South Florida riders are returning to Brightline, but they're paying less for their tickets.
The private passenger train service that runs between Miami and Orlando has been racing to raise revenue as it struggles to make its debt payments.
Ridership between stations in South Florida jumped 25% in January compared to a year ago. Coupled with a lower average fare, the boost in the number of passengers helped Brightline realize an increase in revenue from its short-haul business to begin the year.
The data is included in its monthly ridership and revenue report filed for its lenders.
READ MORE: Brightline's business races against time and money as an analyst warns of defaul
Brightline introduced a new pricing strategy in September for its South Florida service. It charges higher fares for morning and afternoon trains, as well as special event trains such as those on nights the Miami Heat play home basketball games. The company has been rebuilding its commuter service after angering many by doing away with its popular discounted commuter passes a year and a half ago. About 35,000 rides per month had used the commuter pass. About 22,000 rides utilized the replacement commuter pass program last month.
"We believe the commuter business will reach its previous levels over the next several months," Brightline wrote in its monthly update.
The short-haul service has been a drag on growth for Brightline while its service between South Florida and Orlando has experienced double digit revenue growth. Ticket revenue for that long distance service was up 17% in January even though ridership dipped slightly by 2%. The difference was higher fares, topping an average of $80 for the trip, an increase of 20% from a year earlier.
The changes in average fares and ridership indicate how price sensitive passengers are, especially those riding between stations in South Floridas, as Brightline hopes to provide an alternative to car travel.
Passengers are spending more money while on the trains, especially on luggage. "Baggage fees continue to be the fastest growing revenue stream," reported Brightline. It raised baggage fees leading to a 91% increase in that revenue.
More passengers book travel with Brightline directly and the company is targeting third party sellers such as travel agents, airlines and cruise lines to boost sales. It told its lenders it signed a contract with a large global reservation network, which it expects to be up and running before the end of March.
"It will also, importantly, provide us with connectivity to corporate travel management companies, which would be a new channel for Brightline," the firm said.
Growing revenue faster than it has been is key for Brightline to generate the cash to make payments on its IOUs and address growing concerns by credit rating agencies about its shaky finances. Two credit rating agencies downgraded their outlooks for the company late last year. KBRA added its souring outlook earlier this month when it cut Brightline Florida's credit rating further into junk bond territory. The downgrades cite disappointing financial results from Brightline compared to expectations and the necessity of Brightline to spend down its reserves.
"This operating underperformance has led to continued draws on the project's liquidity reserves, further weakening its financial position and increasing the risk of default as early as January 2027," wrote KBRA in its analysis.
For months, Brightline has been telling its lenders it is working to sell a big chunk of its business and use that money to repay some of its debt. It also has been in talks to raise more debt "expected to be used to provide liquidity for the company's ongoing operating requirements."
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