(The following story by Gordon Pitts appeared on the Globe and Mail website on April 5.)
MONTREAL — Paul Côté is one Canadian who would not be devastated if discount airline Jetsgo Corp. has drawn its last breath.
“When a member of the industry is removed, it is an opportunity for us,” says Mr. Côté, who was appointed president and chief executive officer of Via Rail Canada Inc. three days after Jetsgo went into bankruptcy protection on March 11.
The intercity rail passenger service has been challenged by discount airline rates in recent years, Mr. Côté says. Now he sees a push for higher air fares in the wake of Jetsgo’s collapse, which may cause some travellers to consider Via again.
But Mr. Côté, 54, who had been the rail service’s interim CEO for a year, takes nothing for granted. “The opportunity is there but we will capitalize on it only when we execute — have trains on time, deliver quality service and be customer focused.”
“It won’t be there forever,” warns the 27-year Via Rail veteran who was a popular internal choice as CEO after the Crown corporation was rocked a year ago by Ottawa’s ouster of both its chairman and president.
He is the boss of a business that moves almost four million travellers a year, grosses more than $250-million annually and employs 3,000 people. But operations lose more than $150-million annually, which, along with capital spending, is recouped through federal subsidies.
He knows that while the CEO can play an important internal role, as a catalyst for ideas and the operational boss, the fate of Via ultimately hangs on people and forces beyond his control.
Via gained riders after the Sept. 11, 2001, terrorist attacks when travellers shied away from airlines. Then came a disastrous 2003, when Via and the travel industry was hit by SARS, a major power blackout in Ontario and the Iraq war, and a minor recovery in 2004.
One performance measure in particular rankles Mr. Côté, who started his career with Canadian National Railway Co. and moved to Via in 1978. Passengers might like the friendly service and dine well, but won’t tolerate late trains.
On-time performance — which in major corridors means less than 15 minutes late — fell to 70 per cent in 2004 from 73 per cent in 2003 and 85 per cent in 2001.
Via, which is believed to pay $40-million annually to railways for use of the tracks, says 60 per cent of late trains reflect problems originating with the rail infrastructure. CN, which handles almost all Via traffic, enjoys booming freight business and deploys larger, slower trains. In the capacity crunch, Via’s passengers are the losers.
Mr. Côté says CN assures him that it is improving its dispatching systems. He also feels Via can do more to solve the 40 per cent of delays for which it is responsible. Last year, it cut Via-related delays by 25 per cent. It is also revising schedules, beginning in May, to more closely reflect capacity restraints.
But to meet the demands of customers, especially in busy corridors, Via needs to boost frequency and speed, which requires major investments in infrastructure and equipment. The Chrétien government had earmarked $692-million in capital spending, but that was shelved in the political transition to the Martin regime.
“We will revisit this [investment] package and also be identifying other scenarios,” Mr. Côté says. “We have to wait to see what the shareholder will decide.”
He says he has ample studies to justify levels of investment all the way up to high-speed service. But what he really needs is a new chairman, following the dismissal of Jean Pelletier last year, to make Via’s case with Ottawa. A spokeswoman for Transport Minister Jean Lapierre could not comment on when that appointment will be made.
Indeed, that degree of dependence on cabinet points to a major limitation on Mr. Côté and his team, says Anthony Perl, an associate professor of political science at the University of Calgary who has written extensively on Via. “The biggest challenge in running the service is dealing with the bankers in Ottawa, not the landlords.”
It speaks volumes about Via Rail’s vulnerability that, even as Mr. Côté holds out hope for more frequent service, he concedes service cuts are also possible to meet financial targets. “There are no certainties in this world, unfortunately, and we are a Crown corporation, part of government, and we have been asked to propose different scenarios to meet the targets set by government,” he says.
Mr. Côté says reducing the federal subsidy is one of his objectives, but that he is also a pragmatic business person who knows that self-sufficiency comes through growth and growth from investment.
Meanwhile, Mr. Côté is focusing on things that are clearly within his power. He has worked at allaying employee unease following the removal of president Marc LeFrançois and Mr. Pelletier in the fallout from government spending scandals.
His message is simple. Via executives will worry about the external noise and employees can concentrate on serving customers.