Can passenger rail ever be profitable? Florida’s about to find out.

at 08:50 AM ET, 04/03/2012

One frequent criticism of passenger rail is that it rarely pays for itself. The trains typically require hefty public subsidies — Amtrak, for one, has received more than $30 billion from Congress since 1971 — and that makes new lines politically difficult to build here in the United States.


Amtrak may get a little competition. (Scott Harmsen/AP)
So it’s worth following this intriguing bit of train news out of Florida. In late March, Florida East Coast Industries (FECI) announced plans to build “All Aboard Florida,” a private passenger rail line that would connect Jacksonville, Miami, Tampa and Orlando. At least for now, FECI is planning to do this without government subsidies — which could make this the first self-funding passenger rail line in the United States in half a century. So can private rail make a comeback?

It’s worth taking a closer look at what, exactly, Florida East Coast Industries is planning. As Stephen Smith details, FECI already owns about 200 miles of track between these Florida cities, which it currently uses for freight. The company plans to spend about $1 billion upgrading those tracks and extending them to Orlando. By 2014, All Aboard Florida plans to have an initial passenger route between Miami and Orlando that will take three hours — which means speeds of around 80 miles per hour, about as fast as Amtrak’s Acela averages between New York and Washington, D.C.

So why couldn’t other private freight companies in the United States — many of which own their own tracks — do the same thing and set up their own passenger rail systems? Paul Druce of Reason & Rail lists a few reasons why FECI is unique in this regard. The company’s freight network doesn’t rely on slower bulk trains, as many other rail companies do. Most of FECI’s freight is reasonably fast and light. That means passenger trains that share the tracks won’t have to pull over and stop for hours at a time while the cargo passes by, as happens on many parts of Amtrak. (The Northeast Corridor is one of the few exceptions here — which helps explain why this is Amtrak’s only line that operates at a profit.)

Here's another reason why the All Aboard Florida line could succeed. As Tanya Snyder explains over at Streetsblog DC, the trip by car between Miami and Orlando is slow and pricey, taking four hours and costing $16.70 in tolls. It’s not yet clear how much tickets for All Aboard Florida will cost, but the hassles of driving could make the new train more appealing at the margins.

Meanwhile, it’s possible that FECI could profit off its new rail line by taking advantage of rising land values along the route. What distinguishes FECI from other rail owners, Druce points out, is that the company is also a major real-estate developer, and it owns a nine-acre strip of real estate near the potential train station in downtown Miami. In that sense, the company might be poised to capture some of the secondary benefits of a new train service.

In any case, FECI’s excursion into private passenger rail will be worth watching closely. This all comes not long after Florida Gov. Rick Scott (R) rejected $2.4 billion in federal stimulus money for a smaller high-speed line, and it’s happening right as Amtrak subsidies are under attack by Republicans, which means there’s ample fodder here for debates about trains and government funding.

 
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