Plans for a $240 million Fiordland monorail have been derailed by Conservation Minister Nick Smith, who says the project does not stack up economically or environmentally.
"The independent tourism and financial analysis concluded it was not viable," Dr Smith said today.
"There would be a significant impact on the area's flora, fauna and natural heritage.
"The route is not sufficiently defined to properly assess the impacts," he said.
The Fiordland Link Experience proposed a new link between Queenstown and Milford Sound consisting of a 20km boat excursion across Lake Wakatipu to Mt Nicholas Station, a 45km all-terrain vehicle ride to Kiwi Burn, a 43.8km monorail ride to Te Anau Downs and a 90-kilometre coach journey to Milford Sound.
The application included a lease, licence and concession for the monorail and related infrastructure through the South West New Zealand World Heritage Area including the Snowdon Forest and Fiordland National Park.
Dr Smith said the monorail plan had more merit than the Miford Tunnel proposal, and had been a more difficult decision to make.
"I have visited the site twice, met its applicants twice, consulted with the New Zealand Conservation Authority, and spent days reading the relevant reports and responses from the applicants," he said.
Dr Smith said he did not want the decision interpreted as the Government and the Department of Conservation (DOC) being opposed to any proposal for alternative access options in Fiordland.
"The door is still open but proposals will need to be both environmentally sustainable and economically viable."
Riverstone Holdings managing director Bob Robertson, of Wanaka, said the Minister had followed a flawed process in making his decision.
The rejection of the plan meant a "world-class" experience his company had already spent a lot of time and money on would not proceed.
If it went ahead, the monorail development would have been the largest concession ever granted on conservation land.
A Department of Conservation hearing commissioner recommended in November that the project should go ahead with extensive conditions.
Dr Smith then visited the site and commissioned a financial viability report for the project to investigate whether there were any risks to Government.
That report found that Government would be liable for significant costs if the project failed.
The development would have cut through both the conservation estate and private land.
Unesco warned the Department of Conservation that the development was "likely to be considered incompatible" with the site's World Heritage status.
But Dr Smith has previously said that many of the 200 World Heritage spots around the world had visitor facilities which were similar to the proposal.
A separate proposal to build a bus tunnel between Queenstown and Milford Sound was rejected in July because it was considered a financial risk to Government and would have cut through two National Parks.
There were tears and toasts in Te Anau immediately after the decision was announced.
Members of the Save Fiordland group had gathered at the Olive Tree Cafe in central Te Anau and eagerly awaited the decision on an idea which had consumed so much of their time over the past two years.
When word came the monorail had been refused there were sudden gasps of joy from Manapouri's Ruth Shaw, who is on the group's committee.
"It's two years of hard work but it's paid off."