The Government has confirmed the two new Cook Strait ferries will remain under public ownership and continue to be operated by KiwiRail when they enter service in 2029.
Rail Minister Winston Peters said KiwiRail’s experience operating the Interislander service since 1962 made it the right choice to run the new rail-enabled ferries, which have also been officially named Kupe and Cook.
“KiwiRail has run the Interislander since its inception in 1962, and in our book, experience counts,” Peters said.
“This decision keeps the rail freight network and ferry operation working as one system, supporting the critical domestic freight route between Auckland and Christchurch.”
Peters said Interislander’s reliability had improved to 98%, while KiwiRail was on track, subject to final audit, to achieve its $160 million earnings target for the year ended June 30, 2026.
Under the agreement, KiwiRail will operate the ferries for their planned 30-year service life, with the arrangement to be reviewed after 10 years, in 2039.
The Government has reaffirmed taxpayer funding for the ferry replacement programme will be capped at $1.7 billion, following confirmation of a fixed-price shipbuilding contract with Guangzhou Shipyard International. Construction is due to begin in 2027, with the ferries expected to enter service in 2029.
Peters said the revised programme would save taxpayers around $2.3 billion compared with the cancelled iReX project, which KiwiRail had estimated would cost $3.1 billion, while Treasury had warned costs could rise to $4 billion.
“Our approach is simple: build what is needed, not what is desired. Do what works, not what dazzles. Trust the experts, not the yes-men,” he said.
The programme includes new marine infrastructure in Picton and upgrades to the Wellington terminal. Peters said Ferry Holdings would retain overall control of the project, with no cost-plus construction contracts.
The ferries have also been officially registered under the names Kupe and Cook.
“These are proper names. Historic names. New Zealand names,” Peters says.
KiwiRail chief executive Peter Reidy welcomed the Government’s decision, saying it recognised the company’s operational experience and the work undertaken to improve reliability.
“KiwiRail has operated Interislander services for more than 60 years, and this decision reflects the experience, operational capability and professionalism our people bring to running a safe daily reliable Cook Strait service,” Reidy said.
He said the Government had made it clear KiwiRail needed to demonstrate its capability through improved performance.
“The Government quite rightfully made it clear KiwiRail needed to demonstrate its capability through strong performance, and I would like to thank all our team who showed we can deliver.”
Reidy said the Interislander fleet achieved more than 99% sailing reliability over the past financial year, excluding weather-related disruptions.
“Our priority has always been running today’s fleet safely and reliably for everyone on board from international tourists to everyday freight users. That is the strongest demonstration of our capability as an operator, and that focus will continue.”
He said the new ferries would provide greater capacity and reliability for both passengers and freight customers.
KiwiRail will continue working alongside Ferry Holdings, Port Marlborough, CentrePort and other project partners to support construction of the associated port infrastructure and ensure a smooth transition when the ferries enter service.
Reidy said early construction work was already under way at the ports, while KiwiRail would begin work later this year on the Dublin Street overbridge in Waitohi Picton to maintain the rail connection across the township.
He added that KiwiRail staff were also helping shape the design of the new ferries using their operational experience to ensure the vessels were practical, safe and fit for purpose.
