My own rattling-around-the-back-of-my-head trial balloon would be coming up with some sort of a train schedule serving those who quasi-relocate to cottage country over the summer, especially those who leave one spouse and the kids at the lake while they driving into Toronto on Monday morning and out on Thursday or Friday afternoon. You could push Richmond Hill trains further up along the the Bala sub to the ONR station in Gravenhurst on a couple of runs, and turn that into a transfer point for car journeys onwards to the cottage on Rabid Dog Lake ~40 km away.
Being able to circumvent that hellish cottage-rush traffic on the 400 would be a huge selling point, but admittedly the whole thing only works if there's a car waiting at the northern end. Some kind of partnership with a rental car agency might be worth pursuing to make it more useful.
I and some friends suggested this very idea to the Minister a few years back, pitching Niagara, Peterborough, Huntsville and Owen Sound as the destinations.
I (nor my friends) are taking undue credit for the idea which has been bandied about by a few folks over the years (more than a few in the case of Niagara) but we'd like to think writing to the Minister made some difference. (Though the Niagara announcement came about 9 months after we wrote, so we're calling it our 'baby' LOL)
Niagara down, St. Pete's next; hopefully Huntsville after that. Owen sound is big track issue.
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In terms of using Bala I agree w/you (or re-extending Barrie to Washago...yes I know a tiny piece of the ROW is gone....but there's a lovely waterfront park to put the track through!!! LOL)
The key w/Bala though is that CN needs to have its 'alternate' main line back.
The old Northbay - Ottawa route. That would allow a huge percentage of traffic to bypass Toronto and Bala.
But you know before they re-lay that, they will wait for the gov't to fund High Speed Rail (which it will, one day....) ....and then they will point out that there is insufficient room in the Kingston Sub for all that passenger traffic, so the gov't can buy the corridor and rent back some freight space in off-hours, as long as they pay to relay NB-Ottawa. (w/taxpayer money)
See CP Havelock, the passenger service proposals seem to be an excuse to give CP back an alternate main line from Smith's Falls. Don't get me wrong I support passenger rail....just saying.....
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The key to making the idea work though is to have extensive inter-modal planning, particularly car rental/sharing at the cottage country stations. But also Shuttle Buses to Wasaga Beach Provincial Park (assuming a spur right into the park isn't feasible); and from Huntsville, a shuttle bus that takes you to the campgrounds and resorts of Algonquin.