The Benefits

The Organization

High Speed Rail: Making the Infrastructure Investment

Leveraging Capital Outlays and Increasing Returns

Making the infrastructure investment is one of the biggest challenges for high speed rail. High speed rail infrastructure costs are truly significant--particularly as speeds increase. They include right of way acquisition, bridge and tunnel construction for grade separation, preparation and construction of the rail bed, electronic safety systems, train stations, and so forth. All these require massive amounts of capital to get high speed trains running. Moreover, the capital requirements grow exponentially as train speeds increase, particularly as speeds increase beyond 110 MPH. As speed increases, grade engineering and safety costs begin to skyrocket.

The graph below, from an Environmental Law and Policy Center article, depicts the relationship between ridership growth and costs for the Chicago-St. Louis route at different speeds. Ridership does increase as speeds increase, but costs rise dramatically at speeds over 150 MPH.

What if airlines became players in the high speed rail program?

High speed rail competes primarily with automobile usage and with short distance air travel. What if a business model were developed that provided added profitable service opportunities for airline industry participation in high speed rail?

Consider what might be possible. The original Transportation Economics & Management Systems, Inc (TEMS) study in November 2006 pointed out that reduced traffic congestion in and around airports would create significant benefits for airlines by improving airport efficiencies and reducing travel delay costs.

Since the time of that study, airline fuel costs have risen substantially. It appears harder now for airlines to operate short distance flights profitably. Although the data showing route profit (or loss) per passenger mile by trip distance is hard to come by, the fact that airlines continue to announce service reductions or eliminations of shorter flights clearly suggests that the flights of 300 miles or less are not profitable.

But what if airlines could find a way to move those unprofitable airborne flights (and their customers) to the rails?

What new "connector flight" revenue opportunities might that hold for airlines and what might that look like? Here are several strategic items to consider:

Advocates for high speed rail face an uphill battle to expand high speed passenger service. As long as HSR appears to expose public sector sponsors to weak infrastructure utilization rates or to be dependent on significant public operational subsidies, high speed rail is likely to gain inadequate support in this country. For that reason, a strategy to involve commercial airlines could hold significant promise.

If a cost effective business plan were developed to migrate commuter airline passengers to air-carrier-operated "train-planes," then everyone could be a winner. This is especially true if the plan could attract more passengers for the urban core to urban core travel segment. The airlines and Amtrak would both generate more revenue, and significant numbers of travelers would have shifted from auto travel to "train-plane" travel--with all the attendant benefits to individuals and to society that this alternative would offer. Finally, the returns on the initial capital outlays would have been greatly leveraged.