Can Private Intercity Passenger Rail Make a Comeback?

All Aboard Florida, a passenger service planned for the Orlando-to-Miami corridor, may soon find out.

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All Aboard Florida

It's been several decades since the United States has had a private passenger rail service, and a good bit longer since it's had a lucrative one. Today intercity passenger service is handled by Amtrak, and while ridership has been growing for years, Amtrak loses money largely because it has a mandate to run unprofitable lines in remote areas. As a result, fiscal conservatives have recently called for Amtrak to privatize some of its services.

So all eyes turned to Florida last spring when a private company called Florida East Coast Industries announced it would make a go at passenger rail travel. The new service, named All Aboard Florida, plans to connect downtown Miami with Orlando via Fort Lauderdale and West Palm Beach. All Aboard Florida officials say the trip will be made in three hours — taking some three million cars off the crowded interstates of Florida's east coast in the process — and that the line has the potential to expand to Jacksonville and Tampa.

Despite the long historical odds, there's a lot to like about All Aboard Florida's plans (outlined by occasional Atlantic Cities contributor Stephen Smith). FECI is affiliated with the Florida East Coast Railway, a freight industry veteran with (you might say) a good track record. The railway also operates a relatively fast freight service, which should ease the transition to passenger speeds. Best of all, the company already owns the right-of-way to 200 of the roughly 240 miles of track needed for the trip.

The list goes on. FECI possesses nine acres of valuable real estate in downtown Miami on which it plans to build a station and develop adjacent commercial property. All Aboard Florida will reach a new terminal at Orlando International Airport, creating the possibility of a completely car-less trip between there and Miami International Airport. Within three years of opening, the service expects to reel in $145 million in annual fares, according to the Orlando Sentinel. All this without a single taxpayer penny.

Despite this strong starting position, All Aboard Florida is already confronting some challenges. The line has an abundance of grade crossings [PDF], which can lead to congestion, and a number of localities may be tempted to fight for "quiet zones" that would reduce the noise of the passing train, according to the Miami Herald. The project's cost estimates have been adjusted upwards 50 percent to $1.5 billion, and the original launch date of 2014 has been pushed back a year. Amtrak, meanwhile, continues to have interest in the same corridor.

To top it off, last week the Sentinel reported that All Aboard Florida has now filed for a loan from the Federal Railroad Administration. So much for reviving privately funded passenger rail service, right?

Well, not exactly. A federal loan is a contract to use public money, of course, but it's not the same as a government grant. The Railroad Rehabilitation and Improvement Financing program, for instance, can help fund capital expenses like tracking or equipment at a low interest rate for up to 35 years. The government protects itself by taking a lien on the company's assets; to date, the program has never had a default that required a federal takeover, according to the Department of Transportation [PDF, p. 5].

In that sense, All Aboard Florida could do the entire rail industry a service by calling attention to the RRIF program, which has struggled for years to attract projects. Private freight lines have found the application process too convoluted and the approval process too lengthy. (The biggest recipient of RRIF loans has been Amtrak, of all service providers.) Congress even held a hearing in 2011 to consider ways to improve the program, and greater publicity would no doubt help.

So maybe we're chasing the wrong outcome in wondering whether All Aboard Florida will become the new model for completely private passenger rail. Maybe instead we should wonder if All Aboard Florida will remind us just how well the private and public transport sectors can work together.

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