I can only draw comparisons with defunct airlines here in Spain, Spanair being just one in a very long list.
Competition comes from not other airlines but from road and rail, which is probably the case now in the United Kingdom.
A flight from Madrid to Barcelona is very quick, 1 hour 15 minutes, however check in and security procedures add on a couple of hours or so. The cost for this flight is around 95 Euros.
For the same cost a seat in a comfortable high speed train will get you there in 2 hours 30 minutes.