By: Robert S Weinroth
Public transportation is a loser. Be it trains, buses, trolleys or urban circulators. The conveyance of people traveling hither and yon, on a public transportation system has, invariably, necessitated the infusion of significant financial subsidies to remain solvent.
So, in early 2012, when Florida East Coast Industries announced its plan to establish All Aboard Florida as a privately owned and operated intercity passenger rail system, there were skeptics aplenty. The idea that passenger rail could be operated without public subsidies between Miami, Orlando and, Tampa, was viewed as wishful thinking.
Overcoming regulatory and financial hurdles, construction began in 2015 in Miami, Fort Lauderdale and West Palm Beach to establish the first three stations. At the same time, track and safety improvements along the corridor were initiated to support higher speeds and to provide relief for adjacent communities seeking “quiet zones” to curtail the need for the air horn to be utilized at each rail crossing.
In October 2014, work on the Fort Lauderdale station began and a groundbreaking ceremony was held for the West Palm Beach station the following month. Service between Miami and Fort Lauderdale began in January 2018 with West Palm Beach added to the system five months later. Plans call for service to Orlando begin sometime in 2022.
All Aboard Florida, rebranded as Brightline in 2015, was renamed again a year later with the decision by Sir Richard Branson to become a minority shareholder in the enterprise.
The underpinning of the financial viability of this venture is clearly real estate. At each station, Virgin USA is negotiating for density, development rights and municipal concessions to produce the revenue stream that will balance the all but certain shortfall in fare box receipts.
Many communities are clamoring for the convenience of a train station in their urban center (something TriRail could not achieve, having been relegated to the western CSX rail corridor for its tri-county commuter rail system).
Virgin is currently eyeing intermediate stops in Aventura, Boca Raton and the Port of Miami with several other cities eager to hop on the train.
While real estate will supplement the revenue stream from passengers, it is clear Virgin will only entertain proposals from cities capable of delivering business and tourism travelers. There is clearly the potential for a symbiotic relationship between the addition of passenger rail within the selected stops and economic growth these cities can anticipate.
The challenge, especially for the cash strapped South Florida Regional Transportation Authority (operating TriRail) is to retain its passenger base as Virgin continues to chug along. The potential addition of Hollywood and Fort Lauderdale-Hollywood International Airport will further challenge TriRail’s ability to attract commuters notwithstanding the lower price point for its airport transportation fares and airport transportation service.
Virgin reported in June it carried over 80,000 passengers and generated total revenue of just over $1.5 million (a 65 percent increase in ridership and 90 percent increase in revenue, year over year). The target for Virgin is leisure riders and business travelers with high incomes seeking to avoid the hassle of travel by passenger vehicle or air alternatives for the Florida cities they must visit.
According to Virgin’s analysis of its fledgling ridership, the legal community is a heavy user of the service, followed by real estate, technology, hospitality and finance.
In June, the average Virgin fare, system wide, was just over $15 (about three times the fare charged by TriRail). Time will tell whether passengers are willing to fork over premium fares for a high-speed regional railroad.
Likewise, it will be a critical test for TriRail, with its 18 stations between Mangonia Park in Palm Beach County and Miami International Airport, to maintain its level of service without significant fare increases or seeking additional financial subsidies from the state and counties.
With each additional station adding time to the trip between Miami and Orlando, its unlikely many more cities will be able to grab hold of Virgin’s success, near term. The potential of more people abandoning the interstate for a seat on the train will benefit both riders and drivers as it increases road capacity without adding additional lane miles of asphalt.