The Aratere in Wellington in 2011 after it was lengthened. Photo: RNZ
Interislander ferry operator KiwiRail says with the Aratere gone, passengers may need to travel on less popular sailings or be more flexible with dates.
But it says there will be no price-gouging or considerable increases to ticket prices.
The Aratere Interislander ferry will retire by the end of August, meaning cuts to both passenger and freight capacity.
The Aratere is the only ship that carries rail wagons, but cannot use the Picton or Wellington wharfs as they are being upgraded for two new ferries arriving in 2029. A temporary wharf would have cost $120 million.
The ship can hold 650 passengers, 230 cars and 28 rail wagons.
More than 2200 passenger bookings have already been transferred from Aratere to other vessels - the Kaitaki and Kaiārahi.
Despite the Aratere being the only rail-enabled ferry, Kaitaki and Kaiārahi can carry rail freights by using road bridging.
Interislander executive general manager Duncan Roy advised passengers to book their trips early, especially for peak season around Christmas time.
"We don't have full ferries all the time with three [ferries], so we'd expect to have fuller ferries and, probably, people will be travelling at non-traditional times - earlier in the morning, later in the evening," he told Morning Report.
Roy would not say whether prices would increase after the Aratere retires, but assured there would be no price-gouging.
"Nothing considerable... there could be a price increase anytime, but we watch our prices and monitor them like any good business. We work hard to keep the cost down."
He said Interislander had dynamic pricing, meaning prices went up in times of high demand.
Asked if customers may have to pay more because of reduced capacity, he replied: "That may be the case".
'Bad news'
Union NZ spokesperson Victor Billot told Morning Report job losses were "likely", but did not know how many would go.
"We will be fighting for jobs. We can't afford to lose any more seafarers in New Zealand."
Billot said there needed to be thought given into how the retirement of the Aratere would impact the security of supply chains between the North and South Islands.
"This is going to reduce the resilience. It's going to lead to a higher risk of service failure if there is a problem with one of the other existing ferries. It's bad news, as far as we're concerned."
Ferry operator Kiwirail had been under fire after multiple breakdowns in recent years left passengers stranded.
The Aratere ferry grounded near Picton in 2023. Photo: Supplied: Marlborough Express
In 2023, Interislander's largest ferry - the Kaitaki - lost engine power while sailing Cook Strait with 800 passengers and 80 crew aboard.
The same year, there was a gearbox issue with the ship and a heat exchanger issue on the Kaiārahi.
Last year, the Aratere made headlines when it ran aground near Picton, which began with an autopilot mistake.
Roy said this year to date, the ferries had been 99 percent reliable.
"As we reduce the capacity, it's our job to keep those ferries running safe."
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