Why isn't Amtrak copying Brightline?

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Why isn't Amtrak copying Brightline?

Postby SouthernRailway » Sat Jan 20, 2018 10:34 am

As conservative as I am on economic issues, I've always maintained that private-sector rail passenger service absolutely requires government subsidies, since passenger rail does not make money, period.

However, Brightline has upended my perspective. I can't imagine that Brightline trains will ever make a cent of profit, but the entire package of what Brightline is doing (station and other real estate development plus train operations) must have been well thought out; Fortress (its financial sponsor) is a highly reputable investment fund, and Softbank is behind Fortress. So there must be a decent business plan there somewhere that involves profit, somehow. Plus Brightline seems to have very quickly built really nice stations and put really nice trains into operation.

Question: why isn't Amtrak doing what Brightline is? Brightline's management has mentioned other corridors where Brightline might replicate its South Florida project. Why isn't Amtrak beating Brightline to the punch and doing a combination of real estate development plus frequent train operations in other parts of the country? Couldn't places where Amtrak already has some service, such as the Pacific Northwest, California and elsewhere, be places where Amtrak could do that? In short, if the Brightline business plan will result in profits (somehow), why isn't Amtrak racing to do the same thing?
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Re: Why isn't Amtrak copying Brightline?

Postby DutchRailnut » Sat Jan 20, 2018 10:49 am

copy something not yet proven ?? lets just see if Brightline will meet the expectations.
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Re: Why isn't Amtrak copying Brightline?

Postby electricron » Sat Jan 20, 2018 10:50 am

SouthernRailway wrote:As conservative as I am on economic issues, I've always maintained that private-sector rail passenger service absolutely requires government subsidies, since passenger rail does not make money, period.

However, Brightline has upended my perspective. I can't imagine that Brightline trains will ever make a cent of profit, but the entire package of what Brightline is doing (station and other real estate development plus train operations) must have been well thought out; Fortress (its financial sponsor) is a highly reputable investment fund, and Softbank is behind Fortress. So there must be a decent business plan there somewhere that involves profit, somehow. Plus Brightline seems to have very quickly built really nice stations and put really nice trains into operation.

Question: why isn't Amtrak doing what Brightline is? Brightline's management has mentioned other corridors where Brightline might replicate its South Florida project. Why isn't Amtrak beating Brightline to the punch and doing a combination of real estate development plus frequent train operations in other parts of the country? Couldn't places where Amtrak already has some service, such as the Pacific Northwest, California and elsewhere, be places where Amtrak could do that? In short, if the Brightline business plan will result in profits (somehow), why isn't Amtrak racing to do the same thing?

Amtrak does own real estate around the stations it already owns, mostly along the NEC. But Amtrak, with it's public-state ownership, isn't geared to be a privately owned real estate developer. It's geared to think as a transit provider, expect with nationwide vs city scope.
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Re: Why isn't Amtrak copying Brightline?

Postby SouthernRailway » Sat Jan 20, 2018 11:01 am

electricron wrote:Amtrak does own real estate around the stations it already owns, mostly along the NEC. But Amtrak, with it's public-state ownership, isn't geared to be a privately owned real estate developer. It's geared to think as a transit provider, expect with nationwide vs city scope.


Yes, you're exactly right; I recall that Amtrak is working on some development around 30th Street Station in Philadelphia.

Why doesn't Amtrak "think outside the box"? Real estate development and transit have gone hand-in-hand for decades, so I'd think that Amtrak would have real estate development on its radar screen.
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Re: Why isn't Amtrak copying Brightline?

Postby adamj023 » Sat Jan 20, 2018 11:21 am

Brightline is just between two stations now which aren’t that far away. I don’t forsee profitability for Brightline. Tri Rail actually makes sense as commuter rail in the area. But having fewer stations and faster trains isn’t really meaningful.

I predict Tri Rail and/or freight railroads will takeover Brightline operations on the FEC as they already have plans to expand to more areas using the FEC tracks as surely Brightline will eventually run out of funds to operate.

Amtrak loses enough money as is, and even failed on the new Washington line where people got killed and injured during the first day of the shortcut and faster path.
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Re: Why isn't Amtrak copying Brightline?

Postby Greg Moore » Sat Jan 20, 2018 12:16 pm

I'd point out too that one could argue that "Amtrak" in a sense is copying Brightline, in part getting funding from real estate and other sources... i.e. the entire fricken US.

I'm hopeful for Brightline, but I'm not convinced it'll work.

And I'm not really sure it's the model that a national rail network SHOULD follow. Because then ultimately it becomes, "Why provide rail service to say Taylor Texas, if it can't provide enough real estate revenue.

Profit driven is a nice model when it works, but there are somethings that I think ultimately need to be considered a public good, which means at least in some cases you will be funding money losing options.
This doesn't mean one shouldn't try to cut costs, increase revenue, but sometimes ultimately it can become counterproductive.

And consider that Penn Station was torn down to sell air rights because that was "profitable".
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Re: Why isn't Amtrak copying Brightline?

Postby Alex M » Sat Jan 20, 2018 1:38 pm

In terms of real estate income, Amtrak would be better off forming a susidiary that would deal with that. I believe that Wick Moorman said that revenue from real estate in Chicago would be used to catch up on maintenance needs there, as well as expansion. Amtrak is just too big and spread out for this to have much impact. They would be better advise to market their services better and grow ridership and revenue from that so that at least some of the trains could break even, if not show an operating surplus.
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Re: Why isn't Amtrak copying Brightline?

Postby Nasadowsk » Sat Jan 20, 2018 2:39 pm

Greg Moore wrote:
I'm hopeful for Brightline, but I'm not convinced it'll work.


It's off to a good start, being faster than driving and cheap and clock face schedules (I think).

Of course, it's just 2 stops and a short run at this point. I wonder if the FEC wanted to get it rolling now to test the waters / gain experience, or what?
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Re: Why isn't Amtrak copying Brightline?

Postby mtuandrew » Sat Jan 20, 2018 2:55 pm

Washington Union Station redevelopment: https://nec.amtrak.com/project/washingt ... d-century/

Amtrak is absolutely redeveloping large swaths of its land and attempting to make money from it (or at least to pay for other projects.) In this case as with most in the past, they have partnered with real estate companies for the non-train-related parts.
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Re: Why isn't Amtrak copying Brightline?

Postby Nasadowsk » Sat Jan 20, 2018 3:01 pm

mtuandrew wrote:Amtrak is absolutely redeveloping large swaths of its land and attempting to make money from it (or at least to pay for other projects.) In this case as with most in the past, they have partnered with real estate companies for the non-train-related parts.


One wonders how much longer Sunnyside will be open air. LIC is full of development now...
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Re: Why isn't Amtrak copying Brightline?

Postby mtuandrew » Sat Jan 20, 2018 3:03 pm

Nasadowsk wrote:One wonders how much longer Sunnyside will be open air. LIC is full of development now...

14th St. Coach Yard might have an indoor future ahead of it too.
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Re: Why isn't Amtrak copying Brightline?

Postby SouthernRailway » Sat Jan 20, 2018 3:18 pm

Thanks, everyone.

Why isn't Amtrak picking a corridor that is currently underserved, building lots of new real estate in the corridor and adding a lot more train service to the corridor? Surely there are plenty more corridors around the country where the Brightline business model could work (and the Fortress CEO said that there are). Atlanta-Charlotte definitely comes to mind.
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Re: Why isn't Amtrak copying Brightline?

Postby Gilbert B Norman » Sat Jan 20, 2018 3:31 pm

Regarding Mr. Stephens immediate thought, I will not dismiss such out of hand.

The South Loop area is being developed to meet the needs of a diverse, Middle Class, college educated, demographic. Already, there are residences and "mixed use" structures over the former "throats" of Grand Central, Dearborn, and Central stations. The "head houses" of C&NW, Randolph St, LaSalle, and Central have all been razed and redeveloped. Dearborn remains but redeveloped. Grand Central has been razed but undeveloped.

Chicago Union Station has been redeveloped over its tracks for now some fifty years. The Head House, or Great Hall in Amtrakese, has plans laid out that will retain its facade (lest we forget, there were plans to build a twenty five story hotel atop the Head House dating back to CUS's construction, but such were shelved under political pressure) but otherwise redevelop to "mixed use".

So all told in Chicago, the Brightline model of having passenger rail enhance real estate development is alive and well.

Finally regarding Mr. SRY's immediate thought, government agencies do not take risks - they adminster programs, hopefully in an economic and efficient manner, that their "mission statement" under the enacted legislation that established them. Entrepreneurial risk is not mandated as part of that mission.
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Re: Why isn't Amtrak copying Brightline?

Postby SouthernRailway » Sat Jan 20, 2018 3:42 pm

Gilbert B Norman wrote:Finally regarding Mr. SRY's immediate thought, government agencies do not take risks - they adminster programs, hopefully in an economic and efficient manner, that their "mission statement" under the enacted legislation that established them. Entrepreneurial risk is not mandated as part of that mission.


True. Isn't Amtrak supposed to be "for-profit", though? If the Brightline business model is valid and will lead to profits, then Amtrak is leaving money on the table by not pursuing a similar business model in some corridors. (I'm not saying that Amtrak should ditch unprofitable service and focus on only a few corridors; I'm saying that Amtrak should consider adding service in underserved corridors, funded by real estate development or whatever Brightline is counting on to generate profits). And if Amtrak is unwilling to expand service where doing so could (as part of a package of activities) be profitable, then it's not using its resources efficiently and is wasting my tax dollars.
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Re: Why isn't Amtrak copying Brightline?

Postby quad50cal » Sat Jan 20, 2018 3:53 pm

SouthernRailway wrote:Question: why isn't Amtrak doing what Brightline is? Brightline's management has mentioned other corridors where Brightline might replicate its South Florida project. Why isn't Amtrak beating Brightline to the punch and doing a combination of real estate development plus frequent train operations in other parts of the country? Couldn't places where Amtrak already has some service, such as the Pacific Northwest, California and elsewhere, be places where Amtrak could do that? In short, if the Brightline business plan will result in profits (somehow), why isn't Amtrak racing to do the same thing?


These real estate projects can cost much more than building the rail infrastructure. The Hudson Yards development in NY will cost north of 20 billion - more than the cost of the Gateway project. That's why Amtrak and similar agencies simply auction off the rights. They could never afford to build the developments themselves, but they will certainly be happy to gain what they see as free money. In the case of Hudson Yards, the MTA received 1 billion dollars without expending any effort.
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