How A Tunnel Toll Increase Becomes A Decrease

Does calling a Tunnel toll increase a Tunnel toll decrease make it smell as sweet?

It's all a joke. The Star Online headline reads:

• "Tunnel tolls expected to decrease because of the loonie's surge"

The toll from Windsor to Detroit was US$3.50 or CDN $4. The new toll is in US dollars increases to US$3.75 while it is reduced Canadian $3.75. A roll of tokens will be the same in both currencies: $65. That is a decrease of CDN$5 and an increase of US$5.

For a border crosser like me who does not use the Tunnel very much, I would save a quarter if I chose not to use US money. However, for the person who uses the Tunnel frequently, is very sensitive to currency fluctuations and who probably has been paying for some time in US dollars, that person now has to pay $.25 more since the US dollar price is still cheaper than the Canadian dollar price and $5 more for a roll. ie US$3.75 = CDN $3.51, US$65 = $CDN60.75

What a great way to encourage US tourism by making them pay more!

I note that it was stated:

• "A report authored by the tunnel commission's executive director Mark Galvin predicts tunnel traffic should increase by about one per cent thanks to the planned new rates, generating increased monthly revenue between $13,000 to $17,000."

So now we know what Eddie's mismanagement of the Tunnel has cost us. On average, the Tunnel has lost $15,000 per month for every one per cent of lost volume. We know that the dividend has dropped significantly. I thought the last number that I heard for a dividend was $1 million. That amount was much lower than the amount quoted at the Joint Councils meeting in Detroit where I thought the number was around $6 million. Now that is managment from our "Young Entrepreneur of the year" all right!

According to Transport Canada, the Tunnel's volume at the end of 2003 when Eddie became Mayor was 6.39 million cars and at the end of 2006 was 4.81 million cars or a loss of 1.5 million cars. In other words, the Tunnel saw a reduction of about 23.5%. Based on Galvin's number, the Tunnel revenues dropped by over $4 million in 2006 alone!

Somehow we are to believe that reducing the tolls by $.25 Canadian and increasing them by $.25 American will bring success to the Tunnel by increasing volume and revenue.

Well maybe and maybe not. I have been a Tunnel user since I started crossing the border. It is just more convenient for me with where I live and where I go to take the Tunnel. But for the last several times going into the United States, I've chosen to drive the extra distance and take the bridge. I do so for the simple reason that when I am at Goyeau and Wyandotte and see the Tunnel backed up all the way from the US side, I go to the bridge and go through much more quickly! My criteria for which crossing I will take has now become not the price but how long it will take me to get through.

Lower toll prices does not automatically mean success. This is been recognized before in the past and by the Mayor. He has

• "acknowledged that "our traffic has gone to the bridge and we have to do a better job of convincing people that the tunnel should be their crossing of choice."

One of his Board colleagues stated "We have tried in the past to keep fares low to encourage usage, but it appears our patrons are not being supportive of that position because we are losing business to the (Ambassador) bridge."

The problem is that Eddie cannot make up his mind which hat he should be wearing. Which is more important, his Tunnel hat or his Mayor hat:

• "The tunnel should be run for a common purpose. [DCTC] are operating it as a toll road where we're trying to operate it in the public interest."

Notwithstanding his assertion that “We're a public utility” in relation to the Tunnel, he is also the business competitor of the Ambassador Bridge. Does this competitive side of the Mayor help explain why we still have a border mess on Huron Church road? Why would he fix up that road when Goyeau is a mess and the Tunnel Plaza improvements are far from being done as both Dev Tyagi and Abe TaqTaq have told us recently.

Will Eddie's toll pricing actions help? Here's what was said in the past:

• “Francis countered there hasn't been a noticeable increase in traffic numbers despite the Windsor side of the tunnel providing the cheapest cross- border tolls at either the bridge or tunnel in recent years.”

What was also said that is interesting in the story is:

• "Negotiations between the city and Detroit also remain ongoing to potentially finalize Windsor's takeover as operator of the Detroit side of the tunnel, Francis said.
  
  A deal was anticipated to be finalized in June, but has been slow to complete. "The two teams from both cities are still meeting frequently," Francis said. "A transaction of this nature with two cities and two countries is very complex. The teams are working extremely hard to bring a resolution to the discussions."

It's no wonder there is no deal. Our team is totally exhausted. Why Eddie had said that they were working "around the clock" so they are probably sleep deprived but bank account enhanced.

Was Derek Miller leaving his job in Detroit a signal that this deal is in serious trouble? My understanding is that he was quite involved in trying to structure an arrangement with Windsor.

How is Eddie going to pay for the deal? Chris Schnurr in his BLOG speculated that perhaps the 10% budget cut will help pay for the Tunnel deal. Maybe it's the 1% GST funds that he wants. Those are alternatives but a better one I think is that Eddie will lease out the entire Tunnel to generate revenues for whatever he wants to do with all that money. To make the Tunnel more attractive, he needs to show an increase in volume not a constant decrease. As he said before to justify his mismanagement

• “We can't always think in terms of increasing tolls to maximize profits, we also have to go after more market share.”

Of course he does not tell us what to "think" when you lose revenues, profits and market share.

Of course, price competition is an acceptable way to generate business but not if supported by taxpayers to the detriment of a private enterprise competitor.

Now I assume Alinda has the opportunity to finally increase prices on the US side given that Eddie has done so. After all they must have paid a pretty dollar when they took over the operation of the Tunnel. They have waited long time in Windsor while in Alabama they increased tolls right away when they took over operation of several bridges.

And Windsorites are being asked to put up US$75M for this. Where are the Councillors? Oh I forgot. There is a separate Tunnel Corporation with Eddie at its head. Councillors don't count now, if they ever did!