Railway capacity, improvement and route capacity are currently among the most significant and prominent issue for the modern railway network. It is generally accepted that the capacity of a railway represents the number of trains that can reliably operate in a given section of track in a given time period. In this thesis the main concepts and methods to analyze performance of railway capacity are discussed. Capacity is extremely dependent on infrastructure, traffic, and operating parameters. Also there are different tools that are evaluates the performance of railway capacity such as, analytical method, optimization method and simulation method.rnFor this thesis, analytically by using real data from AALRT rail network, calculations are performed for the parameters that affect capacity of railway specifically breaking distance, journey time, possible speed of the train and headway time. And present their results to show how the capacity varies according to such factors. Anylogic software is used to check the validation of the calculated values and to show the performance of capacity variation in terms of speed of the train and headway time of the train for the selected station of EW, NS and bottleneck of AALRT.rnFinally different factors influence railway capacity and train delays are analyzed, and then we can maximize the current practical capacity of AALRT by 40% specifically by providing better headway time (5.66min), hence, approximately 10 train can move on the track within one hour interval using advanced traveling speed than the existing AALRT operating standards for the better railway transportation quality.