TAMPA — Leave it to the arrival of a visionary investor like Sir Richard Branson to help flesh out the vision for Brightline's proposed Tampa-to-Orlando passenger train service.
On Friday, Miami-based Brightline announced that Branson's Virgin Group had taken a minority stake in the company, and that Brightline will change its name to Virgin Trains USA.
That day, Virgin Trains USA filed notice of a common stock offering with the U.S. Securities and Exchange Commission giving more detail for Brightline's proposed Tampa expansion.
The company hopes to launch rail service along the Interstate 4 corridor from Tampa to Orlando in 2021 and it expects ridership to take two years to ramp up.
Travel time between the two cities is projected to be an hour — Virgin's trains will have a top speed of 125 mph — compared with 90 minutes by car and 2 hours and 5 minutes for Amtrak's Silver Star. The trains feature leather seats, food and beverage service and free high-speed WiFi. Virgin projects it can hit these goals by capturing about 2 percent of the travel market between Miami and Tampa, considerably less than the 10 to 30 percent market share held by established rail service like Acela in the northeastern U.S. or Italo in Italy.
"We believe our passenger rail system offers travel that is faster, safer, more eco-friendly, more reliable, less expensive, more productive and more enjoyable than travel by car or air," Virgin said in the SEC filing. (Virgin is not Brightline's only well-known investor. This summer, a new financial disclosure form reported that Florida Gov. Rick Scott and his wife Ann had invested at least $3 million in a credit fund for Brightline's parent company.)
Creating the Tampa-to-Orlando service has an estimated cost of $1.7 billion. Virgin projects 2.9 million passengers a year as a result of expanding its system from Orlando west to Tampa, with an estimated average round-trip ticket price of $73 — more than $100 less than the average Acela fare of $174. That would generate nearly $212 million a year in ticket revenue. Virgin expects food and beverage sales, parking, naming rights, sponsorships and partnerships, merchandise, advertising and other fees to equal about 14 percent of total revenues, or about $12 per passenger.
Virgin anticipates a Tampa terminal somewhere in or near downtown Tampa with "adjacent real estate for commercial development." Brightline's business model combines using rail to connect cities with traffic and congestion, and developing real estate around its terminals to cater to businesses and residents drawn to the alternative that rail provides in a dense urban environment. In the Overtown area near downtown Miami, its terminal is at the heart of a 1.6 million-square-foot privately financed development that includes two office towers, two apartment towers, 130,000 square feet of stores and restaurants.
But in Tampa, Virgin said, "we have not yet acquired all real property interests necessary for the Tampa Expansion," adding that some "must be acquired from private parties."
Of the Tampa sites that Brightline is known to have scouted, the old Morgan Street jail site is owned by the state of Florida, Tampa Union Station is owned by the city of Tampa, the Tampa Park Apartments are owned by a nonprofit group headed by Florida Sentinel Bulletin newspaper publisher S. Kay Andrews and the GasWorx property, near the proposed Ybor City site of a new Tampa Bay Rays stadium, is owned by investor Darryl Shaw.
Virgin also said it expects to contract with "municipal and private parties to purchase, lease or otherwise obtain the right to use land for the construction and operation of the Tampa expansion."
First, however, the Florida Department of Transportation has to consider Brightline's proposal — the only bid received in response to a state request for proposals — to create and run the service. That decision is scheduled for Nov. 28.
Contact Richard Danielson at email@example.com or (813) 226-3403. Follow @Danielson_Times