Concession fares will rise and services on The Ghan and Indian Pacific trains will be halved as Great Southern Rail (GSR) prepares for an expected 20 per cent downturn in passenger numbers.

GSR chief executive Chris Tallent said $9 million in funding from the Federal Government that subsidised the travel costs of pensioners, veterans and seniors taking the train journeys would end by July next year.

Although the company would still offer a 20 per cent discount to concession passengers, Mr Tallent said the company was expecting fewer people to take the rail journey.

A company spokesman confirmed the drop in demand was expected to be 20 per cent.

GSR currently operates 13 to 14 double-weekly services from Adelaide to Darwin during the Dry Season.

"At this point we are looking to withdraw those services and continue on with a firm weekly service on the Ghan, albeit with longer trains potentially to cater for increased demand on those services," Mr Tallent said.

About 40 to 50 per cent of travellers on the Ghan and Indian Pacific routes currently receive some benefit, with 95 per cent of them getting a 30 per cent reduction in fares.

The company said, as an example, the fare for a sleeper for war veterans on the Indian Pacific would increase from $83 to $689 for journeys from Adelaide to Broken Hill.

Mr Tallent said he was "disappointed" but agreed it was not the Federal Government's job to subsidise pensioners' trips.

"The veterans represent about 2 to 3 per cent of the business," he said.

"Ninety-five per cent of those affected will be looking at fare increases of close to $20 to $30 on Adelaide to Sydney on a gold sleeper, to $150 on Adelaide to Alice Springs."

Mr Tallent said the company would provide a "20 per cent discount to all eligible concession card holders in next year's schedules" before the full increase is introduced.

Labor says cuts will impact local tourism

Federal Opposition transport spokesman Anthony Albanese said the Government should never have slashed the funding.

"These cutbacks will mean less jobs and have a particular impact on local tourism," he said.

The Ghan train service will be reduced to once a week after government cuts. ( ABC News: Robert Herrick )

"The impact for regional tourism if these cuts aren't reversed will be devastating, devastating for jobs."

Mr Albanese said Prime Minister Tony Abbott should have told South Australians what he planned to do so as his cuts would inevitably cause job losses at GSR, which employs about 400 people, mainly in Adelaide.

GSR was formed in 1997 after the privatisation of government-owned Australian National.

Subsidies of up to 55 per cent for pensioners and 88 per cent for war veterans were built into the privatisation arrangements.

GSR operates the Overland, which travels between Adelaide and Melbourne; the Indian Pacific, which travels between Sydney, Adelaide and Perth; and The Ghan, which travels between Adelaide and Darwin.

Mr Albanese said these services, which make multiple stops in regional centres, pumped $100 million a year into regional Australia, boosting local communities and creating jobs.

The Federal Government said it was now up to state governments to provide subsidies for pensioners and veterans.

But South Australian Attorney-General John Rau said it was unlikely the State Government would step in.

"It's not an expectation I have that the state would, in effect, assume another expenditure on this particular Commonwealth program rather than commit money to police officers or public health or public transport or something of that nature," he said.

Northern Territory Chief Minister Adam Giles said the reduction in services would not severely damage the Territory's tourism industry.

Mr Giles said while the loss of visitors arriving by rail was regrettable, it was getting easier for people to visit the Northern Territory.

"It's always a challenge for any government in terms of looking at how to subsidise travel, there are a range of opportunities to be able to get to the Northern Territory and recently we've seen Virgin Airlines come to Alice Springs and having more of a presence between Adelaide and Darwin," he said.

"That's presenting an opportunity and now more tourists are coming here."

RSL warns fare increase a deterrent to diggers

President of the SA branch of the Returned Services League, Brigadier Tim Hanna, said the price hike would deter veterans from making long-planned journeys.

"We know that many veterans use train travel to understand their military heritage and to revisit battle sites, particularly in The Ghan services," he said.

"Train travel remains a very safe and, until now, affordable way for veterans to travel to the country and to remember those that they've served with.

"This will be such a significant cost impost that many veterans will not be able to undertake the train trips that they had perhaps planned for many, many years."

Council on the Ageing's SA chief executive Jane Mussared said the price rises could mean pensioners spend less time with loved ones.

"Seniors and older people will start to make different decisions," she said.

"They'll review what's possible for them, they will be less likely to travel around Australia, they're less likely to see families and friends and then themselves becoming isolated."