Train travel in America has never been a profitable or smooth-running venture. Can a famous Brit change that?
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Sir Richard Branson, the mogul who brought us Virgin Records, Virgin Airlines and Virgin Cruises, is making a bold move into U.S. transit by acquiring a minority stake in the private passenger rail Brightline, the company announced last week. Brightline will change its branding to Virgin Trains USA, and filed the initial paperwork to go public.
Brightline, a subsidiary of Fortress Investment Group, launched service this year between Miami, Fort Lauderdale and West Palm Beach. The company announced in June that it would pursue an Orlando-to-Tampa route (which may have a Disney World stop), and in September announced that it would move to put high-speed rail between Las Vegas and Southern California by 2022.
The company has also floated plans for other routes considered too short to fly but too long to drive, such as Houston-Dallas, Atlanta-Charlotte, Chicago-St. Louis, Los Angeles-San Diego and Washington-New York-Boston.
Branson’s Virgin Trains already operates in the U.K., where it has an emphasis on fun and style. According to the Financial Times, in May this year, the U.K. government stripped Virgin and its partner of one of its rail franchises after they failed to hit ambitious growth targets, but the companies blamed that on infrastructure problems. Virgin still operates another franchise more successfully.
In Securities and Exchange Commission filings submitted Friday, Virgin Trains disclosed that work in Florida will cost more than $5B and in Las Vegas, $3.6B. Brightline has lost $87M this year. It has raised $1.75B in private activity bonds. Shares would be listed on the Nasdaq under the symbol VTUS.
Brightline has faced some criticism in Florida over deaths of pedestrians on train tracks, and has faced lawsuits from entities along the Treasure Coast north of Palm Beach — where trains would pass through but not stop — though the parties have been in talks to settle.
Virgin Trains predicts reaching an annual 6.6 million riders, who would pay $73 per ticket to ride from Miami to Orlando. That fare, according to the company's filings, is approximately 25% less expensive than driving and approximately 30% less expensive than flying. The company also intends to develop real estate adjacent to its stations.
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