1AC is definitely something that railways have to reconsider now, given how air travel has become cheaper.
However, there is still a reasonable demand for 1AC on many routes. My experience is mainly with the SBC Rajdhani between SBC and SC.
I've regularly seen many executives and businessmen preferring to take the 1AC on the Raj between SBC and SC, instead of taking an early morning flight. For them it's more comfortable to just get onto a train after dinner and reach their destination well rested in the morning, as opposed to...
more... getting strained by waking up at ungodly hours to catch an early morning flight, or travel by night flight at the end of a tiring day.
Targeting 1AC at the right group of passengers can make it very profitable on many routes.