Conventional wisdom in the transit establishment is that rail passenger transit can never break even, never mind turn a profit. Given some of said transit establishment’s mega-projects, that view is not surpising… The country is littered with proposed ten mile or so long light rail projects with billion dollar price tags. My personal point of reference is Minneapolis’ Hiawatha Light Rail Line, which keeps the seats full on it’s twenty or so light rail cars with twenty million annual paid fares. At around two bucks apiece, that’s forty million in revenue, which sounds impressive until you realize that the interest on that billion dollars borrowed to build the line is around the same forty million a year. So the fares are barely paying for the interest on the debt, and the actual repayment of principal, wages, track maintinence, electricity, etc. all require continuing taxpayer subsidy.

Last month Florida East Coast Industries kicked the transit establishment’s fantasies right out of the park. They announced that they’ll be offering passenger service on their Florida East Coast (FEC) railroad from Orlando to Miami beginning in 2014. And at least officially, they’re not asking for one cent in taxpayer subsidy. No doubt the transit establishment poo-poo’d the announcement… How could anyone do rail transit without multi billion dollar subsidies?

But for those of us that have perused the financials and ridership stats of Amtrak’s Empire Builder, FECs proposal make absolute financial sense. The Empire Builder provides daily service between Seattle and Portland on the west coast and Chicago with stops at Milwaukee, St.Paul, Spokane, and a bunch of other towns along the route. It runs full pretty much year round, and with the oil boom in North Dakota it’s become a defacto commuter train for oilfield workers. And if you subtract the overhead costs of east coast Amtrak facilities the Empire Builder never visits (The Empire Builder is administered  out of Seattle), it’s at least breaking even.

How can a passenger train break even and maybe even turn a profit? Well, for a start, dozens of BNSF and CP freight trains a day are paying for most of the costs of it’s tracks. And while the latest light rail wet dreams cost a few million apiece for each overbuilt car and require an expensive power transmission system, the Empire Builder uses classic thirty year old Superliner cars and pretty much conventional diesel locomotives that were paid for years ago.

So no wonder FEC can afford to offer passenger rail services without courting bankruptcy. FECs tracks have already been upgraded for 90 MPH speeds in anticipation of the intermodal boom that will come when the new larger Panama Canal locks open. With that first rate infrastructure in place, FEC just has to buy some conventional passenger cars and maybe some new locomotives… Or fit their existing locomotives with generators or build the generators into the trainset.

Shouldn’t be hard to for FEC to break even on passengers fares alone. Then consider that parent company Florida East Coast Industries owns more than a little land around the proposed stations… Leasing or selling that land will pay dividends to FEC shareholders for decades to come.

So the “moral” of this story? Well, the taxpayer’s billions that are being blown on boutique “light rail” systems to serve a few big city dwellers could instead be building  passenger rail systems that would serve the whole country with little or no taxpayer operating subsidy. The downside is that much of the “transit establishment” would become unemployed in the process… Is that a downside?

Advertisements