29.11.18

ALREADY FAILING ITS MARKET TEST?

Railway Age asks D. P. Alan to evaluate Brightline's partnership with Virgin Group.  The train service impresses.
Brightline spokesperson Ali Soule told this writer: “We are at the intersection of transportation and hospitality” and the station and on-board experiences proved her right. There were plenty of employees around to cater to every rider’s needs, and their attitudes were positive and helpful at all times. Of course, they also made sure that passengers stayed in their assigned places and did not wander too far. For riders in the extra-fare “Select” class, the railroad offered wine, coffee, snacks like chips and granola bars, breakfast pastries in the morning, and cheese, crackers and cold cuts in the afternoon. There were also wine, beer (the Jai Alai IPA is local and appropriately hoppy, even though in comes in a can) and snacks available on board. “Non-Select” passengers had to pay for them.

Soule also pointed out some of the features of the car design, including some inspired by the Americans with Disabilities Act (ADA), like unique restrooms and small grabirons attached to the seats, so passengers did not need to grab the backs of the seats to steady themselves. In reality, they were not needed, because the track was the smoothest this writer has ever experienced. It was possible to fill a cup to the brim with beer and watch it for a few minutes, without a drop being spilled. That feat is impossible on Amtrak’s Northeast Corridor (NEC) or anywhere else Amtrak goes.
I believe somebody conducted a similar test with a cup of coffee on the press run of the Hiawatha in 1935, and the coffee stayed in the cup at 112 mph.  The challenge, dear reader, is in providing a train service from somewhere to somewhere, and that's not so promising, in Mr Alan's view.
On Sept. 18, Brightline acquired XpressWest, a high-speed rail venture that would run trains between Southern California and Las Vegas along the I-15 corridor, beginning in 2022. The Southern California end would be in Victorville, a town east of San Bernardino and 119 miles from Los Angeles by rail. Amtrak’s Southwest Chief stops there, but the only way that Angelinos can get there on public transportation would entail a long ride to San Bernardino on a Metrolink train and taking an infrequent local bus from there to Victorville. Motorists could park in Victorville and take the train the rest of the way to Las Vegas.

It does not appear to this writer than either market is fertile ground. It would cost motorists convenience and money to drive to Victorville and take the train, while the trip would be extremely long and difficult for transit riders. If management could figure out a way to run through to Las Vegas from Los Angeles, that would be a different story. It would probably require an agreement with Amtrak and BNSF, which owns the route to Victorville.
Yup, despite quips about "there being no there there" where downtown Los Angeles is concerned.

Virgin, though, is relatively new to U.S. travellers.
Virgin is an established brand, but more in Europe (it is based in London) than in the U.S. It is also a widespread conglomerate, both geographically and in terms of other business lines. With regard to travel, it is building ships for a cruise line to be based in Plantation, Fla. (Virgin Voyages), so it is establishing a related travel-based presence in the region. It is not quite as clear how well-respected the Virgin name is in this country, which does not prize the concept of virginity as much as other places in the world. Virginity is a status that many people lose relatively early in their lives. It seems that a company courting that status is moving in the other direction.

Virgin Group has holdings in the travel, hospitality, publishing, media, entertainment, retail, communications, sports and other industries. It has also given up more branding positions throughout its history than it owns today. It retains a minority share in Virgin Atlantic Air Lines, which did well in 2015, but has lost money more recently. It has discontinued or sold other airline holdings, but it retains tour operation Virgin Holidays.

With respect to rail, it still owns 51% of Virgin Rail Group, having sold the other 49% to Stagecoach, which owns such American companies as Coach USA and Megabus. Virgin’s experience operating rail franchises in the U.K. has been spotty, with a history of operating the Intercity Cross-Country, East Coast and West Coast franchises. It lost all three at different times, but regained the West Coast franchise until next April. It is currently bidding to keep that franchise under its brand with a 20% position, along with French railroad SNCF (30%) and the other 50% held by Stagecoach Group.
That's where market tests come in.
Everybody, including rail managers and rider-advocates, have been watching Brightline’s progress to determine whether or not it would be feasible to introduce passenger trains back into the private sector. It now appears, at least to this writer, that it is not. The railroad had plenty of land in downtown Miami, Fort Lauderdale and West Palm Beach that could be developed. That land is a great asset on the balance sheet, and it would contribute much more to the bottom line after it is developed. Other privately owned railroads do not have that special asset.

There is a difference between a balance sheet and a cash flow statement, and it appears that even Brightline and its owners did not have the cash to build the new railroad they planned. So they needed an investor. They got some cash, and they paid the price. The trains may run to Orlando someday, but the experiment failed.

So, if you wish to experience Brightline, you had better get on an Amtrak train or a plane soon, and go to South Florida to ride the brightly colored train. You do not have much time.
Whether other railroads will seek relief from ancient regulatory constraints on the ownership of real estate and commercial properties, the better to provide developments for development-oriented transit, remains to be seen.

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