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Billionaire behind Brightline says he’s “very, very happy” with rail service’s performance.

June 27th, 2019

Virgin Trains USA, the first for-profit rail service to launch in the U.S. in decades, says it’s on track to begin ferrying passengers between West Palm Beach and Orlando in 2022. Standing on a platform at Orlando International Airport, Wes Edens, the billionaire backer of Brightline, said the rail service’s shiny new trains traveling up to 125 mph will prove an attractive alternative to what he called the “miserable drive” between Central Florida and South Florida.

Edens, the head of Fortress Investment Group and owner of the NBA’s Milwaukee Bucks, already promises to replicate for-profit city-to-city train service throughout the U.S. He’s in talks to link Victorville, Calif., and Las Vegas. He also sees the potential for Virgin Trains connections between Houston and Dallas, Atlanta and Charlotte and other metro areas.

“Once you have proof of concept in one place, the second one and the third one and the fourth one come very quickly,” Edens told reporters and dignitaries Monday.

Since it launched in early 2018, Brightline has elicited strong opinions. Proponents paint the train service as a remedy to clogged highways and a spark for economic development. Opponents see a money-losing boondoggle that clogs traffic at railroad crossings.

Skeptics wonder if the service is financially viable. Through the first five months of 2019, Virgin Trains reports ridership of 401,226 and revenue of $9.4 million. In a document issued to bond investors in late 2017, Virgin Trains projected its 2019 ridership in South Florida would top 2.3 million, while revenue would eclipse $112 million.

“We started a little bit later than we thought, but actually it’s very much in line with what our projections were,” Edens said. “We’ve moved about a million people in the first year. …. We’re very, very happy with how it’s actually gone thus far.”

Edens counseled patience. The service needs time to achieve its projected passenger counts, he said.

“If you look at railway utilization around the world, not just the United States, it takes about three years for things to ramp up to commercial viability,” Edens said.

The train service always has stressed the importance of connecting to Orlando’s airport, which ranks as Florida’s busiest hub with 45 million passengers a year.

In addition to linking West Palm Beach to Orlando, Virgin Trains also is scouting for new stops in South Florida. For now, the trains stop at stations in downtown West Palm Beach, downtown Fort Lauderdale and downtown Miami. That means residents of cities such as Boca Raton and Aventura must drive north or south to catch the train.

“We are in advanced discussions to establish additional stations in our South Segment system between Miami and West Palm Beach that we expect will also increase ridership,” Virgin Trains said last week in an update to bond investors.

The company did not disclose details about where the new stations might be located, although the company has publicly acknowledged pursuing a stop at PortMiami.

Virgin Trains USA in January pulled the plug on an initial public offering of stock that would have raised nearly $500 million. However, the company in April consummated a bond offering that brought in $1.75 billion to pay for Virgin Trains’ expansion from West Palm Beach to Orlando. It’s marketing another bond issue that would raise nearly $1 billion.

The company already owns the railroad tracks from West Palm Beach to Cocoa, and the publicly funded train station at Orlando International Airport is steps away from a parking garage and a new terminal where 19 airline gates are under construction.

Florida taxpayers paid to build the station. In 2014, then-Gov. Rick Scott signed a budget that included $214 million for the Orlando station and an additional $10 million for crossing improvements. Scott called it “the right thing for the state.” Virgin Trains pays $4 million a year to rent the facility.

Its Orlando hub complete, Virgin Trains now must build track between Orlando and Cocoa, a route that will cross Interstate 95 and run next to State Road 528. After that leg is completed, Virgin Trains says, it plans to extend service to Walt Disney World and Tampa.

British billionaire Richard Branson, head of the Virgin Group of travel companies, in November announced a partnership with Brightline, a deal that included putting the Virgin name on the company’s trains. Virgin Group owns “less than 2 percent” of the U.S. rail company, according to regulatory filings made earlier this year. The company is changing names and color schemes, trading Brightline’s yellow logo for Virgin’s red theme.

During a visit to South Florida in April, Branson noted that a resident of Scotland one day will be able to ride a Virgin Train to the airport in London, board a Virgin plane to Florida and then take a Virgin Voyages cruise from PortMiami.

Edens, for his part, said he was inspired to launch passenger service after reading the book “Last Train to Paradise: Henry Flagler and the Spectacular Rise and Fall of the Railroad that Crossed an Ocean” by Les Standiford. Edens had bought the Florida East Coast rail line, and he thought it would make sense to add passenger service to what long had been a freight line.

“There’s not many times in life when you can stand up on a stage and imagine being Henry Flagler,” Edens said.

All Aboard Florida, which operates Brightline, is owned by an affiliate of Fortress Investment Group LLC, a global investment management firm. Fortress Investment Group LLC is contracted to manage and advise New Media Investments Inc., which owns GateHouse Media, the parent company of The Palm Beach Post.

Source: The Palm Beach Post