KiwiRail to shutter Coastal Pacific service during winter months to stem losses

Tuesday 2nd April 2013

KiwiRail, the state-owned railway, will close its Coastal Pacific train service between Picton and Christchurch for the winter months to stem losses running at $3 million a year.

The tourist train needs to sell 130 seats to breakeven though last winter some services carried just 30, said Deborah Hume, general manager, passenger, in a statement.

The losses reflect "a significant drop in the tourism and domestic travel market to and from Christchurch after the earthquake," she said. "These losses are highest through winter."

The decline in patronage is more pronounced than for the TranzAlpine service, which links Christchurch with the West Coast and takes tourists through the Southern Alps. The railway has tried to arrest the decline with packages such as Whale Watch and wine tasting and had hiked fares by about 20 percent.

The government took a $1.4 billion impairment charge on the rail network last year after revaluing the assets and splitting the underlying land from the rolling stock. While operating earnings at KiwiRail rose in the first half, driven by the freight business, it took a charge of $189.9 million, relating to the restructuring of the company, resulting in a net loss of $75.9 million.

The railway is exiting unprofitable businesses including its Hillside workshops in Dunedin, and wants to scrap the Napier to Gisborne line, which has suffered expensive storm damage.

(BusinessDesk)

BusinessDesk.co.nz

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