Las Vegas High Speed Rail Project Shows Private Sector Can Get Job Done on High Speed Rail

As California’s bullet train continues to get hung up by cost projections gone wild, construction delays, postponed opening dates, and legal troubles, a high-speed rail line between Los Angeles and Las Vegas could be carrying passengers just four years from now. The difference? One is a government project, the other a private enterprise.

In all fairness, the California high-speed rail was supposed to be a public-private partnership. But private investors have not been interested in risking their dollars on the iffy project.

The proposed Las Vegas line looks much more promising. Florida-based Brightline says it is buying the dormant 185-mile project first conceived more than a dozen years ago. Initially called XpressWest, the railway was projected to cost $7 billion. Business Insider has reported that the company spokesman said “officials believe they can cut that in half,” and eventually generate $1 billion a year in revenue by 2035, serving 11 million passengers a year.

That’s far different than the California bullet train. Its costs have soared from the $33 billion price tag voters approved 10 years ago to as high as $117 billion before settling — for now — at $77.3 billion.

At that figure, the California high speed rail, which is more likely to lose money than make a profit, should have more 22 times as much track as the Las Vegas line. Even if spending were limited to the original projection, Gov. Jerry Brown’s bullet train should still have 10 times the track of the Vegas rail. Yet it will have only a little more than four times the reach.

While the government project was earning its “the train to nowhere” label, Brightline was, please excuse the pun, establishing a solid track record. It is the only privately owned, managed, and maintained intercity passenger rail line in the country, and was the first passenger startup since the 1970s. Brightline began operations between Miami and Fort Lauderdale in January, and the service was an immediate hit. Trains carried three times more passengers in the early weeks than they were expected to. There are plans to extend the line north to Orlando by 2021.

The private company has performed so well that Wes Edens, co-founder and co-chief executive of Fortress Investment Group, a $41 billion global hedge fund which lists Brightline in its portfolio, says the company “is changing transportation in our country by connecting heavily trafficked corridors that are too long to drive and too short to fly.”

“Our experience in Florida,” said Edens, “is proving that private-sector investment has a meaningful role to play in developing transportation infrastructure.”

In the meantime, California’s bullet train languishes. It isn’t likely to carry its first passenger until 2033 or 2034, more than a decade after the Las Vegas line is projected to begin shuttling passengers. And that might be overly optimistic given its murky future and the rising calls for the state to abandon the project before it loses even more money.

The Las Vegas line is still a few years away and there are no guarantees it will succeed. But if it does no more than highlight the vast differences between private-sector business ventures and government’s poor imitation of entrepreneurship, it will have been a success.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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