Whether it is ridiculous to pay £350 to travel to Paris or not, it is probably a truer reflection of the costs involved of running a long term regular and profitable service. It isn't that people expect to be able to do this for nothing, indeed they realize that being shuttled about in £50 million capital assets isn't likely to be cheap. They really want to be able to travel in sumptuous comfort, being plied with grapes and champagne, and be whisked through to their destination with speed and good grace. The problem is most of them can't afford the true cost of that. The compromise means that the various levels of discomfort and hassle they face, generally justifies the search for a bargain price.
The advent of the pile em high sell em cheap airlines (or supermarkets, car warehouses, etc.) requires that in order to suceed both of the conditions have to be satisfied. That requires very high yield to even hope to achieve any sort of acceptable margin or indeed any profit. The £350 fares probably satisfied the cost base at 50% load factors or less. The bargain basement fares most certainly won't. When that yield starts to fall away, because the novelty wears off, spending priorities change, or more competition comes to town, you are faced with 3 choices: 1) Raise the fares and hope the fickle customers dont run across the street to the competition; 2) cut the operating costs to the bone; 3) Slash your own fares to increase yield even though that yield will still lose you money, and hope that the competition bleeds to death before you do.
As long as there is competition, these will always be the cyclical realities of this market segment. If you want comfort and champagne, take the train from London to Paris, it is quicker, nicer, more convenient, and for all the best advantages will still cost you £350!