Funding High-Speed Transportation in America with Public-Private Partnerships

The cost for this new system has ballooned from $10 billion to $40 billion and future funding for this project is not assured.

Higher-speed rail: HrSR is important as a feeder to HSR. At 70 mph, HrSR which still requires subsidization, would require less of a subsidy since it is far more competitive with both automobiles and buses. Many of these HrSR lines, also called emerging HSR, can become true HSR service in the future, as demand, conditions and financing warrant.

P3 Benefits

The HSPT fund is the key. With this fund, the government and private sector can work together in P3s. The additional revenue streams from the commercial and residential TOD construction, along with the anticipated rail fares, will result in HSR operators turning a profit, covering not only operating and maintenance costs, but also capital costs. The added benefit is that the HSPT Fund is a user fee and will not require allocations from strained general federal tax revenues.

Neither the federal government nor private industry has the wherewithal to construct HSR alone. The total cost of development along the 11 key FRA corridors will be in the vicinity of $500 billion to three quarters of a trillion dollars, or $25 to $30 billion a year for 25-plus years.

The benefits accruing from the HSPT Fund are numerous. The country benefits because there is now another time-competitive, cost-effective way to transport the additional 100 million Americans that are projected to be here by 2050.

The airlines benefit because they will have a new ATC system that will make their operations far more efficient. Take-offs and landings will be more predictable and planes will not waste expensive jet fuel as they circle airports or queue on taxiways. Aircraft utilization will increase and the return on these expensive assets will be improved as the planes spend more time in the air on revenue service. Another benefit to the airlines is that this proposal will reimburse them for the cost of retrofitting their planes with the NextGen ATC hardware, a price tag estimated in the $20 billion range.

For convenience sake, many Americans will choose to travel by rail between key city pairs 200 to 600 miles apart, and airlines will be able to concentrate on more profitable, longer-haul flights.

Americans benefit because they will have a viable, cost-effective, time-competitive alternative to airline travel. Say goodbye to long lines at airport security checkpoints and intrusive, annoying TSA searches. Even travelers who cannot use HSR benefit because a viable HSR system translates into less congestion at airports, and better on-time performance when they have to fly.

HSR Deployment

Another part of this proposal would impact the politics of HSR funding. Instead of the 11 HSR corridors proposed by the FRA, keep it simple.

Picture four mega-corridors Eastern: Portland, Maine to Miami, Fla.; Central: Minneapolis, Minn., to Chicago, Ill., to Houston, Texas; Western: Vancouver, B.C. to San Diego, Calif.; Mid-American: Washington, D.C. to Chicago, Ill. These 1,000- to 2,000-mile corridors will have multiple 200- to 600-mile corridor segments between key city pairs where HSR will be more than competitive with air travel.

But, by having the long corridors, it will be feasible to take political advantage of the additional senators, congressmen and governors that will represent states included in an HSR corridor. This is a strategy that Amtrak has used successfully for more than 40 years, and by having competition amongst the various states, the execution of the P3 can be even further expedited by more aggressive states pushing to complete their sections earlier. And by keeping key Amtrak routes in the picture as HSR feeders, that vocal political constituency’s concerns are addressed.

Issues and Concerns

Will there be complaints from the airline industry and perhaps from some members of congress for the user fee on the plane tickets? Yes. But consider this. One of the action items from the Simpson-Bowles deficit reduction committee, now being reconsidered by the senate, is a 3 percent fee on airline tickets. Not one cent of this fee would go toward transportation; all proceeds would be earmarked for deficit reduction.