Should Connecticut’s commuter railroads be privatized?
That’s a suggestion I often
receive from commuters hoping that railroads who treat riders like customers
instead of cattle are incentivized to offer better service. Sounds good in theory but, as the finance bros
ask, “does it pencil?”
Well you don’t have to look further
than Florida for some answers… and they are not encouraging.
Brightline is the privately funded and operated passenger rail line in Florida launched in 2018 with such promise: shiny, clean new cars, fancy stations with amenities, and on-board food service. Trains are comfortable with two-by-two seating and free Wi-fi. They even offered a free first-mile / last-mile solution promising free rides to and from nearby stations.
Riders were gobsmacked. Initial
service was between Miami and West Palm Beach, recently expanding to Orlando and
with dreams of eventually pushing further west to Tampa.
Ridership by 2025 was
projected to be 6.6 million annually. In
fact it wasn’t even half that amount.
That year they lost $127 million, not counting an additional $114 million
in interest payments on construction loans.
The railroad is also tied to
over 180
deaths… most of them pedestrians and cyclists at
grade crossings, of which there are 156
between Miami and West Palm Beach.
Brightline’s trains hurtle along at 80 mph (eat your hearts out,
Connecticut rail users), leaving no margin of error for impatient people at
crossing gates who think they can just zip around the barriers.
On-time performance is about 94%. And fares are reasonable… Miami to West Palm is about $30 one way for the 66 mile trip. Compare that to Metro-North’s 72 mile run from New Haven to Grand Central which costs about $23.50. Both railroads offer peak and off-peak fares and commutation discounts. But Brightline has something Metro-North doesn’t: Premium (First) Class seats.
Even with 23 times the
ridership as compared to Brightline, Metro-North still requires an annual
subsidy of over one billion million, 26% paid by CDOT. As a
private railroad, Brightline (which is owned by freight carrier Florida East
Coast Railway) has no subsidy, just a lot of debt.
While the farebox revenue is
much lower than expectations (and doesn’t cover operating costs), Brightline is
still trying to pay off its huge construction costs. This is what threatens its
survival, not a lack of good train service.
Brightline borrowed $5.5
billion to prove what Wall Street never wants to admit: you can't run trains
like a retail franchise. Twenty-year bonds at five percent interest? That math
worked fine until it didn't. Now the
vultures are circling with fears of a Chapter 11 filing in early 2027.
If that happens, the trains
will probably keep running but fares may go up and dreams of westward expansion
to Tampa could evaporate. Some pieces of
real estate may get liquidated and Brightline’s creditors
will take control.
To be honest, comparing
Brightline to Metro-North isn’t a fair:
a brand new railroad constructed at huge costs versus an existing rail
line operating far more trains with a much larger ridership.
And the lessons in all this
for publicly-funded passenger railroads like those in Connecticut? Be thankful for what we’ve got: a
multi-billion dollar, century-old railroad on valuable real estate with a
captive ridership that’s able, if not thrilled, to pay ever-rising fares.
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