Massive Demand for Third AC in Indian Railways

Indian Railways is witnessing rapid changes in its travel patterns. In the past, most revenue came from sleeper class, but now, the Third AC (AC-3 Tier) has taken its place. Over the past five years, revenue from Third AC has seen a significant rise. For the year 2024-25, Indian Railways estimates that total passenger revenue will reach Rs 80,000 crores, with Rs 30,089 crores (approximately 38%) expected from Third AC alone. Interestingly, only 26 crore passengers (3.5% of the total 727 crore passengers) travel in Third AC, but it still generates the highest revenue for Railways.

According to the 2025-26 budget estimates, passenger revenue for Indian Railways in 2024-25 is expected to reach Rs 80,000 crores, with Rs 30,089 crores likely to come from Third AC. Meanwhile, revenue from sleeper class is projected to contribute 19.5%. This trend highlights a shift in travel preferences in India, with more passengers opting for more comfortable and premium travel options, which is driving the increase in Third AC revenue.

The number of passengers in Third AC has steadily increased over the last five years. In 2019-20, there were 11 crore passengers, which has risen to 26 crore by 2024-25, reflecting an annual growth rate of 19%. During the same period, the charges for this category have also increased due to dynamic pricing. However, compared to other AC categories, Third AC charges remain relatively lower. For instance, the average charge for Third AC was Rs 1,090 in 2019-20, which has increased to Rs 1,171 by 2024-25, a 7.4% rise. Meanwhile, charges for First AC have risen by 25.38%, AC Chair Car tickets have increased by 23.24%, and Second AC fares have gone up by 18.22%. The charge for Second AC, which was Rs 1,267 in 2019-20, is expected to increase to Rs 1,498 by 2024-25.

Revenue from sleeper class has declined in recent years. Before the COVID-19 pandemic in 2019-20, sleeper class was the highest revenue generator for Indian Railways, contributing Rs 13,641 crores (about 27% of total revenue). By 2024-25, this is expected to drop to Rs 15,603 crores, a 19.5% contribution. The number of passengers in sleeper class has also increased from 37 crore to 38 crore.

The change in passenger preferences is evident from the data, showing a shift towards Third AC for a more comfortable journey. In 2019-20, a total of 18 crore passengers traveled in AC categories, and this number is expected to rise to 38 crore by 2024-25—almost doubling. On the other hand, the number of passengers in non-AC categories has decreased from 790 crore in 2019-20 to 688 crore by 2024-25.

Indian Railways is focusing more on passenger comfort, and despite higher ticket prices, passengers are showing interest in booking tickets for better amenities. As more people prefer better travel experiences, Third AC has become a significant revenue source for Railways. This trend is expected to continue in the coming years, leading to even higher revenue. The Railway Ministry is keen on introducing more AC trains to meet this demand.