Brian Dondanville Maxx Paez Kevin Ortenzio Sean Rademaker [email protected] [email protected] [email protected] [email protected] What is the plausibility of implemenng High‐Speed Railway (HSR) Structure of passenger railroad service: Drivers of Change: systems in the United States for intercity transportaon? 1. Commuter Railroads (28 services in U.S.) 1. Consumers – demand ridership uncertainty; other modes of transit 2. Intercity Passenger Rail (1 service – Amtrak) 2. Society – increasing populaons could lead to land scarcity; polluon While ridership demand and economic feasibility are the most significant concerns •HSR is an opportunity for the government and/or private equity 3. Government – loyal support of this mode of transit; economic and barriers to entry for HSR, our research shows that prime investment societal benefits firms to turn the notoriously unprofitable government‐subsidized opportunies lie within U.S. regions featuring both populaon and Constraints of Change: IPR service profitable. economic growth. 1. Government – lack of available state and government funding; budget •Promising entry point for HSR: Northeast Corridor, which connects deficit cies between DC and Boston 2. Private Equity Firms – disinterest in leasing; scaered cost esmates •Barriers to entry: demand uncertainty and economic feasibility. & uncertain demand Metrics: Expected Future (by 2025): 1. Populaon: More specifically, this measures the total number of residents living in agglomeraon 1. The Northeast Corridor, which is comprised of Boston, New Haven, New York City, Philadelphia, within each urban area. 2. Metropolitan GDP: Necessary because it is the primary measurement used to record economic Balmore, and Washington D.C. offers the most promising opon for HSR. value. 2. The Northeast corridor will derive the necessary cash flows in the future to make HSR an NPV posive project. Most Qualified Corridors for HSR: 3. It is likely that the primary U.S. HSR venture would require government funding. 1. Northeast Corridor 2. Chicago Hub Network 3. California Corridor Populaons by Corridor Total Annual Ridership Metropolitan GDPs by Corridor 45,000 18000 $4,500,000 40,000 16000 $4,000,000 Northeast Northeast 35,000 14000 $3,500,000 California Northeast California 30,000 12000 $3,000,000 Chicago Hub Chicago Hub 25,000 10000 California $2,500,000 20,000 South Central 8000 $2,000,000 South Central Florida Florida 15,000 6000 Chicago $1,500,000 10,000 Southeast 4000 Hub $1,000,000 Southeast Shinkansen 2000 Total GDP (in Millions) Shinkansen Populaon (in thousands) 5,000 $500,000 0 ‐ $0 1990 1995 2000 2005 2010 2015 2020 2025 Total Passengers (in Thousands) 2001 2005 2009 2013 2017 2021 2025 2006 2008 2010 2012 2016 2018 2020 2022 2014 2024 Year Year 1. Stay‐caon – Low Demand, Public Enty Uncertaines: Needy Travelers – High Demand, Public Enty 3. Needy Travelers – High Demand, Public Enty •Government will not take steps toward privazing the public enty of 1. Ridership Demand (Changes in Resident and Business traveler Rering Boomers are looking for more comfortable and efficient modes •Rering Boomers look for more comfortable and efficient modes of travel preferences) railroads. •Businessmen and women benefit from HSR • of travel 2. Private versus Public Ownership of Rail Sector (Government Large investment in HSR technology is out of the queson •Federal investment in HSR innovaon well received by U.S. cizens versus Business) 2. Wait and See – Low Demand, Privately Held Businessmen and women benefit from HSR Federal investment in HSR innovaon would be well received by the 4. Where is the Funding – High Demand, Privately Held • Unlikely that profits would be experienced in the short‐term cizens of the United States. •Privazing the rail industry would likely pave the way for a high‐speed rail Preferred Future: •Current low demand could translate to high ridership demand in the future High demand for business and residenal travelers and Where is the Funding – High Demand, Privately Heldoverhaul that could turn a notoriously unprofitable industry profitable. once HSR is implemented and consumers are sasfied with their HSR business ownership Privazing the rail industry, in whole or in its majority, would likely pave experience. the way for a high speed rail overhaul that could turn a notoriously unprofitable industry profitable. 1. While the ridership growth trends per city are large determinants of HSR performance, it is the urban agglomeraons and GDP per capita that are most appealing to businesses 2. Where are services needed? Where are consumer demands high? •Miami: growing; may be too late for innovaon that will yield rapid future growth •Detroit: not growing, opportunity for rapid growth in future .