Why the High-Speed Rail Subsidy Could Approach $1,000 Per Passenger

Let’s strip this down to first principles and run the numbers.

1) Start with the real capital cost

The headline budget is often cited as around $90 billion.

But large infrastructure projects—especially rail projects—consistently run over budget. A conservative multiplier is about 1.7×.

$90B × 1.7 ≈ $153 billion

Round it: $150 billion total cost

2) Financing the project

Assume:

Interest rate: 3.4%

Amortization: 20 years

Annual financing cost:

👉 ~$10.5 billion per year

3) Ridership (generous assumption)

Current corridor:

~5 million passengers/year

Boost it by 1.5×:

👉 7.5 million passengers/year

This is already optimistic.

4) Revenue

Assume:

$200 average ticket

Revenue:

👉 7.5M × $200 = $1.5 billion/year

5) Operating costs

Using conservative global benchmarks:

~$100 per passenger (a reader more informed than I told me that VIA said in its annual report that its average cost was $193, so I am underestimating).

Total:

👉 7.5M × $100 = $750 million/year

6) Total cost vs revenue

Annual costs:

Capital: $10.5B

Operating: $0.75B 👉 Total: ~$11.25B

Revenue:

$1.5B

7) The subsidy

Shortfall:

👉 $9.75 billion per year

Per passenger:

👉 $9.75B ÷ 7.5M $1,300 per passenger

The Bottom Line

Even with generous assumptions, you don’t get a small gap.

You get a structural subsidy in the range of:

👉 ~$1,000+ per passenger

And that’s before reality pushes costs higher or ridership lower.

What That Actually Means (Put in Real Terms)

For roughly $1,000 per passenger, the government could:

Rent each traveller a Mercedes-Benz

Pay for the fuel from Toronto to Montreal

Let them stop at The Keg Steakhouse + Bar and spend $200 on a full meal

And still hand them the remaining cash

…and the taxpayer would be in roughly the same financial position as funding this train.

That’s not rhetoric.

That’s the arithmetic.