Agenda:
Faster Headlines
California HSR, Chapter 4
Transport as a Platform
Faster Headlines
Progressive Railroading
Fresno Bee
Aviation 24
Inverse
Business Traveller
CNBC
CNN/Youtube
The Coloradan
California High Speed Rail: Chapter 4
(Part 1)
For the last few weeks the group has been reviewing the newly revised California High Speed Rail Business plan.
Chapter 4 is a huge chapter that discusses the network, mostly focusing on the future and what the system is going to look like.
This weeks discussion is going to focus on the system plans. Next week will be about the stations.
Highlights of Chapter 4 include:
Sufficient funding for the whole system has never been provided (this is no surprise)
Goal is to initiate high speed rail service as soon as possible, (duh)
Make concurrent investments that will be linked over time, including economic and environmental benefits
Be prepared to construct additional segments as funding becomes available.
This design is very similar to the design for Spain, which is the largest high speed rail network in Europe. To learn more about this, we recommend this Youtube Video: The Greatest High Speed Network in Europe
The big flaws in this chapter:
Simple - The high speed rail line doesn't go to Merced or Bakersfield!
The northern end of the line will be in the middle of a field on the northern side of Madera (Population 65,000), 34 miles south of Merced (population 83,000).
It won't go to Bakersfield (population 347,000), but rather it will go to a vacant orchard on the outskirts
People going from Merced to Fresno will just get in their car and drive, since there is little time savings to driving from downtown Merced out to the rail station, then taking the train to Fresno.
Once San Jose, SF, and LA are connected, this problem will flip to a HUGE advantage, but that is over a decade a way
More details on the design can be seen below in Exhibit 4.0
The consultants are claiming that their goal is to unlock the socioeconomic benefits with this interim study, but they are not going to achieve this! It is going to be a huge blunder as the trains will go empty until San Jose, San Francisco, and LA are linked!
Then there is the Interim Service Operator:
First, this idea is from KPMG, the financials consultants to the project. This explains the horrible operational plan for the potential private investor.
This Interim Service Operator is to fund the trains, signalling, track and cantarry.
Will not receive any subsidy from the state
In fact the state quotes a savings of $40 million per year from this arrangement
The interim service provider would then "transition" to an authority operated service (Meaning a government high speed rail service) when the whole system is built.
The Authority will structure the agreement with the third-party entity as a lease of real property and equipment and will have neither control over the lessee's high-speed operations nor financial responsibility for operating and maintenance costs or any losses (meaning good luck to the company who tries to run this, they are on the hook for everything)
While I am sure California will get some bidders; this is a completed wrong design if they want to be successful in the short term! What are they thinking? They are putting all of the risk on private industry for a system that is not likely to have many riders. But then California comes in uses a government organization to take over everything? This is doomed to fail!
Think of it like this. They are building an airport. They want an airline to come in and service that airport with service to other smaller cities with minimal passenger demand. Service to the major cities that can fill airplanes, well no. Those routes are reserved for the government agency to run....
Next week, we will look into the design of the stations all along the route, from the Salesforce Transit Center in San Francisco down to Palmdale and onto Los Angeles. Palmdale specifically, is an opportunity worthy of a real estate opportunity discussion!
From the Captain
What Transportation Planners Can Learn from Facebook
When trying to build high speed rail, the inevitable response I get is “I wish we had one near my home”.
That is great, but when they live in a town of 5,000 in rural Wisconsin....that is not going to happen. However, that is not the end of the story.
It wasn’t long ago, that in this rural city they was totally isolated. As recent as 1990, this town had 1 radio station and on clear days you could pick up television stations from the closest city 60 miles away. This town was isolated!
However, fast forward 40 years. Now this same house has satellite tv and just received broadband (5G is on its way). So they are connected with the media, on Facebook, and it is possible to now work at a city job from home and be remotely connected. This world has changed.
Why does this matter? Well, Facebook, Youtube, TikTok, Twitter; they all depends on everyone being connected. They are what is called “Platforms” meaning they function as connecting points between different people. Typically a consumer and a producer, which could be anything from a book seller and a book buyer (think old school Amazon) to driver with a car and someone needing to go somewhere. The more people connected, the more successful the business.
Transportation networks are very similar. When you look at American, Delta, Southwest, and United Airlines; they are not renowned for their customer service. No, what they are know for is their network. From Green Bay to Guangzhou, from Madison to Mombasa...United Airlines will sell you a ticket there. The airlines have realized the more destinations served, the most passengers will use them. United Airlines is a platform, but with people rather than data.
However, then we have Amtrak. If you have ever tried to take Amtrak to an airport, you are likely out of luck (excluding Milwaukee’s Mitchell Field, but it still requires a 15 minutes mini bus ride to the terminal). Amtrak has very few connections to other modes, which is kind of like having dail-up as your network connection.
Going back to United Airlines, they look at themselves as a platform business. How do you say? Well, look no farther than United's commitment to buy electric airplanes. Or United's new relationship with a new Landline bus to Breckenridge and Fort Collins, CO. Those buses act are treated the same as a flight. Also, don't forget that United was the one who established the global alliances with Star Alliance back in 1997 and has even partnered in the past with Amtrak (United and Amtrak cut ties; end mileage earning and lounge access), but that Amtrak relationship just ended this year.
Meanwhile we have the California project that won’t even go into San Fran or LA till later stages, but even then won't go to the airports. Your out of luck with the Texas Rail Project. Brightline is the only bright spot. Miami Central Station is a short ride to the airport, and in Orlando will be the first rail station WITHIN the airport. So some get it.
So as we mull over ridership projections for high speed rail and hyper loops, got look beyond getting the passenger between two stations. Gotta take a lesson from Facebook and United and look at high speed rail as a platform business.