Dear friend, the fares of AC classes are not subsidised, IR earns marginal profit out of it. If IR use its resources well and improve its efficiency, it must earn decent profits out of upper class paxs like bus operators. Ac sleeper luxury bus fares are generally equivalent to ACIII rail fares if booked a few days in advance and lesser than ACII fares.
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Need of fare increase is for the subsidised (non ac) classes who pay less than half for rail travel as compared to equivalent bus travel. Even if fares...
more... are brought to reasonable levels, the traffic is likely to remain with IR. Most important thing for IR is to curb ticket less travel which cause a lot of losses to IR.