Auditor General says airport trains will lose money

The Auditor General of Ontario released a long report on Metrolinx today. The Presto fare cards have received most of the attention from the downtown press, but the report also had a few words about the Air Rail Link UP Express. It says, in short, that the UP Express is going to lose money: either Metrolinx can have the ridership it needs or the high fares it needs, but it will not have both.

Breaking even on the link “may prove to be a challenge for Metrolinx”, the report says. The math is quite simple: annual costs are expected to be about $55 million. Metrolinx thinks that 1.8 million people (about 10% of all Pearson fliers) will ride the Express if fares are $20. But $20 x 1.8 = $36 million—just enough to cover the lowest estimated costs, but very far indeed from covering estimates that include paying off the debt and paying for the GO track.

This is no surprise: The smart money (in the ‘Public-Private Partnership’)  jumped ship some time ago figuring that there was no way to turn a profit unless the province picked up the losses—at which the province, naturally, balked.

The Auditor says the break-even fare at Metrolinx’s ridership estimates is a steep $28. But it gets worse: Metrolinx’s ridership estimates are probably optimistic. Other North American links charge between $2 and $13 to get the same proportion of airport travellers as Metrolinx thinks it can get at $20. Those ridership estimates are downright implausible at $28. Surveys found that 75% of GTA residents said they wouldn’t take it if it cost even $22.50.

So Metrolinx is probably stuck: they have overestimated how many people will take the train and how much they are willing to pay. The Auditor says,

“Metrolinx should work with the Ministry of Transportation to clearly define the business model under which the Air Rail Link (ARL) should operate to ensure that the ARL will be a viable and sustainable operation.”

Your humble correspondent thinks that passage, translated from the tame, means something like “Metrolinx is about to lose a piss-whack of money unless they know something we don’t.” But your humble narrator is, as always, willing to be corrected.

The Auditor General included Metrolinx’s response:

Metrolinx advised us that it did take these factors into consideration but still concluded that its ridership projections at these premium fare levels would be achieved.

Metrolinx seemed to take at least some of the AG’s criticism to heart. They said in their reply that they

[agree] with the Auditor General on the importance of reliable ridership forecasts, and independent analysis has been obtained to create ridership projections.

… Metrolinx will continue to use best-in-class ridership information to guide our internal decision-making and to inform our business model, and we will continue working with the Ministry of Transportation to finalize the business model.

 

Author: Adam Norman

I am raising my two children in Weston.

2 thoughts on “Auditor General says airport trains will lose money”

  1. ….lower numbers and profitability of the ARL, ultimately leads to the closure of the Weston ARL station. Weston gains nothing from the ARL……

  2. On the contrary, there are many infrastructure investments, including the new St. John’s school that probably wouldn’t have happened now. It’s very easy to always point out the negative. I say get what you can from the project.

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