized tourist destination:
- We undertake vital market research in the areas of marketing, product development, and investment to aid business decisions by both governments and industry.
- We encourage private sector investment and new product development to expand Ontario's tourism sector and promote regional tourism economic development.
- We support and facilitate the development of new experiences and destinations.
- We market Ontario as a tourist destination.
- We invest in Ontario's tourism agencies.
- We work with industry and organizations to support the maintenance and growth of the tourism's economic contribution.
The budget amounts listed above are not totally devoted to "Economic Development" but they are all expenditures of the Provincial Government. There is more money spent on economic development by the federal and municipal governments also.
Now I understand that it takes money to make money, but I would really like to see an independent review and analysis of all the government money spent on "Economic Development" and what the return on investment is. Or better yet, why not take a portion of this money and invest it in something that will return hundreds of jobs and create new industry in the North...the New Deal.
Monday 22 April 2013
How to Kill a Passenger Train - Scheduling
ONTC and GO Transit are similar in that they are both responsible for transportation services in their respective regions and both use buses and trains to provide that service. There are differences however that require different approaches in determining service levels.
GO Transit operates in a primarily high density population area, while ONTC must service areas of the province where not many people live. Because of this, schedules that make sense in the south do not work in the north. GO Transit has enough passenger volume to operate a train with a bus running on a parallel road at the same time. Not so, in the North....but that did not stop the ONTC from operating duplicating bus and train schedules with very few people on either service.
The train left Cochrane at 8:00 am and arrived at North Bay at 1:20 pm after a 5 hour and 20 min trip. The bus left Cochrane at 8:30 and arrived at North Bay at 3:00 for a 6 hour and 30 min trip, the extra time needed to access passenger stops at small locations, pick up BPX parcels and stop for the driver to eat lunch.
There is another bus departing Cochrane daily at 7:45 pm and arrives at North Bay at 1:30 am. All of the trips have a connecting service out of North Bay, using the same train, obviously, and different buses. The train left North Bay at 1:35 pm and usually arrived at Toronto Union Station at around 6:30 pm, although the schedule was published with a 7:15 pm arrival to avoid complaints when CN regularly delayed the train for an extended period. The duplicating bus schedule left North Bay at 12:15 pm and arrived at Toronto Bay Street bus terminal at 5:30 pm. On Fridays and Sundays there was also an express bus that left North Bay at the same time and arrived at Toronto Bay Street at 4:45
When I came into work on Fridays, I would often see two buses loaded with people heading down to Toronto, then I would take a train out at less than 25% capacity. That made no sense to me whatsoever, but I was informed that the ONTC commission had insisted that Northerners should be given "a choice" of transportation mode. Well, I am all for that, but the choice should be between times of departure also, not only the type of transportation. If it was determined there were enough resources to run 2 bus departures and 1 train departure per day, the departure times should be evenly spaced throughout the day to give the most choice to Northerners.
Another point was how Passenger service was geared toward buses rather than focused on concentrating on utilizing our highest capacity service first, and using buses to feed the train, then filling out time slots with bus service. Don't get me wrong, I have nothing against the bus service, but when managing a multi-mode transportation system, you have to ensure you are maximizing ridership on the highest cost service first.
For example, the primary target market for Ontario Northland was seniors and students. The fact that North Bay had two education facilities in one spot meant there was a great potential to attract riders from that location. This was recognized by bus services, operating a mini-agency on site and running their schedules up to the Education Centre before leaving town. There was no such effort made to bring the students down to the train, they were on their own for that, provided they knew it even existed.
Then there was the matter of scheduling on CN tracks. It was bad enough being sidelined for CN freight trains, but it got really frustrating being made to wait in a siding while GO Trains went ahead of you and met opposing GO Trains, while you waited for both.
Why someone in the government could not negotiate the same penalty for CN whether they delayed a GO Train or the Northlander was always questioned, since they were all operated and paid for, by the same government. It never changed, because the government never really cared about the Northlander.
Still with scheduling, the Northlander only operated 6 days a week, due to cost constraints, but there was additional demand from the Muskoka area on the weekend for use as a commuter service between Toronto and their region. As cottagers became aware of the service, through word of mouth, they expressed a desire to travel north on Friday night and return later on Sunday. The ONTC incurred storage costs in Toronto for the trainset that remained there over Friday and Saturday night, but even the elimination of those costs would not permit them to go after the additional revenue possible from returning the trainset to North Bay.
Some of these decisions were not the direct result of MNDM staff, but again....when you control the purse, you bear the ultimate responsibility.
GO Transit operates in a primarily high density population area, while ONTC must service areas of the province where not many people live. Because of this, schedules that make sense in the south do not work in the north. GO Transit has enough passenger volume to operate a train with a bus running on a parallel road at the same time. Not so, in the North....but that did not stop the ONTC from operating duplicating bus and train schedules with very few people on either service.
The train left Cochrane at 8:00 am and arrived at North Bay at 1:20 pm after a 5 hour and 20 min trip. The bus left Cochrane at 8:30 and arrived at North Bay at 3:00 for a 6 hour and 30 min trip, the extra time needed to access passenger stops at small locations, pick up BPX parcels and stop for the driver to eat lunch.
There is another bus departing Cochrane daily at 7:45 pm and arrives at North Bay at 1:30 am. All of the trips have a connecting service out of North Bay, using the same train, obviously, and different buses. The train left North Bay at 1:35 pm and usually arrived at Toronto Union Station at around 6:30 pm, although the schedule was published with a 7:15 pm arrival to avoid complaints when CN regularly delayed the train for an extended period. The duplicating bus schedule left North Bay at 12:15 pm and arrived at Toronto Bay Street bus terminal at 5:30 pm. On Fridays and Sundays there was also an express bus that left North Bay at the same time and arrived at Toronto Bay Street at 4:45
When I came into work on Fridays, I would often see two buses loaded with people heading down to Toronto, then I would take a train out at less than 25% capacity. That made no sense to me whatsoever, but I was informed that the ONTC commission had insisted that Northerners should be given "a choice" of transportation mode. Well, I am all for that, but the choice should be between times of departure also, not only the type of transportation. If it was determined there were enough resources to run 2 bus departures and 1 train departure per day, the departure times should be evenly spaced throughout the day to give the most choice to Northerners.
Another point was how Passenger service was geared toward buses rather than focused on concentrating on utilizing our highest capacity service first, and using buses to feed the train, then filling out time slots with bus service. Don't get me wrong, I have nothing against the bus service, but when managing a multi-mode transportation system, you have to ensure you are maximizing ridership on the highest cost service first.
For example, the primary target market for Ontario Northland was seniors and students. The fact that North Bay had two education facilities in one spot meant there was a great potential to attract riders from that location. This was recognized by bus services, operating a mini-agency on site and running their schedules up to the Education Centre before leaving town. There was no such effort made to bring the students down to the train, they were on their own for that, provided they knew it even existed.
Then there was the matter of scheduling on CN tracks. It was bad enough being sidelined for CN freight trains, but it got really frustrating being made to wait in a siding while GO Trains went ahead of you and met opposing GO Trains, while you waited for both.
Why someone in the government could not negotiate the same penalty for CN whether they delayed a GO Train or the Northlander was always questioned, since they were all operated and paid for, by the same government. It never changed, because the government never really cared about the Northlander.
Still with scheduling, the Northlander only operated 6 days a week, due to cost constraints, but there was additional demand from the Muskoka area on the weekend for use as a commuter service between Toronto and their region. As cottagers became aware of the service, through word of mouth, they expressed a desire to travel north on Friday night and return later on Sunday. The ONTC incurred storage costs in Toronto for the trainset that remained there over Friday and Saturday night, but even the elimination of those costs would not permit them to go after the additional revenue possible from returning the trainset to North Bay.
Some of these decisions were not the direct result of MNDM staff, but again....when you control the purse, you bear the ultimate responsibility.
Thursday 18 April 2013
How to Kill a Passenger Train - No Targets
The Liberal government would like you to believe that Ontario Northland is unsustainable and the Northlander had "stagnant" ridership in spite of millions of dollars invested by them. I will leave the sustainability of the company to be determined by the amount of the projected savings found by the Auditor General, but I take issue with the idea that they invested anything, money or effort, into the passenger service they were so desperate to eradicate.
There is an old adage that it takes money to make money. My concerns in this post however, center around the business decisions of the ONTC passenger service, more than the lack of their fair share of government financial assistance.
The Polar Bear is an essential service and no matter how much it costs the government, it is far cheaper than building and maintaining an all-season road to Moosonee, so it did not face the same pressure as the Northlander for its existence. It has room for many improvements, and the communities it serves are entitled to still better service, but for the sake of this post, I will focus on the Northlander, since it has already disappeared.
In a previous post, I commented on the importance of pricing and briefly touched on the issue of marketing. The Northlander had a dual mandate that sometimes presented conflicting issues, it was a connection to the provincial capital for people in Northeastern Ontario and it was supposed to be an economic development tool used to bring people up north and promote tourism.
It is ironic that the Northlander ended up being trashed for "stagnant" ridership, when there is no evidence that was ever a priority for the government. If increasing ridership was the top priority, why did they stop setting any hard targets for it?
Recent figures are hard to come by, since the government has stopped posting annual reports on the website, (the most recent Annual Report posted, is 2008-2009), but in the last posted Annual Report, there is not even a breakdown of the Northlander's ridership. There is a reference to the fact it was down due to the anomaly of a time period with no buses in the previous year. In the past there were ridership targets set and the odd event like a seat sale used to drive up ridership.
Speaking of marketing again, around 2005-2006 the ONTC partnered with The Bike Train and provided a baggage car for this service. It was well received for its inaugural run but within two years, the partnership was transferred from the Northlander to the Motor Coach division, where, not surprisingly, it did not survive. Other markets have survived with rail participation, but the Northlander was not given the same chance.
Then, shortly after, ridership targets seemed to disappear.
If the MNDM had set hard targets for increased ridership, they would have been forced to provide some resources to management, so those managers had a reasonable chance of achieving their goal. Different decisions might have been made, if there was a corporate focus on bringing more people on the train.
The Ministry of Tourism paid for a Ontario Tourism Infrastructure Research Study in Feb 2009. Although that report seems to have a bit too much focus on Toronto, it does accurately reflect the importance of transportation infrastructure to tourism.
"Rejuvenation of the rail network, like upgrading Northern Ontario’s highway
system, is an expensive and long-term solution to tourist travel. However,
improving rail service could provide economic returns and tourism sector
growth and investment. In the 2000 Travel Activities and Motivations Survey22 Americans travellers stated they were more likely to be motivated to take a trip to Ontario for nature-oriented attractions such as an overnight train tour through natural terrain."
Oddly though, even though MNDM staff were interviewed, Ontario Northland is not mentioned as a possible tool for tourism initiatives. In fact, the existing role played by the company is downplayed as much as possible, to the point that temporary service disruptions are highlighted, as is the fact that the train does not go to Timmins. The fact that there is a connecting bus service to Timmins from Porquis does not get mentioned at all.
In addition to Via, passenger rail service is also provided by Ontario Northland
Railway. The Ontario Northland Railway provides transportation option for people traveling between Toronto, Cochrane, Moosonee, and various points along the way40. The two major cities with the provision of passenger services are North Bay and Toronto.
The Northland Ontario provides one regular service per day from North Bay to
Toronto (and vice versa). On the 19th of November, the Ontario Northland website noted that train service has been replaced by bus service between Toronto and North Bay due to operational difficulties41. The regular Northland train service was still operating between North Bay and Cochrane.
There is an Ontario Northland route that connects Northern and Southern Ontario between Cochrane and Toronto along the Highway 11 corridor. This service goes through the Central Ontario tourist region.
The passenger rail service provided by Ontario Northland Rail does not provide full coverage inter-city transportation service between major tourist areas in the Northern Ontario
During my time on the Northlander, I met two individuals who I thought could have been instrumental in attracting more riders on the train for longer trips. One was Daryl Adair, of Rail Travel Tours and the other was Ron Brown, noted Ontario author and travel guide.
Both of these gentlemen approached the ONR on their own and booked groups to travel on the Northlander, but they were never engaged in a formal business relationship to partner with ONTC. There are all kinds of rail tour companies in Canada, why would the ONTC not begin a business relationship with these two men, then go after more?
If they wanted to attract riders from the largest metropolitan area in Canada, they could have employed one staff member there, instead of a contractor who made $100,000 per year selling 90% of his tickets in the hour and a half before the train departed. That would have left 6 hours a day for an employee to do some marketing and maybe develop packages with attractions up the line.
Starting with Washago as the first stop, Casino Rama, could have been used to draw people onto the train and use the short run as an opportunity to introduce people to the North. Videos, brochures and engaged employees could have explained about further adventures in parts of the province unknown to most GTA residents.
The adventure and appeal of a train ride could have been expanded to Gravenhurst, where a visit to Norman Bethune's house may have been of some interest to the Chinese community in the GTA. Or maybe a lunch trip on the Segwun would appeal to some people...again, if you bring them on the train, you have a captive audience for a couple of hours while you get them there. Some tourism businesses might pay something for that kind of targeted advertising, but most would certainly be interested in a free opportunity to participate in it.
There are more attractions at every stop and as you build traffic on the train, you stand a chance of enticing them back and further North. These things were not done, however, and while there were some efforts made to bring Japanese tourists on for the fall colour tours, the lack of support from the government made it impossible to add a dome car to the experience or grow the business to any extent.
The only answer I can see, is there was never an intent to grow ridership, there was only an effort to cut costs. That focus was the cause of a "stagnant ridership" and the organization that controls the purse strings is the one who bears the responsibility...Ministry of Northern Development and Mines.
There is an old adage that it takes money to make money. My concerns in this post however, center around the business decisions of the ONTC passenger service, more than the lack of their fair share of government financial assistance.
The Polar Bear is an essential service and no matter how much it costs the government, it is far cheaper than building and maintaining an all-season road to Moosonee, so it did not face the same pressure as the Northlander for its existence. It has room for many improvements, and the communities it serves are entitled to still better service, but for the sake of this post, I will focus on the Northlander, since it has already disappeared.
In a previous post, I commented on the importance of pricing and briefly touched on the issue of marketing. The Northlander had a dual mandate that sometimes presented conflicting issues, it was a connection to the provincial capital for people in Northeastern Ontario and it was supposed to be an economic development tool used to bring people up north and promote tourism.
It is ironic that the Northlander ended up being trashed for "stagnant" ridership, when there is no evidence that was ever a priority for the government. If increasing ridership was the top priority, why did they stop setting any hard targets for it?
Recent figures are hard to come by, since the government has stopped posting annual reports on the website, (the most recent Annual Report posted, is 2008-2009), but in the last posted Annual Report, there is not even a breakdown of the Northlander's ridership. There is a reference to the fact it was down due to the anomaly of a time period with no buses in the previous year. In the past there were ridership targets set and the odd event like a seat sale used to drive up ridership.
Speaking of marketing again, around 2005-2006 the ONTC partnered with The Bike Train and provided a baggage car for this service. It was well received for its inaugural run but within two years, the partnership was transferred from the Northlander to the Motor Coach division, where, not surprisingly, it did not survive. Other markets have survived with rail participation, but the Northlander was not given the same chance.
Then, shortly after, ridership targets seemed to disappear.
If the MNDM had set hard targets for increased ridership, they would have been forced to provide some resources to management, so those managers had a reasonable chance of achieving their goal. Different decisions might have been made, if there was a corporate focus on bringing more people on the train.
The Ministry of Tourism paid for a Ontario Tourism Infrastructure Research Study in Feb 2009. Although that report seems to have a bit too much focus on Toronto, it does accurately reflect the importance of transportation infrastructure to tourism.
"Rejuvenation of the rail network, like upgrading Northern Ontario’s highway
system, is an expensive and long-term solution to tourist travel. However,
improving rail service could provide economic returns and tourism sector
growth and investment. In the 2000 Travel Activities and Motivations Survey22 Americans travellers stated they were more likely to be motivated to take a trip to Ontario for nature-oriented attractions such as an overnight train tour through natural terrain."
Oddly though, even though MNDM staff were interviewed, Ontario Northland is not mentioned as a possible tool for tourism initiatives. In fact, the existing role played by the company is downplayed as much as possible, to the point that temporary service disruptions are highlighted, as is the fact that the train does not go to Timmins. The fact that there is a connecting bus service to Timmins from Porquis does not get mentioned at all.
In addition to Via, passenger rail service is also provided by Ontario Northland
Railway. The Ontario Northland Railway provides transportation option for people traveling between Toronto, Cochrane, Moosonee, and various points along the way40. The two major cities with the provision of passenger services are North Bay and Toronto.
The Northland Ontario provides one regular service per day from North Bay to
Toronto (and vice versa). On the 19th of November, the Ontario Northland website noted that train service has been replaced by bus service between Toronto and North Bay due to operational difficulties41. The regular Northland train service was still operating between North Bay and Cochrane.
There is an Ontario Northland route that connects Northern and Southern Ontario between Cochrane and Toronto along the Highway 11 corridor. This service goes through the Central Ontario tourist region.
The passenger rail service provided by Ontario Northland Rail does not provide full coverage inter-city transportation service between major tourist areas in the Northern Ontario
During my time on the Northlander, I met two individuals who I thought could have been instrumental in attracting more riders on the train for longer trips. One was Daryl Adair, of Rail Travel Tours and the other was Ron Brown, noted Ontario author and travel guide.
Both of these gentlemen approached the ONR on their own and booked groups to travel on the Northlander, but they were never engaged in a formal business relationship to partner with ONTC. There are all kinds of rail tour companies in Canada, why would the ONTC not begin a business relationship with these two men, then go after more?
If they wanted to attract riders from the largest metropolitan area in Canada, they could have employed one staff member there, instead of a contractor who made $100,000 per year selling 90% of his tickets in the hour and a half before the train departed. That would have left 6 hours a day for an employee to do some marketing and maybe develop packages with attractions up the line.
Starting with Washago as the first stop, Casino Rama, could have been used to draw people onto the train and use the short run as an opportunity to introduce people to the North. Videos, brochures and engaged employees could have explained about further adventures in parts of the province unknown to most GTA residents.
The adventure and appeal of a train ride could have been expanded to Gravenhurst, where a visit to Norman Bethune's house may have been of some interest to the Chinese community in the GTA. Or maybe a lunch trip on the Segwun would appeal to some people...again, if you bring them on the train, you have a captive audience for a couple of hours while you get them there. Some tourism businesses might pay something for that kind of targeted advertising, but most would certainly be interested in a free opportunity to participate in it.
There are more attractions at every stop and as you build traffic on the train, you stand a chance of enticing them back and further North. These things were not done, however, and while there were some efforts made to bring Japanese tourists on for the fall colour tours, the lack of support from the government made it impossible to add a dome car to the experience or grow the business to any extent.
The only answer I can see, is there was never an intent to grow ridership, there was only an effort to cut costs. That focus was the cause of a "stagnant ridership" and the organization that controls the purse strings is the one who bears the responsibility...Ministry of Northern Development and Mines.
Monday 15 April 2013
Ontera - The Cost of the Sale
Ontera was put up for sale by the Liberals, because it was deemed to be the most attractive to business. The fact that it is also the most independent of the business lines operated by ONTC due to a 1997 restructuring is also a factor.
In order to understand the rationale behind this decision a little background is needed. Back in 1997, O.N. Tel as it was known then, was deriving most of its still growing revenue from long-distance charges in a regulated and protected marketplace. Even back then it was providing internet services to 85 communities under its ONLink banner and it operated local telephone service in Moosonee, Moose Factory, Temagami, and Marten River, later adding Iroquois Falls. The profit from long-distance subsidized those services and also provided relief for the Rail division which was still losing money after the iron ore mines shutdown in 1990.
The financial statements for ONTC have always been complicated by little items like paying almost $1M to communities affected by the earlier divestiture of Norontair to find alternative transportation. Political issues like the retiring of the second ferry in service between Tobermory and South Bay Mouth, the Nindawayma, the devaluing of the land in Timmins freed up by relocating out of the downtown core or the leasing of passenger equipment to the ACR for $1 per year all hit the bottom line of ONTC. I don't understand the impact of a lot of it in the financial statements, but I don't think it was beneficial to Ontario Northland.
So now the province wants to sell Ontera...ostensibly because they say they will save $269M by 2014/15 and they cannot afford the $100M per year they claim the company will cost them. The Liberals are adamant the transfer of assets to the private sector will not be a "firesale" and service levels will be protected.
The price of the sale will determine whether or not it is a firesale, but it is important to understand what has transpired since the company started acquiring fiber optic cable, the "ring" that connects all the major centers in the North. The company has spent large amounts of money in capital to build the ring since well before deregulation took away their long-distance revenue in 2002. As of March 2012, the Ontera had $173M of equipment and buildings with $127M of accumulated amortization, most of it in recent years.
Business is going to look at the fact that the company has not turned a profit since 2001, the last year of Long Distance revenue, and disregard the profit potential now that the fiber optic ring is complete.
If you factor in the requirement for the successful bidder to continue the money losing services in small local telephones and cell service in the northern part of our service area, the bids are not likely to be very high.
The recently formed advisory council should be able to review the bids and determine if they represent a firesale or not. If the bids are deemed too low, the divestiture should be stopped at that point and input sought for the best way to proceed.
This selloff and the previous attempt to divest Ontera, (then ON Tel) have both consumed massive amounts of money, wasted time and effort and diverted attention away from improving the process. If this attempt to sell off provincial assets is unsuccessful, whoever is responsible should be held accountable.
In order to understand the rationale behind this decision a little background is needed. Back in 1997, O.N. Tel as it was known then, was deriving most of its still growing revenue from long-distance charges in a regulated and protected marketplace. Even back then it was providing internet services to 85 communities under its ONLink banner and it operated local telephone service in Moosonee, Moose Factory, Temagami, and Marten River, later adding Iroquois Falls. The profit from long-distance subsidized those services and also provided relief for the Rail division which was still losing money after the iron ore mines shutdown in 1990.
The financial statements for ONTC have always been complicated by little items like paying almost $1M to communities affected by the earlier divestiture of Norontair to find alternative transportation. Political issues like the retiring of the second ferry in service between Tobermory and South Bay Mouth, the Nindawayma, the devaluing of the land in Timmins freed up by relocating out of the downtown core or the leasing of passenger equipment to the ACR for $1 per year all hit the bottom line of ONTC. I don't understand the impact of a lot of it in the financial statements, but I don't think it was beneficial to Ontario Northland.
So now the province wants to sell Ontera...ostensibly because they say they will save $269M by 2014/15 and they cannot afford the $100M per year they claim the company will cost them. The Liberals are adamant the transfer of assets to the private sector will not be a "firesale" and service levels will be protected.
The price of the sale will determine whether or not it is a firesale, but it is important to understand what has transpired since the company started acquiring fiber optic cable, the "ring" that connects all the major centers in the North. The company has spent large amounts of money in capital to build the ring since well before deregulation took away their long-distance revenue in 2002. As of March 2012, the Ontera had $173M of equipment and buildings with $127M of accumulated amortization, most of it in recent years.
Business is going to look at the fact that the company has not turned a profit since 2001, the last year of Long Distance revenue, and disregard the profit potential now that the fiber optic ring is complete.
If you factor in the requirement for the successful bidder to continue the money losing services in small local telephones and cell service in the northern part of our service area, the bids are not likely to be very high.
The recently formed advisory council should be able to review the bids and determine if they represent a firesale or not. If the bids are deemed too low, the divestiture should be stopped at that point and input sought for the best way to proceed.
This selloff and the previous attempt to divest Ontera, (then ON Tel) have both consumed massive amounts of money, wasted time and effort and diverted attention away from improving the process. If this attempt to sell off provincial assets is unsuccessful, whoever is responsible should be held accountable.
Wednesday 10 April 2013
Transportation policy - It's all in the price
The furor over road tolls has brought the discussion of congestion and public transit into the spotlight. The fact that the Liberal government is expanding GO transit from a city-wide transit system into an intercity transportation solution while at the same time cancelling the Northlander, only serves to illustrate the Liberal government is not in control of the bureaucracy.
The Liberal mindset that is tilted in Toronto's favour, has been made clear by numerous comparison's of the "subsidy" to the Northlander and the "investment" in GO Transit. Aside from the obvious bias of the terminology used, there are some other differences that need to be addressed as Ms. Wynne struggles to find a solution to the mess that is transportation policy in Ontario.
GO Transit is recognized as a valuable public organization and is wholly supported by the Ontario government. Whether or not the claim of an 80% to 85% recovery rate is strictly due to efficient operations, or slightly skewed by inclusions of deferred capital contributions, there is no doubt it is a well run company. I will leave the differences in comparing the financials of the two companies to those of you who are qualified and have time available.
Metrolinx 2010-2011 Annual Report
ONTC 2010-2011 Financial Statements (Annual Report not published)
Ontario Northland, as an agency under the direction of Ministry of Northern Development and Mines has undergone at least two decades of declining support and constant attacks by the party in power. There was a time in 2003 where it looked like the tide was turning and the Liberals were prepared to invest in the company, but that ran out before the damage could be corrected and it has actually declined to the point where the entire company is to be cast aside.
With that background, we turn to comparisons of the services provided by both companies.
GO transit serves a population of 7,000,000 within an 11,000 square km area and has the benefit of municipal transit systems to feed all its stations.
Ontario Northland serves a population of 3,300,000 including Toronto within a
181,000 square km area with very limited transit feeding its stations.
There is a difference in the level of service on board due to the amount of time needed to come from Cochrane rather than Barrie, but it is in the per kilometre pricing that a distinct and vital difference emerges. The competition for both GO Transit and Ontario Northland is the automobile. Although the CAA Driving calculator shows the true cost of driving, most potential riders only compare the price of fuel against a train/bus trip since they will own and operate the vehicle regardless of transit use. If we assume an average fuel economy of 10L per 100 Kms and and average price of $1.20 per litre (more like $1.36 in Cochrane) the cost per km of taking the car works out to .12 cents per km.
For trips to Toronto, GO Transit fares vary from .12 cents per km from Barrie to .15 cents per km from Kitchener, Oshawa and Hamilton. Ontario Northland fares from Cochrane work out to .22 cents per km, which is much higher than the cost of driving. Why is there a need to capture so much more revenue from a passenger from Cochrane versus one from Oshawa?
Then there is the difference in discounts for multi rides, students and seniors, who are primarily the target market for the Northlander. GO Transit discounts will lower the fares down to .06 per km for seniors and .10 per km for students, while Ontario Northland passengers only get discounted to .18 cents per km. It is no wonder the services offered by ONR are not utilized to the same extent as GO Transit.
Then there is the marketing budget for each company. GO Transit spends huge amounts of money to advertise their services and pull people out of their vehicles. Ontario Northland has not advertised the Northlander for years.
Again, the company is set up to fail, then non-use is used as justification for removing the service. Road tolls will start to correct the financial imbalance of gas tax and vehicle registration revenue being $875 Million below the amount spent by MTO on highways.
Transportation companies rely on good feeder systems to build ridership. Ms. Wynne needs to set up good feeder systems for GO Transit and properly price them to stem the unsustainable use of the automobile.
Friday 5 April 2013
Big Move equals Big Money
Metrolinx has shortlisted a number of revenue tools needed to finance ambitious expansion plans for GTA transit. The article in the Toronto Star lists eleven ways to generate the funds necessary with none of them being politically appealing. The issue of gridlock in the Toronto area has grown to the point where it can no longer be ignored and the loss of productivity is starting to affect the economy.
Our political leaders are starting to grapple with the effects of a non-existence transportation policy in this province and now that the issue is forced upon them, they should take the opportunity to do it right. Ontario Northland Transportation Commission, as the first provincial Crown agency has provided rail transportation in their region for over one hundred years.
There are discrepancies in the tax system that have led to the rapid expansion of highway transport in spite of the fact that rail is more economical in medium to long haul situations. One of the main issues facing railways is that the trucking industry is able to utilize infrastructure that is paid for by the province. The trucking industry uses the same highways as the general public but there is no evidence to suggest they pay enough in gas tax or registration fees to cover the increased cost of maintaining roads subjected to their weight.
This is a chance for government to make some changes that will lead to better transportation choices for the public. Increasing the gas tax will make transit a better option for the travelling public. In so doing, the government will have to make more of an effort to show that the money raised by gas tax and vehicle registrations is being used to improve transportation options and reduce gridlock.
In spite of the horrendous experiment with Hwy 407, I would also support toll revenue on 400 series highways, the DVP and the Gardiner, if I could be sure the money would be transparently applied to their maintenance and any surplus directed toward transit.
For a long time the money raised by gas tax, vehicle registration and licensing was supplemented by general revenue, to invest in our highway infrastructure. Now is the time to reverse that trend and increase the amount invested in our passenger rail infrastructure.
It is also incumbent on the provincial government to work with the federal government to expand rail options into other areas of the province beyond the GTA, the one most under their control is the rail passenger service provided by Ontario Northland. That service should be expanded and enhanced not thrown away. More on how to do that later.
Our political leaders are starting to grapple with the effects of a non-existence transportation policy in this province and now that the issue is forced upon them, they should take the opportunity to do it right. Ontario Northland Transportation Commission, as the first provincial Crown agency has provided rail transportation in their region for over one hundred years.
There are discrepancies in the tax system that have led to the rapid expansion of highway transport in spite of the fact that rail is more economical in medium to long haul situations. One of the main issues facing railways is that the trucking industry is able to utilize infrastructure that is paid for by the province. The trucking industry uses the same highways as the general public but there is no evidence to suggest they pay enough in gas tax or registration fees to cover the increased cost of maintaining roads subjected to their weight.
This is a chance for government to make some changes that will lead to better transportation choices for the public. Increasing the gas tax will make transit a better option for the travelling public. In so doing, the government will have to make more of an effort to show that the money raised by gas tax and vehicle registrations is being used to improve transportation options and reduce gridlock.
In spite of the horrendous experiment with Hwy 407, I would also support toll revenue on 400 series highways, the DVP and the Gardiner, if I could be sure the money would be transparently applied to their maintenance and any surplus directed toward transit.
For a long time the money raised by gas tax, vehicle registration and licensing was supplemented by general revenue, to invest in our highway infrastructure. Now is the time to reverse that trend and increase the amount invested in our passenger rail infrastructure.
It is also incumbent on the provincial government to work with the federal government to expand rail options into other areas of the province beyond the GTA, the one most under their control is the rail passenger service provided by Ontario Northland. That service should be expanded and enhanced not thrown away. More on how to do that later.
Subscribe to:
Posts (Atom)