Maybe Our Railroads Need Some Robber Barons

Is Florida’s Brightline a remedy for our ailing rail system?

Americans like to believe we have the best of everything. But there’s one exception where people are willing to admit we fall short: high-speed rail. Americans travel to Europe or Japan or China, enjoy their high-speed rail experience, and wonder why we don’t have that here.

Amtrak’s Acela line in the Northeastern United States technically has sections that reach high-speed service levels but is far below the global standard. An Amtrak-led consortium says that it would cost $117 billion to upgrade the line to a true high-speed service. This is a cost level that’s far out of line with global norms, but sadly consistent with the extraordinary costs we’ve come to expect from American rail projects. The New York Times once called the Second Avenue Subway extension in New York the most expensive mile of subway track on earth for example. American rail projects cost multiples of what other countries spend; the Times, for example, notes that the East Side Access rail project in New York was seven times the global average construction cost.

The Transit Costs Project at the NYU Marron Institute put together a plan to upgrade the Northeast Corridor based on global best practices that would only cost $12.5 billion (plus $4.5 billion in new train sets). But there’s no agency that could realistically implement that.

Similarly, plans to build a high-speed rail line between Los Angeles and San Francisco have been a debacle. Unable to afford the full line, the state’s high-speed rail agency decided to build an initial link between Bakersfield and Merced. But even this has seen massive cost overruns. The state of California itself estimates a cost of between $89 billion and $128 billion. The federal government believes it’s even higher, and the Trump administration is attempting to revoke federal grants for the project.

Given general governmental incompetence, it doesn’t seem likely that it will create real high-speed rail in America, even in the places like the Northeast Corridor where it makes sense.

But America’s initial rail development was powered by a private-led, government-supported approach. For example, the federal government gave grants of land to railroads to encourage the development of lines. Would a similar private-public approach work for high-speed rail?

Enter Brightline, a private rail operator. Brightline was developed by Florida East Coast Industries, which is controlled by the private equity group Fortress Investment Group. FECI was the firm that until recently owned a rail line running along Florida’s east coast, in addition to a large real estate development arm. It developed plans to launch its own high-speed rail service between Miami and Orlando. Brightline was the brand ultimately chosen for this. The initial segment opened in 2018, with the full line from Miami to Orlando operational in 2023, with intermediate stops in West Palm Beach, Boca Raton, Ft. Lauderdale, and Aventura.

Brightline is not a European-style high-speed rail, or even the Acela. It’s more akin to Amtrak’s Northeast Regional line. Trains run at speeds ranging from 79 MPH to 125 MPH. But it’s still faster than driving. And the quality is good. Brightline smartly incorporated the best parts of airline travel into the experience. It has sleek, modern stations. They are owned and operated as private spaces, accessible to only ticketed passengers. Panhandlers and others engaging in antisocial behavior aren’t allowed inside. Stations have airport-style concessions. Seating on board the train is reserved. A recent trip I took on a well-patronized Brightline train was an overall high-quality experience. 

While Brightline is not yet profitable, people are riding it. The line had over 1.5 million passengers in the first half of the year, with $106 million in revenue, a yield of $55.55 per passenger. The company is adding more premium (first-class) coaches later this year. However, it is falling short of traffic and revenue projections and its bonds are trading at a significant discount. Potentially, it could be forced to restructure its debt if ridership doesn’t continue growing.

The route took about $6 billion to build. Some might view this as excessive, but it’s certainly more reasonable than $117 billion. As a real estate as well as an infrastructure venture, FECI was able to profit from development around the stations. It built and later sold three towers in conjunction with this Miami station, for example. Obviously satisfied with the results, Brightline is looking to extend service to Tampa and add infill stations such as Stuart and Cocoa (paid for by local governments). 

One dark spot has been the large number of crashes. A recent Miami Herald report found that 182 people have been killed since the line opened. While these were overwhelmingly either suicides or people behaving manifestly incorrectly (such as by driving around lowered crossing gates), the number of deaths suggests further safety improvements to prevent people from doing these things are needed. This could include things like eliminating grade crossing, four quadrant gates, and fencing of the right of way.

The backers of Brightline are thinking even bigger with a second project called Brightline West, which would be a true high speed rail project linking the Los Angeles area (Rancho Cucamonga in the Inland Empire) with Las Vegas, projected to cost $12.4 billion. This project received a $3 billion federal grant and, like the original Brightline, will benefit from the ability to issue tax exempt bonds. Again, real estate plays a role, with Fortress Investment Group acquiring 100 acres around the planned Las Vegas station. 

Brightline West officially broke ground for construction in 2024, and it is supposed to be complete in 2028. Given the delays that are endemic to US construction projects today, it seems likely there will be some level of delay and cost overrun. But if Brightline is able to pull this off with even a reasonable amount of delay and cost inflation, it would represent an enormous achievement. 

It would also further validate a new private-led, government-supported model to improving passenger rail in the US, one that bypasses Amtrak and other legacy entities and constituencies. The private sector would lead, and the government would provide some level of support and subsidy. If Brightline is successful with Brightline West, it’s easy to imagine similar projects being pulled off elsewhere around the country. It’s true that the United States is not Europe or Japan. We will never have a complete network of high-speed rail like China’s. But select corridors, like the one from Washington to Boston along the East Coast, do have sufficient travel demand and airport capacity constraints that make high-speed rail more than viable. Perhaps a model suited to American culture will allow us high speed rail in these places where it does make sense after all.