Tranz Rail keeps finger in passenger pie

The company plans to sell the TranzScenic assets to a new holding company operated by Victoria-based West Coast Railways but will keep a financial stake.

"Tranz Rail sees the financial benefits of a long-distance passenger service, run by a specialist operators and will, therefore, retain a positive financial investment in the new holding company," says managing director Michael Beard.

"Tranz Rail will not play an active role in its management. This continued involvement will ensure effective co-ordination on issues such as track access."

Mr Beard says the company is in final negotiations with West Coast Railway over the deal, which is in line with the company's restructuring announced last October.

"West Coast Railways is a respected and successful rail operator, with plans to develop the business.

"Tranz Scenic will benefit from being run by a specialist operator which is committed to making the business a star performer."

Under the proposed sale process, Tranz Scenic assets - including 13 operating, mainline locomotives, 9 other locomotives, 76 carriages, 3 railcar sets, 16 power or observation vans, brands, selected station buildings around the country and carriage maintenance depots in Christchurch and Otahuhu - will be sold to a new holding company.

All staff currently employed by Tranz Scenic would be offered jobs by the new owner, however not all of Tranz Rail's passenger services have made the cut.

The services to be purchased are the Northerner and Overlander between Auckland and Wellington, the TranzCoastal service between Picton and Christchurch and the TranzAlpine, which runs over the Southern Alps between Christchurch and Greymouth.

West Coast Railway will also acquire a long distance commuter service between Wellington and Palmerston North.

The deal sounds the death-knell for a number of other services, which Michael Beard says will not be purchased by the consortium because of low and declining passenger numbers.

"Tranz Rail has tested the market thoroughly through this sale process and all potential bidders have indicated their view that a number of existing services are not viable."

Services targeted for cancellation include the Geyserland Express between Auckland and Rotorua, the Kaimai Express between Auckland and Tauranga, and the recently launched Waikato Connection between Auckland and Hamilton.

Mr Beard says the Southerner and Bay Express had also experienced similar declining patronage over the past five years, and are not presently viable.

There is some hope that West Coast Railways may offer other services in the affected areas, but Tranz Rail says it will cease running the operations if, at the time of settlement, the Australian company has not come up with viable alternatives.

The final details of the transaction are expected to be completed in two to three months.

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