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Texas Central vs. California: Imported vs. homegrown

Passenger rail in the United States has fallen a long way since it was the dominant mode of long-distance transportation. In a world of competition among cars, planes and trains, the point-to-point functionality of automobiles and the speed of planes means that most trains with existing technologies cannot compete.

U.S. passenger trains (with the exception of tourist services) do not run without federal or state operating and capital assistance. Yet in other countries, unsubsidized rail travel between cities continues to flourish. And as transportation technology moves forward, analysts studying these models are starting to understand the preconditions for building passenger railways that add to, rather than drain, resources from other government services.

California’s failing high-speed rail project is a study in how not to build a passenger railroad. The problems began with the project’s conception. Rather than focusing on the most important city pair—San Francisco and Los Angeles—public managers designed the system as a statewide network that would benefit the mid-size cities of the Central Valley in addition to the Bay Area and Southern California. It was a network, not a corridor, and building its multi-branched system added layers of complication to what could have been a simple project.

The fact that the project was state-run and therefore funded by state taxpayers compounded these complications. Representatives of the communities through which the rails were supposed to run made clear that even the simplest route would never pass political muster. Worse, billions in federal funds added a layer of political input for the project that complicated it further, at the cost of making the core San Francisco-Los Angeles trip longer than it needed to be.

Beyond flawed routing decisions, political railway management comes with other costs. Federal grant timelines and poor internal management, for instance, meant that California was pushed to lay track before it selected its trains. The track was built to handle some of the heaviest equipment in the world in order to maximize the number of options the state would have when it later bought locomotives and cars to begin service. This overbuilding cost money, making the project less viable than it would have been if those planning the project had picked the rail technology from the outset.

State-run projects built around the assumption of taxpayer subsidies, like the California HSR network, also tend to miss details that matter to trip times—think parking lots that require long shuttle rides to the airport or large train stations that require long walks to the platforms. Long connecting rides and walks push riders to other modes of transportation, which benefits services that lose money on every trip but can destroy the viability of transportation services that hope to earn a return for investors. In contrast, the market disciplines airport and station design in ways that public managers with competing political priorities cannot even hope to emulate.

Texas Central has taken the opposite approach in building its high-speed rail. The company began the project by selecting the equipment technology—namely Japan Railways’ Shinkansen trains, which are used by the longest-running profitable passenger railroads in the world—before laying any track. Picking well-tested technology of successful peers from the outset means that Texas Central will avoid having to reinvent the wheel midway through the project. It also chose a city pair to serve—Dallas and Houston—without committing to building a statewide network that would require hundreds of miles of extra track.

Focusing on a single-corridor train line between two world-class cities, rather than a network of lines connecting large and mid-sized cities, simplifies the business model. And like Florida’s Brightline, Texas Central plans to prioritize quick station access, nearby parking and space for rideshare drop-off and pickup. The company’s consideration of the full, door-to-door customer experience gives investors a complete picture of the business case for a new railroad in a way California politicians can only dream of.

This strategy echoes that of many of the world’s most successful rail companies, whose core business focuses on connecting major cities that are too far from one another for driving to be convenient and too close to one another to make the fixed-cost hassle of the airport worthwhile. The London-Paris, Madrid-Barcelona and Berlin-Hamburg corridors all fit the bill.

By importing the successful model from other countries, the Texas Central may have found a path to constructing and operating a profitable passenger railroad in America.

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