Pounamu Tourism Group managing director Paul Jackson said the group had been working closely with the Flyer's engineer, Neville Simpson, to put together the excursion for the tour parties.
Simpson had put in a "huge amount" of work on the rolling stock, locomotives, and carriages, as well as clearing the tracks and replacing sleepers, he said.
"[The tour] is really going to be a trip of a lifetime, not just for rail fans, but everyone on board, and one of the highlights [of the tour] will no doubt be the Kingston Flyer."
Along with the Flyer, the tour groups would travel on trains hauled by a 100-year-old steam locomotive and two 1950s heritage locomotives during the two-week tours around the South Island.
Two tour parties set off in the past few days, going in opposite directions.
Jackson said one group of 180 started in Blenheim and would travel by train to Invercargill before being transported by luxury coach to Te Anau for two nights.
On the way to Queenstown they would take a ride on the Flyer, spend two nights in the resort, travel by coach to Franz Josef, and then connect with the TranzAlpine train service and finish in Christchurch.
The other group started in Christchurch and was doing the reverse trip.
He said the success of the tour had already inspired Pounamu Tourism to look at running more heritage tours to help New Zealand's economic recovery.
"One only needs to look at the UK to see how many millions and millions of pounds is generated from heritage rail.
"What we've realised ... is there are so many other heritage items that are of interest when you get to each town.
"Things like the Earnslaw and Walter Peak and Kingston Flyer and the Passchendaele locomotive and the transport museum — New Zealand has a phenomenal selection of heritage attractions and people do just really enjoy that."
Jackson estimated the tour was worth more than $2m to the South Island economy and it was also supporting heritage rail and "employing a lot of people in the process".
