Gaza brings up some very good points.
I think that for someone to be able to compete with BE anywhere in the country, they need to have A LOT of money behind them. BE are now the U2/FR on the domestic circuit. By that I mean they have the resources and financial back up to fight a start up into the ground.
Secondly, they also have a much better starting point in terms of a customer base. A new airline would be trying to take traffic that is already FlyBE's. Also, if they got wiff on a start up, they can use their marketing and, dependant on the new airlines backing, for them to give up before even operating their debut sector!
Finally, what makes BE work is that they operate frequent services on their major routes. Between the UK's larger cities, there are not many of their routes that operate less than 2, maybe 3 times daily. There key is to have bases at either end.
For example, BE operated MAN-BHD at 7am this morning. Now that aircraft can either turn around in BHD (which it does) and fly back to MAN or onto another destination from BHD, say SOU for arguments sake. Now, five minutes before the E95 left MAN at 7am, a Dash left BHD for MAN. By having bases at both ends it allows the airline to take both MAN and BHD bound business traffic without arriving in one city late for a full working day. BA have operated this policy on their LON-Regions flights for as long as I can remember and it works.
A new start up pretty much has no chance against BE now, they are simply too powerful on the domestic stage. New aircraft, large bases, dedicated customer base - you would need SERIOUS money to even stand a chance, and then you have to make that back!