Incorporating Capital Connection rail service into Greater Wellington's metro network could spare it the axe, the regional council says.

But that would require the Transport Agency to stump up about 60 per cent of its running costs – something it appears to have little appetite for.

KiwiRail says the commuter train from Palmerston North to Wellington has been losing money since Tranz Metro extended its Kapiti line to Waikanae in February last year.

The rail company is in talks with Greater Wellington regional council and Horizons Regional Council about the line's future, including the prospect of a ratepayer subsidy or closing the service by the middle of the year.

KiwiRail refuses to say how much the service costs or how big a loss it is making.

The Capital Connection is a commercial service and does not receive government funding. About 160,500 people used it last year. It experienced a 10 per cent drop in patronage after the Waikanae extension and requires about 20,000 more passengers a year to remain viable.

KiwiRail's general manager for passenger services, Deborah Hume, said the service was no longer commercially viable. "We had hoped that we would recover from the drop in patronage, but we have not."

Greater Wellington economic wellbeing committee chairman Peter Glensor said bringing it under the Tranz Metro banner would qualify it for a government subsidy, but admits that could be a tough sell to the Transport Agency.

"It seems there isn't [enthusiasm] at this stage, but both we and Horizons feel there is a really good case for keeping the Capital Connection," he said.

Transport Agency central regional director Jenny Chetwynd said the service did not fulfil the agency's requirements for investment as it did not deliver relief from traffic congestion.

"Given that there is not a congestion problem between Palmerston North and Waikanae, we believe the focus should be on identifying a cost-effective way to move people between these locations to make the best use of the existing subsidised rail services from Waikanae."

Both regional councils will debate the issue at the end of the month. Horizons chairman Bruce Gordon disputed that the Government would not find it palatable. Not all subsidised services reduced congestion, he said.

- © Fairfax NZ News

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