The future of Dunedin railway services - including the Taieri Gorge line to Hindon - could be secured until mid-2024.
Taieri Gorge Railway Photo: Dunedin Railways
Dunedin City Council staff have recommended keeping the Taieri Gorge route and continuing to operate on KiwiRail's coastal line north from Dunedin while strategic analysis is carried out about longer-term options.
Maintaining limited services on both lines has been presented as the best way to keep options open amid lingering uncertainty resulting from the Covid-19 pandemic.
The council's company, Dunedin City Holdings Ltd (DCHL), would again be instructed to absorb losses.
Keeping the trains running is expected to cost up to $2.4 million a year, offset by about $250,000 in ticketing revenue.
The council had already instructed DCHL to fund the 2021-22 loss-making operation, which could extend the red ink by about $2m.
The company could also face a one-off cost of about $400,000 for an alternative storage space while Dunedin Railways' workshop in Cumberland St is needed by KiwiRail during redevelopment of the Hillside workshops.
City councillors will debate the council staff report and analysis from economist Benje Patterson next week.
The Taieri Gorge line runs from Wingatui, near Dunedin, to Middlemarch.
The scenic trip features bridges, tunnels, deep valleys and varied landscapes.
However, the track is costly to maintain and trains have operated only as far as Hindon recently.
If council staff recommendations are adopted, there would be minimal maintenance between Hindon and Middlemarch.
Patterson compared passenger numbers and the economic impact from the rail services pre-pandemic with a summer trial heavily affected by Covid-19.
In the 2019 financial year, more than 76,000 visitors took a rail journey, resulting in almost $24m of spending in Dunedin and directly adding almost $10m to the economy.
This year, after a trial that began just before Christmas 2020, almost 2000 visiting passengers generated a spend of just over $550,000, directly adding $200,000 to the economy.
Patterson considered two scenarios once international borders have reopened.
Dunedin Railway Station. Photo: RNZ / Nate McKinnon
A minimal flow of international visitors could result in a spend of $5.4m from out-of-town rail passengers, directly adding $2m to the economy.
A strong tourist market could push the spend up to $8.8m, directly adding $3.6m to the economy.
However, at least $6.5m of capital investment would be needed for the Taieri Gorge line in the next decade and as much as $2.8m more for Dunedin Railways' rolling stock.
Patterson said stopping services on the Taieri Gorge line would dramatically reduce capital investment, but would leave Dunedin Railways ''operating in a manner that was inconsistent with historical visitor demand patterns''.
''The reality is that most passengers in a pre-Covid world rode along the Taieri Gorge,'' he said.
Council staff said Dunedin Railways aligned well with the city's brand and identity.
Visitors continued to show interest in the city's heritage.
Other factors in the mix include the possibility of a cycle trail between Middlemarch and Wingatui, or a not-for-profit entity operating the railway.
The Otago Excursion Train Trust has recently developed a business case, including proposed governance and operating structures for consideration.
Council staff have yet to fully assess the information.
They recommended interim arrangements with DCHL continue until 30 June, 2024.
This would allow various investigations and a strategic analysis to be completed while services remained.
This story first appeared in the Otago Daily Times