MONTREAL - A strike by Via Rail locomotive engineers could disrupt summer vacation plans and hurt Canadian tourism operators who are already struggling amidst an economic slowdown, industry observers said Wednesday.

Randy Williams of the Canadian Tourism Association said a strike by the country's largest passenger railway service would have a ripple effect on the industry and affect accommodations, attractions and other businesses.

A strike would just be the latest of a series of challenges that have hammered the industry, including new visa requirements for Mexicans and people from the Czech Republic, and passport requirements for U.S. travellers.

"We're getting bombarded by a host of challenges and each one compounds it on itself and it makes it difficult for the industry to operate at its full potential with these constant challenges," he said in an interview.

Even without a strike, the industry expected tourism would be down about five per cent this year.

Via Rail has begun cancelling some departures of long-distance trains to ensure passengers are not stranded by a strike.

The 340 engineers, represented by the Teamsters Canada Rail Conference union, have set a strike deadline of noon Friday ET. The railway last faced a strike in 1995, when conductors from a different union went on strike for a week.

A federal mediator has been appointed to assist in the contract talks in Montreal and Via says it remains hopeful that an agreement will be reached before the strike deadline.

"We, and we understand the union, are also very serious about finding ways to reach an agreement on those issues that remain on the table and doing so in time to avoid a strike," said Via spokesman Malcolm Andrews.

The union said it also remains optimistic that a strike can be averted, even though employees have been without a contract since Dec. 31, 2006.

"Our members would prefer to resolve this through collective bargaining but we are increasingly frustrated by Via Rail's tactics," said Dan Shewchuk, president of Teamsters Canada Rail Conference.

An impasse would cancel all service except trains on the Sudbury-White River and Victoria-Courtenay routes that are operated by third parties on Via's behalf.

Every week, Via operates 503 intercity, transcontinental and regional trains linking 450 communities across its 12,500-kilometre route network.

In 2008, the company transported 4.6 million passengers - the most since 1989 - and set an all-time record of $299 million in revenue. That amounts to nearly 12,000 passengers a day.

Up to 85 per cent of its business is between Quebec City and Windsor.

While many travellers may be able to find alternatives in the well-serviced corridor, options are more limited in remote areas serviced by the passenger railway system, said David Jeanes, president of Transport 2000.

This includes small intermediate locations that aren't on bus routes, or in remote areas in northern Ontario, between Winnipeg and Hudson's Bay, and in Quebec.

Greyhound said it will respond to increase demand by adding buses if required.

"It's something that we are used to doing and something that we'll continue to do," spokeswoman Abby Wambaugh said from the company's headquarters in Dallas, Texas.

Air Canada also said it is prepared to respond if necessary.

Robert Palmer of WestJet said the Calgary-based airline has no special plans to respond to a rail strike.

Strike planning has already disrupted transcontinental service between Toronto and Vancouver.

"It's one of the finest railway journeys in the world and to have that suspended in the middle of the summer is a huge negative for tourism," said Jeanes, who warned a work stoppage could stall Via's success in luring additional riders.

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