By Pam Graham of NZPA

Wellington, April 3 NZPA - Passengers from cruise ships and North Islanders are filling the carriages on Otago's Taieri Gorge Railway, even in the depths of a recession said to be crunching tourism businesses.

The railway, majority owned by Dunedin City Council, carried a record 850 passengers on March 10, with one of three return trains filled with cruise ship passengers.

The line through to Central Otago from south of Dunedin given up as uneconomic now carries 80,000 passengers a year.

About 10,000 of them are either embarking on, or have completed, the Otago Central Rail Trail developed as a cycleway from Middlemarch to Clyde, when the tracks were removed from that section of the former Otago Central Railway.

"We are noticing we are getting North Islanders who have never been to the South Island before," said Taieri Gorge Railway chief executive Murray Bond.

The recession coupled with the low dollar is causing New Zealanders to travel to places they have never been to before in their own country, including the Taieri Gorge and Central Otago.

The trains on the Taieri Gorge Railway travel from Dunedin to either Pukerangi or Middlemarch and some of the route is inaccessible by road.

Mr Bond does not see rail as a black hole of a business. The railway is successful and has turnover of about $4.7 million a year but profits are small because it has to maintain track and rolling stock.

Excluding the cruise ship passengers, the numbers on the "daily trains" are down 17 percent in February and 14 percent in March compared to a year ago.

The downturn is having an impact but the cruise ship season has been big this year.

The business may "live with" a small loss this year, but "we are so confident about the future", Mr Bond said.

"Railway tourism is one of the fastest growing divisions of tourism in the world," he said.

Taieri Gorge employed 55 staff, equal to 30 full-time equivalents, and a small number of volunteers assist with the cruise ship and charter trips.

"We get no subsidies, no grants, no assistance," he said.

It maintains and has built its own carriages. It bought 11 carriages from Toll NZ, formerly operated on the Wellington to Wairarapa line.

It maintains the line that winds up the gorge after leaving the Government owned network at Wingatui south of Dunedin.

"The gorge trip remains a key reason for cruise ship operators to visit Dunedin," the council says on its website.

A Seasider train between Palmerston to Dunedin is also operated.

The points of interest on the gorge line include the soon to be closed Fisher & Paykel Appliances factory. Dairy giant Fonterra, which is increasingly using rail to transport its goods, is to use the site as a storage and transport hub.

Mr Bond said the Taieri Gorge Rail wanted to carry logs from forests adjacent to its line in a joint venture with KiwiRail but trucks got the business.

It pays $4 per train kilometre for access to the Government owned line.

"That's 10 times the level of road user charges if we put people on buses," Mr Bond said.

He is frustrated at the public perception that rail is a black hole for government money.

The Taeiri Gorge Railway has been going for 30 years and is as strong as it has ever been.

"We are not a black hole and you can get by with running on a shoe string," he said.

He believes rail can be successful but government has to invest in the rail infrastructure.

"I believe the Government should look at the railway lines and bridges in the same way as roads and put the whole lot in one basket and fund it as the land transport infrastructure," he said.

The experience of the Taieri Gorge Railway is that the public of New Zealand and tourists want trains, he said.

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