Riggenbach and Zschokke also built the rack-and-pinion Arth-Rigi Railway. In 1870, a committee of 12 citizens from Arth obtained the concession from the Schwyz Cantonal Council for the routes between Staffelhöhe and Kulm as well as between Arth, Oberarth and Kulm.
The Arth Company immediately started to tackle the construction of the panoramic route Staffelhöhe - Rigi Kulm. This route was handed to the Vitznau-Rigi Railway company for operation in the summer of 1873. From 1873 until the merger of the two railways in 1992, the Vitznau-Rigi Railway company had to pay ground rent for use of the rail section Staffelhöhe-Rigi Kulm.
The concession for the construction of the Arth-Rigi Railway was ceded by the original group in early 1873 to the International Company for Mountain Railways in Aarau, founded by Niklaus Riggenbach. This company carried out the railway project as general contractor at a cost of CHF 4.2 million and also supplied five of the six steam locomotives. The construction of the Goldau - Staffel rail track started in the summer of 1873, and in 1874 the Arth-Oberarth-Goldau section was begun after the definitive location of the railway station in Arth had been agreed.
The Arth-Rigi Railway started operation on 4 June 1875 along the entire route. The open passenger carriages were very luxurious, with curtains fitted on both sides, which protected passengers from the sun, rain and wind. As early as 1907, the electrified service on the Goldau-Kulm mountain route was inaugurated. This conversion was a true pioneering achievement, because the Arth-Rigi Railway was the first standard gauge rack-and-pinion railway in Switzerland which changed to electric traction.