Surprise, surprise! It turns out you can’t count on private equity investors to single-handedly provide effective and accessibly priced mass transit for commuters. South Florida learned this the hard way recently. But the biggest shock might be that the episode could work out for the best, validating the merits of public-private cooperation on U.S. rail networks.

Back in 2018, Brightline train service seemed like the too-good-to-be-true answer to all the Sunshine State’s transportation woes. With the backing of Fortress Investment Group LLC, the company launched America’s first new privately owned intercity passenger rail service in a century, bringing modern and comfortable train service to a region known as a mass transit desert.

In its early phase, the train moved between Miami, Fort Lauderdale and West Palm Beach. Critics warned that profit motives would disincentivize public safety investments. Indeed, an Associated Press analysis found that Brightline had the highest rate of fatalities on its tracks among the nation’s railroads.

Yet the rail line became a popular way to get to museums and professional sporting events; take advantage of neighboring cities’ bars and restaurants; and, of course, get to work. In 2023, the rail route was extended around 200 miles north to Orlando.

While tickets were never cheap, Brightline was a great option for higher-earning workers who lived in the Broward and Palm Beach County suburbs to Miami’s north but had to commute to the financial district or downtown Miami. For $399, you could purchase a month’s worth of tickets on Brightline’s passenger cars with reliable internet and onboard food and beverage service.

But in June, Brightline in effect exited the commuter rail business by killing the $399 package. As a result, the cheapest West Palm Beach-to-Miami package is now $350 for 10 one-way rides, meaning it would cost $1,400 a month to commute each weekday. (For context, the 70-mile journey is comparable to the commute between Trenton, New Jersey, and New York City, which currently costs $552 per month on increasingly creaky NJ Transit.) In an interview with NBC affiliate WPTV, Palm Beach County Mayor Maria Sachs described Brightline’s new pricing as a “bait and switch” from a firm that has benefitted from government grants and tax-exempt financing.

Yet Brightline’s owners have never made a secret of the fact that they were building an intercity rail service, not a commuter railroad.

As the company itself characterized it in a 2018 IPO prospectus (for a deal that never materialized), intercity rail is “highly profitable,” while commuter rail is generally for governments who are willing to lose money in the service of the local population. In Florida, what appealed to Brightline’s investors were those longer-haul journeys from Miami to Orlando and, eventually, Tampa — trips that are “too long to drive, too short to fly,” in the company’s words. (It’s also building a project to connect Las Vegas to Southern California.)

During the construction phase of the Orlando line, Brightline used the shorter-run trips to help build brand familiarity. But less than a year after the Orlando service launched, Brightline returned to its core vision and, at least for now, cut the commuters loose. Officially, the company said it had become “increasingly difficult to accommodate all guests as peak trains are reaching capacity.” My interpretation: Low-margin passengers were crowding out higher-margin ones.

Happily, there was a positive twist to the story. For all the ballyhoo around Brightline, the oft-forgotten part of the South Florida transit story is that the area already had a commuter rail system — Tri-Rail — that runs north and south not far from the Brightline tracks. It lacks the Brightline hype apparatus; has 19 total stops; yet, incomprehensibly, for years dropped inbound Miami commuters about 8 miles from downtown, where they had to transfer to the Metrorail system or a bus.

It was always part of the plan to have Tri-Rail connect to Brightline’s MiamiCentral station downtown. Unfortunately, that plan took years to come to fruition, as platform construction issues set the project back. Earlier this year, Tri-Rail finally launched service into downtown Miami, and Brightline’s exit from the commuter business has served as a catalyst to expand service options further.

Case in point: A few months ago, Brightline President Patrick Goddard called the South Florida Regional Transportation Authority’s Executive Director David Dech, a veteran of CSX Corp. who recently took over the South Florida public transportation operator and has been making constructive improvements ever since. Goddard suggested that Tri-Rail start an express service into downtown Miami, Dech told me recently. Dech got the idea approved and is already launching a pilot express program on July 1 — a rather remarkable turnaround in a region where transit solutions have generally come at a glacial pace.

In its trial phase, Tri-Rail will run only one morning express train and another at the end of the workday, but, hey, it’s a start, and commuters can ride the new route at a monthly cost of just $110. After a year, Dech said he would look at data collected from the pilot program to assess any potential expansion.

That means, first of all, that South Florida commuters pining for affordable commuter rail should make a point of riding the pilot program train to demonstrate demand. If they fail to show up, they’ll have themselves to blame for the limited transit options in the area.

It also means that we should give Brightline some credit for lighting a fire under the public sector to make existing infrastructure work for the community. As Dech told me, “Brightline ignited something here, and there have been some very smart, very astute people who have taken advantage of that momentum.”

In effect, Brightline demonstrated the public’s interest in rail, and then handed the commuter market back to its rightful providers in government. Now, there’s talk of a coastal expansion of the public commuter rail along the Brightline track. While Floridians areskeptical, Dech says it “is going to happen.” In theory, all of those new transit options will eventually connect at Brightline’s downtown MiamiCentral station, creating a virtuous network effect.

A private equity firm was never going to single-handedly solve South Florida’s transit problems, and no one is calling them heroes. They’re in this to make money, and they have accepted plenty of help along the way. Local governments have funded their stations, and they’ve benefitted from billions of tax-exempt financing that the Florida Development Finance Corp. sold to the market on their behalf. But if private sector involvement can bring about meaningful public action, it could all be worth it. In that sense, the whole convoluted episode might just have some lessons for rail development elsewhere in the country.

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—With assistance from Elaine He.

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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Jonathan Levin is a columnist focused on U.S. markets and economics. Previously, he worked as a Bloomberg journalist in the U.S., Brazil and Mexico. He is a CFA charterholder.

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