Decision No. 230-R-1990

April 24, 1990

April 24, 1990

APPLICATIONS by Robert E. Skelly, M.P., Patrick O. Hind, the Corporation of the District of Saanich, the Corporation of the Township of Esquimalt, the Village of Lake Cowichan, and the City of Parksville (hereinafter the applicants), pursuant to section 290 of the Railway Act, R.S.C., 1985, c. R-3, for leave to appeal the current fare structure of VIA Rail Canada Inc. on the Esquimalt & Nanaimo Railway on Vancouver Island.

File No. D 3085-90/1


BACKGROUND

On February 9, 1990, Robert E. Skelly, M.P. applied for leave to appeal the current fare structure imposed on the Esquimalt & Nanaimo Railway (hereinafter E & N) on Vancouver Island pursuant to section 290 of the Railway Act.

Section 290 of the Railway Act provides for any person who has reason to believe that a tariff of tolls or the conditions in that tariff are prejudicial to the public interest to apply for leave to appeal such tariff or conditions. The National Transportation Agency (hereinafter the Agency), if satisfied that a leave to appeal case has been made, may make such an investigation of that tariff or conditions as in its opinion may be warranted.

Interventions in support of the appeal were received from twenty (20) parties, five (5) of which requested status as applicants. The five parties, Patrick O. Hind, the Corporation of the District of Saanich, the Corporation of the Township of Esquimalt, the Village of Lake Cowichan and the City of Parksville, were given applicant status by virtue of this request.

POSITION OF MR. ROBERT E. SKELLY, M.P.

In his application, Mr. Skelly alleges that the high fare levels will reduce demand resulting in an increase in subsidies. Elimination of excursion, return and group discounts has resulted in significant fare increases on such trips. These discounted fares applied on the majority of trips on the E & N.

Mr. Skelly argues that scheduling is inappropriate and promotion is non-existent.

VIA Rail Canada Inc. (hereinafter VIA) is using discounts (40% off-peak) and fare promotions to increase ridership on its routes in Ontario, Quebec and the Maritimes, while using price mechanisms to destroy customer support on Vancouver Island. Mr. Skelly considers this practice discriminatory.

VIA should be negotiating a reduction in the running right charges levied by Canadian Pacific Limited (hereinafter CP).

VIA's POSITION

In its answer, VIA submits that the fares are not inordinately high and are in line with the competition on the Island, Vancouver Island Coach Lines, which unlike VIA, does not offer senior or student discounts. VIA submits that alternative transportation is available at competitive rates should price be the determinant in the traveller's choice of modes.

Traffic on the E & N does not have the day of the week variance in demand nor competitive situation experienced in the Quebec-Windsor corridor and thus off-peak pricing is neither required nor appropriate.

Remedies sought by the applicants with respect to charges by CP are beyond the scope of a section 290 appeal.

CP's POSITION

In its answer, CP submits that it has not been properly included as a party-respondent since the appeal deals with provisions of a tariff of which CP is in no way responsible.

CP denies that charges to VIA are excessive and states that it has been no more than a subcontractor to VIA through the provision of running rights. CP does not participate in the setting of rates and does not share a division of those fares and, as such, is in no way responsible.

The remedies sought against CP are not available under section 290.

REPLY OF ROBERT SKELLY TO VIA AND CP

Mr. Skelly maintains that the fares are still 16-38% higher than the competing bus line. Furthermore, VIA has not articulated what it considers the specific characteristics of the Vancouver Island market while it has determined that it is a different market than in the East. It has not commented on whether there is a seasonal variance nor has it provided any proof that the E & N has no day of the week variance.

With respect to CP's objection to being included in the proceedings, the applicants introduce the fact that CP owns Laidlaw Transport which owns Island Coach Lines and thus CP has a direct interest in the fares charged by VIA.

CO-APPLICANTS' POSITION

With the exception of the application of Patrick O. Hind, the co-applicants based their appeals simply on the fact that the increases were not deemed to be in the public interest.

Mr. Hind maintains that while fares are being increased on the E & N, fares are being discounted in other parts of Canada. He contends that the increases in fares along with the present condition of RDC's in operation will have a detrimental effect on this service. Furthermore, present scheduling and lack of promotion will ultimately result in discontinuance and abandonment of freight service.

Mr. Hind states that there is a constitutional obligation to provide rail passenger service. Reference is also made to a Railway Transport Committee Order which ordered CP and VIA to provide passenger rail service.

The applicants note CP and VIA's joint responsibility to provide passenger train service and addresses the charges levied by CP to VIA.

RESPONDENTS' ANSWERS

VIA reiterates in full its answer to Mr. Skelly and to all co-applicants. Further, VIA submits that the issue before the Agency is the subject tariff and the scheduling and levels of service are not relevant to the nature and effect a specific tariff may have.

With respect to Mr. Hind's application, VIA submits that his application deals largely with the issue of future operations or discontinuance of the E & N however, these issues are not before the Agency at this time.

In response to Mr. Hind's application, CP contends that past Orders of the Agency have been varied by Order in Council. However, these Orders in Council are being pursued in the Courts of British Columbia. With respect to the allegations of CP costs, CP submits that these are false and require no response. The allegation that CP is responsible for level of service problems is categorically denied by CP.

Finally, with reference to Mr. Hind's allegation that discontinuance of service will lead to abandonment of freight lines, CP states that it does not follow that discontinuance is a prelude to abandonment.

FINDINGS

Subsection 290(1) of the Railway Act provides for any person, who has reason to believe that a tariff of tolls or the conditions in that tariff are prejudicial to the public interest, to apply for leave to appeal such tariff or conditions.

In this context, the Agency is charged with a determination of whether a case has been established by the applicants that the tariff or conditions attached thereto may be prejudicial to the public interest. The Agency is of the view that, in the current circumstances, this determination is to be restricted to the arguments in respect of the subject tariff only.

Upon review of the pleadings, the Agency is not satisfied that the issues raised by the applicants warrant further investigation. The Agency is satisfied that VIA, in the current circumstances, has the discretion to identify its respective markets and implement pricing strategies within such markets.

The Agency is therefore of the view that off-peak discounts applied in markets distinct from that affecting the E & N service are not relevant to its determination. However, the Agency does note that excursion, return and group fares have been eliminated throughout the VIA passenger system.

In considering the VIA tariff as it relates to the Vancouver Island market, the Agency is not satisfied that the elimination of excursion, return and group fares are prejudicial to the public interest. The Agency concurs with the argument of VIA that alternative transportation is available at competitive rates should price be the determinant in the traveller's choice of modes.

DECISION

In light of the foregoing, the Agency denies the applications for leave to appeal.

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