Thursday, August 9, 2012

FEC going ahead with All Aboard Florida

Via Stephen Smith comes word that All Aboard Florida is going ahead:


A Miami real estate and transportation company announced Wednesday that it plans to go ahead with a $1 billion project to build a privately run passenger train service between Miami and Orlando to begin operations by the end of 2014.
Florida East Coast Industries said its "All Aboard Florida" project is financially viable without any need for federal and state grants or subsidies.
"After completing our due diligence we have decided to go through with it," said Husein Cumber, vice president of corporate development at Florida East Coast Railway, which operates the company's existing freight line.
Construction would begin in early 2013, Cumber said, and when completed the new service would be the only privately run, non-subsidized passenger rail link between two major cities in the United States. A similar private scheme has been proposed in Texas to link Houston and Dallas.
Amtrak, the government-owned national rail corporation, currently offers a twice daily service between Miami and Orlando, taking five to seven hours.
The announcement comes after Florida Governor Rick Scott rejected federal funding in 2011 for a high-speed rail service linking Tampa, Orlando and Miami, saying the state could not afford it.
The new service is designed for tourists and business travelers and would link two of Florida's major urban centers, Cumber told members of the Beacon Council, a public-private partnership to promote business development in Miami-Dade County.
The $1 billion cost includes a set of 10 diesel-powered trains with a 400-seat capacity offering an hourly service with First-class and Business-class seating, gourmet dining and Wi-Fi, as well as new tracks and stations in downtown Miami, Fort Lauderdale, West Palm Beach and the Orlando airport.
The trains would make the journey in 3 hours 3 minutes traveling at speeds of up to 110 mph at a "cost competitive" price compared to the cheapest round-trip airfare of $140-160 or the roughly $120 cost of car travel, Cumber said.

Given the recent issues with Amtrak's food and beverage service, it will be an interesting comparison to see if they can make a profit on their gourmet dining service here or whether it will function as a loss leader here. My expectation is that it will move away from gourmet dining towards a more casual sit down atmosphere, such as Ruby's Diner is out west.

While I don't believe that the $120 cost of car travel is accurate, I believe that's the rather flawed AAA methodology rather than a more appropriate incidental cost, more than likely you'll see ticket prices in that range. With a market of 50 million annual travelers stated later in the article, this only has to be as competitive with driving as the Acela is with flying. Perceived social class for business travel, time advantage against driving, and the substantial number of tourists for whom the costs of a rental car must be added to the cost of driving should all result in a healthy amount of patronage and a high occupancy rate. Earlier I estimated it would need about three million trips to break even; with 50 million annual trips, that's only a six percent marketshare and I think that's easily reachable with a service that is substantially faster than automobile travel such as this.

5 comments:

  1. A couple of thoughts:
    1) "Gourmet dining" doesn't necessarily mean that there are going to be chandeliers in the diner. I think they're more trying to say "The food will be nicer than airline food". If I had to guess, they're going to shoot for food service in the vein of what exists on either the Acela or on VIA's corridor service in Canada rather than Fred Harvey-esque food service. It'll still be either cafe/lunch counter service or at-seat service if I had to guess, though, and not serve-at-seat food service (though I'm definitely open to a surprise here).

    2) The "base cost" of driving (that is, fuel only) is going to be somewhere in the range of 16-20 gallons of gas, or...probably somewhere in the range of $52-80 (assuming gas stays between $3.25 and $4...which is the closest thing to a predictable range I can guess at there being). That's assuming no tolls, and an Orlando-Miami toll on the Turnpike from the I-4 interchange to 27th Street in Miami is going to run either $13.60 (Sunpass) or $17.90 (cash) each way. So...$79.20 is the low end of all of that, and $115.80 is the high end before you get into any sort of incidental expenses.

    3) As to cost, I'm thinking $60-75 for a one-way coach seat is where they're shooting, though I could easily see it be something like $50 for an off-peak seat and $80 for a departure at a peak morning/evening hour. I figure that first class will be another $30-50, so you'd probably be looking at maybe around $80-120 for that first class seat. This is strictly guessing, of course.

    4) One thing that I wouldn't be surprised to see enter into the equation for a bunch of tourists, as you hinted: It is currently quite possible to do a Disney/Universal vacation in Orlando without a rental car. Assuming the ability to get a cab to the beach in Miami, it'll be possible to add a trip down there to a vacation...still without a car, and with actually decent travel times.

    5) Finally, I'm just wondering...assuming hourly service with either no variation or minimal variation from the hourly schedule (i.e. I could see one or two off-the-hour services getting into the mix), what capacity are we looking at for daily service (and annual service)?
    -Just running on the back of an envelope, 400 seats times an hourly departure each way between 5 AM and 9 PM would get 6400 seats in each direction, or 12,800 total seats per day. This in turn translates into 64,000 seats per five-day week/3.328 million seats per year assuming a five-day week (i.e. not fiddling around with reduced weekend service) and 4.659m/year assuming regular service seven days a week for 52 weeks. I think this is the outside of what would be available...and I'm thinking that it will be a bit lower because of holiday/weekend service being /slightly/ cut back (even if all you remove is the early-morning services).

    ReplyDelete
  2. So I'm guessing that they're connecting to Orlando's airport because it's easier and it hooks into Disney's existing transportation network?

    If they are intending on targeting tourist families, I wonder if they will be offering some kind of family discounts? Because $120 by car is a lot cheaper if that car is carrying 4 people, although not as comfortable or quick.

    And since Amtrak can already make the trip in car-competitive 4 hours, what's the story with their ridership? Is it just a case of having insufficient frequency?

    ReplyDelete
    Replies
    1. *Sorry, nearly car-competitive 5 hours.

      Delete
    2. Probably both frequency and reliability. You want to connect to the Silver trains? Sorry, you can't, there's a three-hour delay.

      Delete
  3. "new tracks and stations in downtown Miami, Fort Lauderdale, West Palm Beach and the Orlando airport."

    So does that mean no downtown station for Orlando? Just one station way out on the edge of town at the airport? Having a station at the airport is a great idea but not having one in the urban center is a mistake.

    ReplyDelete