After years of planning, lobbying and long delays, the privately funded Brightline express rail system launched service last fall between West Palm Beach and Fort Lauderdale; this year it initiated service between West Palm Beach, Miami and Fort Lauderdale. Service from West Palm to Orlando is under development, with construction expected to begin later this year. The state recently approved tax-exempt status for $1.75 billion in bonds. The rail company, owned by All Aboard Florida, is also looking at adding service between Orlando and Tampa.
Its track hasn't run smoothly. Some Treasure Coast residents have vocally opposed the service, citing concerns about noise and delays for fire-and-rescue teams. Since testing began in 2017, Brightline trains have tragically killed seven people; the train service has not been cited. A series of changes in executive ranks raised spectulation of trouble within the organization.
An unaudited financial report released last spring indicated the company operated at a $28.2 million loss in the first quarter 2018 as it carried 75,000 total passengers and collected $663,667 in ticket revenue. Another financial report is due in the coming weeks.
Critics have claimed that Brightline isn't meeting its goals and could fail, leaving the communities served with the tab. Because Brightline is privately funded and held, its business plan is not public.
Media coverage has focused on ridership, ticket sales and Brightline's potential as an alternative for daily commuters. We were curious about its marketing strategy and other revenue streams such as land development, in-station and onboard advertising sales and retail.
To learn more, we hopped on the train with Brightline CEO Patrick Goddard. Finding the the Miami Central Station was a bit difficult due to construction and the lack of signage. Otherwise, we found the experience smooth. Parking was readily available at a flat rate of $6 per day in a lot immediately across the street. The station is bright, airy and easy to navigate. The waiting area includes a children's play area plus a comfortable passenger lounge and executive lounge. The 29-minute ride to Fort Lauderdale was over before we had finished our conversation.
We spoke with Goddard off-the-record, then followed with a written Q&A. The answers he gave are here.
Q: Setting up a rail system must be an expensive venture. Can you tell us what it is costing to create the rail from Miami to Orlando, and how that is being financed?
Brightline is an incredible opportunity to enhance the mobility of our region, and we believe it will be a model for the rest of the country. To date, we have invested $1.8 billion and are privately owned, operated and maintained. This investment has created thousands of jobs and economic impact for Florida. We are excited about expanding this system to Orlando.
Q: Brightline has now been operating out of Miami for a couple of months, between Lauderdale and West Palm since January. How full are the trains? Are ridership levels where you had hoped they would be at this point in your projections? When do you expect to achieve optimum ridership levels?
We are in the early stages of Brightline's launch, and ridership has already exceeded our expectations, attracting a mix of leisure travelers, groups and business riders. The feedback we receive from guests is outstanding. Once you try Brightline, it's hard to go back to driving -- especially when the average highway speed is 34 miles per hour. Brightline trains travel up to 79 mph between Miami and West Palm Beach.
Q: What do you say to observers who point out that they often see trains go past carrying very few passengers?
Brightline's ridership continues to increase month after month. In early August, we launched hourly, regularly scheduled service between Miami, Fort Lauderdale and West Palm Beach. We have always expected a ramp-up period similar to that of other successful passenger rail systems, like Italo and Acela. We are asking people to change their habits and get out of their car. That takes time. We're in the awareness phase and will continue educating consumers about how Brightline can benefit them.
When people try Brightline, they love it and realize it's better than sitting in traffic on I-95.
Q: Some detractors have questioned the viability of your business plan. Could you explain the plan to us?
Despite the assumption, passenger rail is successful in the U.S. and around the world. Systems such as Eurostar, Virgin Trains, Italo and Acela are highly successful. Our model is based on city pairs that are "too short to fly and too long to drive," making passenger rail a viable alternative. There are approximately 400 million trips between Orlando and South Florida, and we need to capture a small percentage.
Our business also focuses on transit-oriented development — condos — that offers connectivity to retail, restaurants and the businesses that residents and travelers need every day.
Q: Earlier this summer, Fitch rated Brightline bonds as non-investment grade because the amount of time expected for ridership to stabilize. Other reports indicated that before the state recently approved a new issue of federally backed bonds, Brightline was running low on cash. In fact, financials released earlier this summer indicate that Brightline lost $28.2 million in the first quarter. That naturally leads to doubts. How do you answer those?
Brightline has been operating on a full schedule for approximately one month. Our business model is similar to other profitable models around the globe.
Our ridership increased by 42 percent in the last quarter and revenue increased by 72 percent. We are on the right trajectory.
There is an appetite for private investment in large infrastructure projects like Brightline. Our initial private activity bond offering — which was purchased by qualified investors — were oversubscribed.
Q: Will you be releasing second-quarter results, and when will that happen?
The reports for the second quarter are expected this month.
Q: Are you targeting all commuters, or just one or two segments? What is your capacity per day? What percentage is that of the total number of commuters in the region?
Brightline's market is a mix of business travelers, leisure travelers and tourists. Each train seats approximately 240 guests and we have 16 round trips per week day.
Q: Some people may use Brightline for daily commuting. How do the costs compare of taking Brightline versus driving a car?
Commuting via a personal automobile adds up — not only money but time. On average, it costs 80 cents per mile to drive and 37 cents per mile to take Brightline. Rideshare costs $1.67 per mile. For people who value their time and want a way to gain some productivity, Brightline makes the most sense.
Q: You have a second market, leisure travelers. That makes pretty obvious sense once you're traveling all the way to Orlando. But are people really using Brightline for leisure purposes now?
The high percentage of leisure travelers is one thing that has surprised us the most. We have partnered with a variety of attractions and venues and are highlighting special events that can be connected by Brightline. We believe leisure travel between our three counties has a lot of potential and will work with our partners and others to offer guests unique, one-of-a-kind experiences.
Q: A lot of people aren't really familiar with how Brightline connects to MetroRail, TriRail and Metromover. Can you remind us?
MiamiCentral is an 11-acre intermodal hub in the heart of downtown Miami. Ultimately, all forms of mass transit in Miami-Dade County will be linked, such as Metromover, Metrorail, Tri-Rail, Brightline, ride share, bike share and bus. Tri-Rail is expected to open in 2019 and will be directly connected to MiamiCentral.
Q: If you don't achieve the ridership levels you expect, who pays? Is there any chance the government would have to subsidize or pay for Brightline?
We are two months into a service that will be here for the next 100 years, and we're excited by the early trends and results. Brightline is privately owned, operated and maintained so there is no risk to taxpayers.
Q: Is there really no risk to task payers? Some of your funding comes from tax-exempt bond issues.
Private activity bonds have been used many times in Florida and throughout the country to incentivize private investment. These bonds do not expose any public entity to any financial obligation or exposure — any suggestions otherwise are just untrue.
Q: Brightline really has two businesses: one is transportation, the other is real estate development around the transportation hubs. How do the two of those intersect? Which is the primary driver of your overall business? Or does each have to stand alone?
Brightline aligns with two emerging trends: more people are using mass transit and more people are moving to areas where they can live, work and play. These two businesses are distinct and separate but complementary. Increased mobility is the No. 1 thing businesses discuss when thinking about relocating or attracting new clients or employees. As a result, the urban cores have seen increased development since the announcement and subsequent launch of Brightline.
Q: Your company has been seeking additional investment. Does that mean the Florida project isn't fully funded? How will those funds be used?
Phase 1 between Miami to West Palm Beach is fully funded and operational. We are working on the capital structure and analyzing financing options relative to the Phase 2 extension to Orlando. A significant component of the Phase 2 capital will be equity from the private sector.
Q: What is the current timetable for the West Palm — to — Orlando extension? What factors could delay that?
We expect to begin construction on Phase 2 to Orlando later this year. Construction is anticipated to take approximately 30 to 36 months.
Q: How are you marketing the service and introducing South Floridians to it?
So much of selling Brightline is encouraging an individual, group or company to try something new. Once we explain how the train will work for them and once they actually experience it, they are hooked and become loyal riders.
We are partnering with museums like the Frost Museum and Perez Art Museum, performing arts venues like the Broward Center for the Performing Arts and of course the Miami Heat to spread our message and encourage South Floridians to take advantage of Brightline.
Q: You have a tiered pricing system. How does that work and what do you get with each tier?
Brightline has three classes of service. We recently launched a new Select service, which is an elevated experience for our guests. It includes complimentary food and beverage, like exclusively curated wine and beer, offerings throughout the day. Garage parking is included, and the Select lounge now features business center amenities, like wireless printing and scanning stations, stationary and iPads. Brightline also offers Smart Plus service, which includes a complimentary food and beverage item on board, and Smart service where guests can purchase items in the stations and on board. All levels include complimentary wi-fi and large leather reclining seats.
Q: How do you determine what to charge? What kinds of prices changes have you made to date, and how have those been received?
We continue listening to feedback from guests and studying trends in our ridership as it relates to pricing. For example, we wanted to offer families the opportunity to try our service so we launched a "kids 12 and under ride complimentary" for the month of August. Pricing will continue to evolve as ridership and demand grows.
Q: Have there been any surprises about how people are using Brightline?
Our biggest surprise has been how much Brightline is changing people's lives and their enthusiasm for the service; some of their co-workers even ask if they are working for us because of their passion. We had one guest who was getting up to drive from Palm Beach County to downtown Miami at 4:30 a.m. tell me Brightline has given him his life back. Another guest said her massage therapist could tell when she quit driving and took Brightline regularly as her back was not as tight and she was signicantly less stressed.
Q: Brightline has had a number of unfortunate incidents with fatalities on the tracks. What are you doing to combat that?
Brightline is a leader in the industry when it comes to safety and safety education. It's always been our top priority. Brightline began an expanded rail safety outreach plan in early 2017, working with Operation Lifesaver, a nonprofit public safety education and awareness organization dedicated to reducing accidents near railroad tracks.
We believe there needs to be a larger conversation on suicide, drug prevention and mental health as it relates to this topic. Every incident over the past year has involved one of these factors.
Q: Some counties on the Treasure Coast have some vocal opponents to Brightline. What are their concerns, and how are you addressing them?
Since its inception, Brightline has received tremendous support throughout the state. As it relates to the Treasure Coast, we understand their concerns and are actively working to address them by engaging in conversations with the business community, elected officials and residents.
Q: Your background is in hotels and hospitality. How does that figure in your current role?
We like to say that Brightline is at the intersection between hospitality and transportation. My background in the hotel business is quite applicable as Brightline is always focused on the guest experience. Just as a hotel, the experience begins when you book your stay then continues upon your arrival and the time you spend on property. The same is true for Brightline. We want each guest to have an exceptional experience from booking a ticket to arriving at our station to the on-board travel between destinations.
