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.