Any route should stand or fall on merit, if the Newquay service is so important the demand has to be there. You cannot prop up a service and distort the market with UK wide taxpayer monies whilst then claiming it's a vital air link, if nobody uses it, it's clearly not that vital. And why should Newquay claim a service over say Liverpool OR Durham? Who decides who gets what ?
Last time I looked, Cornwall was the poorest region in England and the most remote from the capital (and with crap surface transport links). These conditions have been generally accepted as being reasons for a PSO. Are you saying that no forms of public transport should be subsidised and left to the free market? And do you not accept that there's a place for taxpayers money in promoting regional development?