Some contemplation about the prospects for success of this unique project.
Ross Capon, president of the National Association for Railroad Passengers, a national Washington D.C.-based non-profit promoting the development of rail, supports Texas Central Railways’ proposal but says it could be difficult to pull off. Mass transit systems, he points out, have always relied on public funds.
“If they can do it, more power to them,” Capon says. “That is a very steep hill to climb because infrastructure is almost always publicly owned and is the result of public investment.”
All other forms of transportation receive some kind of government subsidies. Even major airlines would be unprofitable if not for public financing of airports. Amtrak relies heavily on federal funding to just stay afloat, and the government builds and maintains roads for buses.
It’s often cheaper to build with subsidies. A private company would not only have to swallow the full costs of building the railway but expect to turn enough revenue to be profitable.
Andy Kunz, president of the U.S. High Speed Rail Association, says high-speed rail is different from other types of transit like planes and conventional trains in that it is potentially profitable, but it also comes with huge capital costs.
“It takes some deep pockets to get them off the ground,” says Kunz. “And that’s why you usually need government because government is better set up to lay out that kind of money up front.”
[…]
Tarrant County Commissioner Gary Fickes says Japan Central Railways—the Japanese high-speed rail company that Texas Central Railways has partnered with—doesn’t want the strings that may come attached to federal funds. Such requirements include the possibility of having to unionize all construction workers and buy all American-made materials. He says these requirements could mean higher building costs and could translate into even higher fares.
But the for-profit approach could also translate into high fares. The company will need to start turning a profit on the project fast. [Tom Schieffer, former U.S. ambassador to Japan and the senior advisor to the project] refuses to pinpoint a fare but says it would be “somewhat less” than a plane ticket between North Texas and Houston.
See here for previous Texas Central Railway blogging. As I’ve noted before, the TCR folks recognize that their project is unusually well-suited for the approach they’re taking. Future extensions to this line, or connections to it, may not follow the same path. As far as pricing goes, I took a quick check on United’s website for roundtrip fares between Houston and Dallas. The ones I looked at ranged from $149 to $330, with most around $250; these were all advance fares, ones for same day departures began at about $450 roundtrip. These don’t include any baggage fees, so the actual total will be a bit higher. This suggests to me that the sweet spot for competitiveness will be in the $100-$125 range for one way. They can probably go a little higher than that and compete on other aspects of the service – leg room! free WiFi! no TSA lines! better food and drink choices! – but I’d guess that $150 for one way is about as high as they can go. I’m hardly an expert on this and I have no inside knowledge, so take my wild guess with a heaping tablespoon of salt. But we’ll see how accurate I am when they get closer to being in business.