Brightline is on the cusp of connecting Disney World to Miami by train. Its owner explains what’s next in the railroad’s quest to beat Amtrak at its own game.
The state of American passenger rail travel is bleak, yet demand is booming.
Amtrak is on track to break even in the next fiscal year, despite what some passengers see as declining service and not to mention ever-rising fees.
In Florida, Brightline has built a successful train between Miami and West Palm Beach, with grand plans to connect Disney World by 2022.
Business Insider spoke to Wes Edens about the company’s transformation into Virgin Trains USA, expansion plans, and other potential routes.
Hugging Florida’s Atlantic coast is a narrow strip of land with some of the country’s most recognizable attractions.
From the white sand of Miami’s South Beach and its nearby cruise ship ports, through the palm-laden groves of Broward County, all the way up through Orlando and Disney is one of the country’s most densely built metropolitan areas.
With an ever-rising ocean on one side, and the Everglades on the other, the region is quickly running out of room to expand traffic lanes and keep up with an increasing population.
Wes Edens, founder of the $70 billion private equity behemoth Fortress Investment Group, says that combination of restricted space and dense urban development make south Florida the “perfect storm” for building passenger rail in the United States that people actually want to ride.
The 57-year-old is the largest investor in Brightline, soon to be branded as Virgin Trains, with help from media mogul turned travel investor Sir Richard Branson. His other bets include a 2014 purchase of the Milwaukee Bucks, currently a top-seeded Finals team, British soccer club Aston Villa, which is also on a 10-win hot streak in its race to make it back to the upper Premier League, and even a professional “League of Legends” franchise.
“I really wanted to focus on things that I have great passion for, and those things fall into the general classification of infrastructure,” Edens told Business Insider in an interview in March 2019 of the seemingly disparate stakes. “Sports, in and of itself, is almost like a social infrastructure.”
Sports, in and of itself, is almost like a social infrastructure. It really provides unity, brings people together, and can rebuild downtown areas.”
That’s exactly what he’s done with the areas surrounding Milwaukee’s downtown Fiserv Forum arena, and hopes to recreate with its Downtown Miami Central station. The 3 million square-foot complex also happens to be on the site where one of Edens’ heroes — Henry Flagler of the iconic 19th century Florida East Coast railroad — built the city’s first terminal in 1896.
“I want to build a train station people want to get married in,” Edens said, drawing inspiration from London’s St. Pancras Eurostar terminal, housed in a grand Victorian building that’s part luxury hotel.
Eventually, trains will run from Miami through their current stops in Fort Lauderdale and Palm Beach as far north as Orlando, with a three-hour journey separating theme parks from cruise ports.
Edens points to Denver as an example of transit-oriented development spurring economic activity, noting that examples like Colorado’s capital are “why we wanted to be right in the middle of Miami.”
“It’s a part of Miami that has been under invested versus the Brickell areas and some of the downtown stuff,” Edens said. “It’s thick with development activity now and I think the train’s been a big part of that.”
Too short to fly, too long to drive
American cities like Denver are only part of the story. America, after all, has long struggled to make passenger rail a viable alternative to car-clogged highways — even in dense corridors like the Northeast from Washington D.C. to Boston, via New York City, where even Amtrak only boasts a small premium on market share in its competition with airlines.
Edens and other Virgin Trains stakeholders visited dozens of city pairs comparable to Virgin Trains’ market across Europe as part of their research.
“These city pairs that are too short to fly but too long to drive are all over the world,” he said. “In Europe, the most successful by far obviously is the London to Paris Eurostar route, but there’s also Paris to Lyon, Madrid to Seville, Rome to Milan, and others.”
The key similarities — despite language or cultural barriers — between these pairs are all roughly the same: the cities are roughly 250 to 200 miles apart, with large populations at either end and in between that need to travel along the corridor.
“That gave us a lot of confidence in the route we are planning initially from Miami to Orlando, which has identical characteristics and is even more constrained in terms of the competition or what you could do by car,” Edens said.
In the most successful cases, train services between two major cities in other parts of the world are able to carry more than a quarter of total travel between the two. Virgin Trains has first set its sights on a much smaller “capture rate” of five percent, something Edens says “does not sound like a terribly aspirational goal.”
It’s likely anything but aspirational
Amtrak, in its quest to turn a profit by the next fiscal year, has set its sights on similar corridors where it can run a frequent service. That’s been at the detriment to some of the Amtrak’s long-distance routes, which suck an outsized amount of money rom the railroad’s budget. Converting those money-losing routes to scaled down segments could help shore up the Amtrak’s finances, its leaders say.
Compared to Amtrak, which only serves West Palm Beach and Miami twice per day — in nearly double the time — Brightline’s already winning handily in South Florida.
Hourly Brightline departures are reasonably prices, and make the journey in about an hour. That in itself is likely enough to sell some travelers, and if not, the $20 fares, sleek interiors, on-board wifi and concessions might help.
Next stop: Orlando — and beyond
In December, Brightline inked a dealwith Boca Raton to build an intermediate stop on its current route by the end 2020, bringing the total network size to six stations. That’s in addition to its under-construction expansion to Orlando, added by a major $1.75 billion private bond package it signed with 67 private investors last April.
Edens hopes the success so far can be replicated. The company has plans for a similar project between Los Angeles and Las Vegas in the future, with eyes on roughly a dozen city pairs throughout the US that could also benefit from train travel.
“Atlanta to Charlotte would be another one,” Edens said. “Chicago to St. Louis would be maybe the most attractive of them all, and if you look at the business travel market, Houston to Dallas would be a good one too.”
Of course, it won’t be easy. For the full-year of 2019, Brightline will likely miss its own goal for ridership and revenue by a wide margin, the South Florida Business Journal reported in December. Revenue, meanwhile, could be less than a third of previous forecasts when all is said and done.
Elsewhere in the country, California drastically slashed the scope of its planned high-speed rail project in 2018, initially relegating the route to the Central Valley instead of the originally proposed San Francisco to Los Angeles link. Rail proponents in Texas, meanwhile, have struggled to gain possession of crucial land needed to build in the busy I-35 corridor.
Despite the struggles, Edens is optimistic, but Virgin Trains won’t be able to turn the tide on its own.
“Our investment in South Florida will be about $3 billion,” he said. “But to build it as true high-speed rail would probably be $10 billion more than that. The government has not actually made it a priority to build it themselves.”
“The model we’re using could be easily copied in different markets,” he continued.”These shorter city pairs where you can build that grade and get there in three hours could easily displace lots of automobiles and passenger flights.”