For the second year running, KiwiRail is suspending the winter train service between Christchurch and Picton.
KiwiRail general manager Deborah Hume says the service - known as the Coastal Pacific - loses $3 million annually, most of it during the winter.
She says the number of passengers has fallen by about half in the past four years, from 75,000 in the 2009/2010 financial year to between 30,000 to 40,000 in the 2012/2013 financial year.
Most of the drop in demand has occurred since the Christchurch earthquake in February 2011.
"We thought that would be a temporary measure but since then it's been clear to us that the new pattern of tourist movements and people movements around the region over the winter really has dropped off a lot after the earthquakes, which means running the service during that time's just not sustainable."
The service will stop on 5 May and resume in October.
The Rail and Maritime Transport Union is criticising the decision, saying it means Christchurch could miss out on tourist spending.
It says Government-owned companies such as KiwiRail need to show they have faith in the Christchurch rebuild and growth in tourism business there.
"They say prior to the earthquake it was actually doing OK," general secretary Wayne Butson says.
"It just beggars belief that that can't recover again and actually turn into a sustainable train service. By cutting it back to seven months a year, we think is the beginning of the end for this service."
