Taieri Gorge Railway unlikely to continue commercially

Last week we blogged about Dunedin Railways being mothballed. Since then various pieces of information have been published. Based on what has been released to date, we see it as unlikely that the Taieri Gorge line can be continued in its present form as a commercial operation between Wingatui and Middlemarch. We have no viewpoint about the rest of Dunedin Railways’ services.
The Taieri Gorge Railway consists of the first 64 km of the old Otago Central Branch railway and came into being initially as a train service run on the line when it was part of the NZR network. Otago Excursion Train Trust (OETT) inaugurated the Taieri Gorge Limited back in 1987 as a Dunedin-Pukerangi daily service and was subsequently able to raise sufficient funding to finance 50% of the purchase of the Wingatui-Middlemarch section of the OCB. This was then reformed as Taieri Gorge Railway Ltd in 1990, the other half of the initial capital being matched by funding from Dunedin City Council.
We know very little about the financials of the early years of operation as there was no cruise ship market back then as it did not develop in NZ until more recent times. But it is probably correct to say that the operation at best broke even in the early period of its life. In the mid 1990s additional capital injections were needed and a higher proportion, if not all, came from Dunedin City Council with the net result that they increased their shareholding to 72% reducing OETT’s holding to 28%.
It was always going to be a tough ask in the south of New Zealand to be able to run a 64 km tourist railway and although income from cruise ship services and running extra trips to Oamaru and Palmerston as well as charter tours must have helped the finances, this has to be balanced against the ageing of most rolling stock which includes the fleet of diesel locomotives that are now more than 50 years old and the original wooden carriage fleet which in more recent times has been steadily upgraded to more modern steel sheathed designs. 
Some of DRL’s operations run over the Kiwirail network and this requires considerable additional expense in certification and maintenance standards as well as direct operational costs which for the excursion train market around NZ has resulted in severe cut backs since the 1980s. We also understand from information released that there is a considerable maintenance backlog on the Taeri Gorge line, which is always going to be more expensive in upkeep, in the shorter term because of the topography (hills and a steeply sided gorge) it passes through, and in the longer term because of the many viaducts in this section which will eventually need a lot of money spent on them. The big floods in the Taieri catchment a couple of years did a great deal of damage to the line which must have cost a lot to repair.
So what could happen in the future for DRL? We have no idea whether the operation can be made viable as a cruise ship tourism operator with the key issue being it could be many years before this business builds up again to where it was last year. The future for the Taieri Gorge Line is, regrettably, likely to be either as an ultralight rail vehicle operation (golf carts or rail bikes) such as we see in other parts of the country. It is possible that the section from North Taieri to Pukerangi or from Pukerangi to Middlemarch could be developed as a heritage railway if enough support can be found in the Dunedin area. 
Here, there are certainly questions; we have noted that OETT has chosen to completely sell out of its 28% shareholding, which seems to indicate a limited future for them as a whole, and even before that, rail heritage in Dunedin in general was struggling. A heritage operator could run cruise ship trains with volunteers (Gisborne City Vintage Railway is one heritage railway that works in that market) but keeping the entire line open to Pukerangi could be a hard ask. A lot depends on Dunedin City Council’s attitude, and whether Dunedin Railways as a whole continues to operate. The worst case scenario is to convert the line into an extension of the Otago Central Rail Trail.