How private startup Brightline revolutionized passenger rail in Florida

With passenger rail in the United States being operated almost exclusively by Amtrak and state-owned agencies, it’s easy to wonder if it’s even possible for private companies to be involved in the industry. Brightline’s success in building revolutionary higher-speed rail in Florida proves that the answer is a resounding, “yes”.

Brightline was originally announced as All Aboard Florida in 2012 as a project under Florida East Coast Industries. Using 200 miles of railroad already owned by the company, plus building an additional 40 miles of new track, All Aboard Florida would connect Orlando with South Florida via high-speed trains. At the time, the railroad hadn’t hosted regular passenger traffic since 1968. The speed and frequency of service proposed by All Aboard Florida meant that extensive track and signal upgrades would be required.

For nearly four years, the company upgraded its railroad along the Atlantic coast and built new stations to prepare for All Aboard Florida, now rebranded as Brightline. Brightline launched with much fanfare in 2018 with revenue service between Miami and West Palm Beach. Brightline was officially (and still is, at the time of writing this) the only privately owned and operated intercity passenger railroad in the United States. The new service was celebrated by passengers, who praised the trains’ comfort, speed, and convenience. Brightline’s sleek, modern trains feature spacious seating, onboard Wi-Fi, and food and beverage service, setting a new standard for rail travel in the United States.

But Brightline didn’t stop developing at West Palm Beach. Pursuing its ultimate vision to connect Miami with Orlando, Florida’s biggest tourist destination, it continued building its railroad. To reach Orlando, Brightline had to construct brand new tracks on a strip of land along highway SR 528. However, unlike the existing coastal tracks, the Cocoa to Orlando section was built to modern higher-speed specifications. Trains running on this segment are capable of reaching speeds up to 125 MPH, making Brightline one of the fastest trains in the United States. The long-awaited extension to Orlando was completed in 2023 and significantly expanded Brightline’s reach. With a station integrated into Orlando International Airport, the service now caters to both domestic and international travelers.

Brightline served over two million passengers in 2023, and is on track to serve even more in 2024, according to our analysis of the company’s monthly revenue and ridership reports.

Financing

Brightline wouldn’t have been possible with just a bold vision and great project management alone — the company’s financing strategy was just as critical. To complete the $6 billion project, Brightline developed an innovative combination of private investment and public support, creating a model of public-private partnership that could be replicated for future infrastructure projects.

Fortress Investment Group, which owned Florida East Coast Industries while developing Brightline, was the primary financial backer. The firm brought deep expertise in managing large-scale infrastructure projects and leveraged its capital to kickstart development.

However, the bulk of Brightline’s funding was raised through private activity bonds (PABs). PABs are tax-exempt bonds that allow private entities to fund public infrastructure projects. This unconventional instrument enabled Brightline to secure billions of dollars in financing at competitive interest rates. The bonds were highly attractive to institutional investors, leading Brightline to become one of the bond market’s largest speculative-grade project finance deals and one of its most active secondary market names.

Having proven its business model and reaching its operating goals, Brightline was able to restructure its debt earlier this year. The deal restructured a total of $4.5 billion of tax-exempt and taxable debt, and won the Innovative Financing Award for 2024. Brightline’s bonds issued in the restructuring also achieved an investment-grade rating.

Development Approach

Aside from innovative project financing, Fortress Investment Group also focused on de-risking the project to attract investors and garnering public support.

De-risking involved securing strategic partnerships with experienced railroad construction contractors, minimizing construction risks through phased implementation, and designing a business model that promised sustainable returns. The combination of these efforts projected confidence in the viability of privately-operated intercity trains.

Getting buy-in from the general public and local politicians was critical for Brightline. Not only did its use of tax-exempt PABs require government approval, it needed to secure land-use agreements for the easement along the state-owned highway.

Public officials ultimately supported Brightline due to its potential to deliver significant benefits for the state. The rail service nicely aligned with broader public policy goals related to economic development and job creation. The project touted that it would create an average of over 10,000 construction jobs per year and sustain more than 2,000 jobs every year after, estimated adding $6.4 billion to Florida’s economy over eight years, and projected removing 3 million cars from the road annually.

Brightline also developed a multi-faceted revenue model that goes beyond just ticket sales. It developed a number of transit-oriented real estate projects around its station, such as MiamiCentral, that allowed the company to generate additional income from commercial and residential leases. These mixed-use developments not only provide steady revenue streams but also integrate seamlessly with the rail network, enhancing its appeal to passengers.

Brightline’s strategic use of branding and partnerships also contributed to its business model. The company has collaborated with local businesses and national brands to offer curated experiences and services. Brightline has built major partnerships with sports teams, universities, and special events that have led to lucrative transportation and advertising deals.

Impact and Future

Brightline has been able to innovate in the passenger rail space by developing an attractive service that aligns with people’s desire for more comfortable and convenient travel. But their impact extends beyond just transportation. The project has spurred economic development in the regions it serves, attracting investment and revitalizing urban areas. MiamiCentral, for example, has become a vibrant hub of activity, drawing businesses and residents to the city’s downtown core.

Looking ahead, Brightline has ambitious plans for expansion. The company is actively working on extending its Florida line from Orlando to Tampa. A separate project, Brightline West, will connect Las Vegas, Nevada to Rancho Cucamonga, California. Brightline West has already broken ground and is expected to be completed by 2028, making it the first true high-speed railroad in North America with speeds up to 200 MPH. Like Brightline Florida, Brightline West will be privately owned and operated, and they’re using a combination of private and public financing to complete the project.

Brightline has proven that successful models exist for private investment in passenger rail services. At Lunatrain, we’re taking the lessons learned from Brightline and applying them as we launch innovative night trains in the United States. We’re actively designing innovative interior cabins that meet the needs of today’s travelers at competitive prices. We look forward to sharing more details about this over the coming weeks. To be the first to hear about our progress, sign up for our waitlist and Insights newsletter below.