The potential for any new South Island service would need to be led by local and regional councils, South Island operations general manager Mark Heissenbuttel said.
Pinch points would have to be dealt with and councils and Waka Kotahi NZ Transport Agency would be expected to lead this work, he said.
"KiwiRail can help councils consider the logistical components, like timetabling, network investments needed, rolling stock estimates, and operating costs for running the service."
The Southerner passenger service between Invercargill and Christchurch ended in 2002 and the South Island was largely ignored in a recent inquiry by a parliamentary select committee into the future of inter-regional passenger rail in New Zealand.
The Otago Daily Times asked KiwiRail if the network being occupied by freight meant there was no room for passenger rail in Otago.
KiwiRail said it was supportive of passenger rail.
"The view that there is ‘no room’ for passenger rail is not true for most of the network, where there is capacity for more train movements," Mr Heissenbuttel said.
"The issue tends to play out in key points where trains need to stop, like at stations where a crossing loop is usually needed to let other trains pass a stopped train.
"These investments are typically funded by the service requiring it, and would be considered as a cost to introduce a new service which councils and Waka Kotahi would lead if it is a public transport initiative."
Otago Business School senior lecturer and rail advocate Duncan Connors said the political landscape resulted in the South Island not getting a fair share of infrastructure investment.
The distribution of MPs — where electorates were mostly concentrated in the North Island — led to the South Island lacking an effective voice, he said.
The South Island would fare better if political and spending decision-making were devolved, he said.
Parliament’s transport and infrastructure committee recommended scoping studies for inter-regional passenger rail services — Auckland to Wellington, Auckland to Tauranga, Napier to Wellington and an extension of the Capital Connection service beyond Palmerston North to nearby Feilding.
Dr Connors said restoring passenger rail between Dunedin and Christchurch would be easier than upgrading Auckland to Wellington.
"We may actually be the best place to restart intercity rail in the country," he said.
However, what he described as rail romanticism needed to make way for economic imperatives and modern technology, he said.
"Let the countryside blur past the train and give people cheap, reliable and efficient rail travel across New Zealand."
