SLOWLY but surely the private sector’s involvement in passenger rail is expanding on both sides of the Atlantic. In Europe, the initial spur was the railway privatisation in Britain and the letting of concessions in countries such as Germany, the Netherlands, Denmark and Sweden. This was followed by the largely successful launch of private open-access operators in Britain, Sweden, the Czech Republic, Austria, Italy and Germany, with several more private operators keen to take the plunge provided the conditions are right.
This success has been achieved despite the unwillingness of some national governments and the European Union to create a level playing field. In Sweden MTR has so far failed in its attempt to get its trains onto incumbent SJ’s booking portal, which is the go-to site for most Swedes buying train tickets. In June, start-up Saga Rail withdrew the service it launched in February for the same reason.
Neighbouring Norway, on the other hand, realises the importance of creating a level playing field as it starts to let its first concessions, even though open access is unlikely in the small Norwegian market. Government-owned Entur manages internet ticket sales and in October took over the sale of tickets at stations from incumbent operator Norwegian State Railways.
EU legislation governing rail passenger rights was amended last month by the European Parliament increasing compensation when trains are delayed even when a trip involves several trains. However, the EU continues to ignore calls for mandatory missed connection protection involving services run by different operators, which sometimes results in passengers having to buy a new ticket when they miss a connection through no fault of their own.
A similar pattern of private development is emerging in the United States, where the operation of commuter rail networks by private companies is already commonplace. Brightline’s Miami - West Palm Beach inter-city service, which launched earlier this year, is the first privately-funded passenger rail service in the US for many decades. Brightline was already committed to extending the service to Orlando and has now agreed to construct an extension to Tampa. It is also taking over the Xpress West high-speed project to link Las Vegas with Victorville north of Los Angeles.
Brightline’s rapid and ambitious expansion plans have already attracted the interest of Sir Richard Branson and his Virgin Group, which has been looking for passenger rail investment opportunities in the US for several years. Brightline will now be rebranded Virgin Trains USA and Virgin will take a small stake in the company.
The deal also brings together two successful entrepreneurs - Branson and Mr Wes Edens, co-founder and co-chief executive of Fortress Investment Group, parent of Brightline - which should give a real impetus to the ventures.
Even more audacious is Texas Central Railway’s plan to build a 390km high-speed line from Dallas to Houston entirely with private finance. The lack of any major physical obstacles along the route should reduce the risk of construction delays, while the marriage of Japanese technology with Spanish operating know-how should boost investor confidence.
Nevertheless, Texas Central faces the daunting task of raising up to $US 16bn to build the railway and convince investors that it can produce a return. Texas Central also must entice enough Texans out of their cars and onto its trains.
However, Texas Central is quite bullish about its prospects and says the world has changed since the failure of the Texas TGV project in 1994. It also recognises the importance of providing good last-mile connections for passengers to make the overall trip as seamless as possible.
Further south, recent elections in Mexico and Brazil have given impetus to two passenger rail projects: the Maya Train PPP scheme to develop a 1500km railway to serve the booming tourist industry on Mexico’s Yucatan Peninsula, and the introduction of the first modern inter-city services in the populous and wealthy Brazilian state of São Paulo. Both countries shut down virtually all their long-distance passenger operations when the railways were privatised in the 1990s, so this will be a major change of direction if the projects come to fruition.
Implementation of the Maya Train project was a core campaign promise by Mexico’s president-elect, Mr Andres Manuel Lopez Obrador, who takes office on December 1. He plans to hold a symbolic ground-breaking ceremony on December 16, which could herald the start of rebuilding an existing line, although studies are still underway for the new-line sections. Nevertheless, at least one Mexican tourism company has expressed interest in the project.
Railway development is also one of the priorities of the newly-elected governor of São Paulo state, Mr João Doria. The inter-city scheme will be implemented as a PPP, although the government has struggled in the past to raise its share of funding for PPPs.
European private open-access operators have already overturned the once widely-held belief that passenger rail cannot make money. Let’s hope that the trailblazers in the United States, and eventually Mexico and Brazil, prove their doubters wrong.
