All Aboard Florida’s Miami-to-Orlando Rail Plan Doomed to Go Bust, Study Says
Posted on February 25, 2015
By Tim Elfrink
All Aboard Florida, the private firm planning rail service between Miami and Orlando, has already faced plenty of blowback, including residents worried about noise and traffic delaysand accusations of political malfeasance. But there’s also the more basic question of whether the $2.5 billion venture — which includes plans for a gleaming downtown Miami station — will be economically viable.
A study out this morning (paid for by opponents of the deal) suggests it’s not. In fact, to meet its debt obligations, the research suggests, the rail line would have to charge $273 for a one-way ticket — far more than the price of a flight.
The rail line quickly struck back at the report, which a spokesman says “relies solely on assumptions and speculation.”
The study comes via John N. Friedman, an associate professor of economics at Brown University who has a PhD from Harvard, and was paid for by Citizens Against Rail Expansion.
Friedman looked at All Aboard Florida’s business pitch — namely, that millions of riders annually would buy $34 tickets to get from Miami to Orlando — and found it wanting.
Train fares are limited for business travelers by the relatively cheap airfare for the one-hour flight between Miami and Orlando, as well as the fact that — unlike other long-distance trains — All Aboard Florida will arrive at the Orlando airport rather than downtown, which is more advantageous to passengers. Fares for personal travelers will be limited by the relative ease of car travel. Train ridership will also be limited by high levels of urban sprawl and the lack of connecting public transit.
Instead, Friedman writes, All Aboard Florida would generate losses of up to $100 million annually. That $200-plus ticket price would be the only way to make ends meet, but then even fewer riders would probably take advantage because airfare is cheaper.
Friedman also calls into question Gov. Rick Scott’s claims that the rail line would be totally privately financed (a claim that Politifact has already rated as “mostly false.”)
He notes that the rail line’s $1.75 billion in tax-exempt bonds amount to a subsidy in the range of $60 million per year, plus another $13 million in benefits from local governments making improvements for the line.
Lynn Martenstein, All Aboard Florida’s executive vice president for corporate communications, released a statement criticizing the study. “All Aboard Florida has carefully reviewed the study published by CARE and concluded that it is not based on any facts or figures provided by All Aboard Florida, and relies solely on assumptions and speculation,” he said in the statement.
New Times has asked All Aboard Florida for further comment but has yet to receive a reply.