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The Northern Explorer and Coastal Pacific will not resume service until mid-2022.
The Coastal Pacific line between Picton and Christchurch is considered one New Zealand's most picturesque train journeys, while the Northern Explorer runs between Auckland and Wellington and stops at Palmerston North, Ohakune, National Park and Hamilton.
"We have now made the difficult decision that the Northern Explorer and Coastal Pacific will remain suspended while we evaluate different and better options for domestic and overseas travelers once New Zealand's borders fully reopen and the tourism market picks up again," said acting chief executive Todd Moyle.
Local travel restrictions and ongoing border closures have caused turmoil for KiwiRail operations, leading to long period of suspension and damaged confidence from passengers.
The scenic rail company is on track to lose almost $10 million this year.
"Even when the services were running, our efforts to encourage domestic travelers with discounts during school holidays have not stopped the revenue decline," said Moyle. "We can no longer keep absorbing these losses."
As the tourism arm of KiwiRail, the company said it was not able to qualify for the same direct subsidies as commuter services.
The TranzAlpine service from Christchurch to Greymouth could begin in January.
The scenic Southern Alps service has been the most popular train during closed borders and "has the best chance of returning to financial viability even without overseas visitors."
West Coast scenic train will run on weekdays, under Orange and Green levels.
"Around 60 team members have been impacted by the suspension of the three scenic trains and all have been retained.
"For the small number affected by the extended suspension, KiwiRail will be offering temporary secondments internally until services resume."
KiwiRail is contacting Coastal Pacific and Northern Explorer customers who have bookings and will be issuing refunds.