November 28, 2014

A Florida Company Profile

Ticket to ride on FECI's 'All Aboard Florida'

Florida East Coast Industries believes it can make money offering a service no private company has offered.

Mike Vogel | 8/28/2013

All Aboard won't be true high-speed rail — its trains can reach 125 mph only on the short leg from Cocoa to Orlando, where there are no crossings. But it will be fast for a train, covering the 240 miles between south Florida and Orlando International Airport in three hours with stations only in Miami, Fort Lauderdale, West Palm Beach and Orlando.

All Aboard will be fast to the market too — announced in 2012 and running by the end of 2015. "It's the beginning of a revolution in passenger rail," says Bruce Richardson, president of the United Rail Passenger Alliance, a national non-profit based in Jacksonville.

Vincent Signorello, a member of Fortress' private equity team who became CEO of Florida East Coast Industries in 2011, says FECI always intended to move fast to bring passenger rail to the tracks.

Most people, however, expected that passenger service to be Amtrak and south Florida commuter service Tri-Rail. Both have pined for years to run on the track, which runs down Florida's east coast and, in south Florida, east of I-95. Amtrak now runs on CSX's line, which takes it on a bow through central Florida, while Tri-Rail runs on a line that leaves commuters west of where many work.

Husein Cumber, FECI executive vice president for corporate development, says the entreaties from Tri-Rail and Amtrak focused FECI's leadership on passenger rail, but the company saw pitfalls in government projects. Government subsidies and grants were uncertain, Cumber says, so FECI began wondering how it might deliver passenger rail without relying on handouts from a cash-strapped public sector.

Meanwhile, in 2010 and 2011, with the promise of $2.4 billion in federal stimulus cash to fund it, eight teams of industry players were vying to build high-speed rail between Orlando and Tampa. Cumber says FECI noticed that teams coveted a proposed $8-billion, 10-year project to extend the high-speed rail from Orlando to Miami.

If those companies saw such opportunity, FECI leaders thought FECI should look into it. In 2012, the company launched ridership studies. An initial draft by Morristown, N.J.-based consulting firm Louis Berger Group reported that after a three-year ramp-up to get travelers accustomed to the service, All Aboard would draw 3.29 million riders a year, generating $145 million in revenue, and would grow ridership at 1.3% per year, keeping pace with overall growth in the travel market. More recent estimates put no ceiling on ridership, estimating a market of 50 million trips each year for which All Aboard Florida can compete — trips beginning and ending near a proposed station. About 75% of the train's projected ridership is leisure travelers, with the remaining 25% business travelers.

Tags: Transportation

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