I think the only link between Aurigny being in profit and competition is that Flybe's evaporation means the ATRs can be better utilised; particularly to EXT and BHX. Other key factors seem to be using the Embraer less; 10% reduction in fuel burn across the operation this year.
Also not sure about the comparison with a 'low cost airline'; e.g. EU261 doesn't apply in the Channel Islands and so Blue Islands
doesn't pay for accommodation for passengers when fog-bound (not a dig as such - they're perfectly entitled not to, and it's in their conditions of carriage). Aurigny still does this on a voluntary basis, even at departure airports (my mother was put up in Southampton recently; many airlines would have sent her on the 2h30m journey home by train). Likewise, it routinely pays to extend airport operating hours to get people home when weather delays come. This isn't the behaviour of a classic low-cost airline.
You can look at the Alderney operation quite separately, as it's run under a PSO and funded entirely at the discretion of the States (i.e. subject to only operational control by GR). The recent delays were due to G-ETAC being in Oberpfaffenhofen for maintenance, leaving GR with only G-OAUR to run the routes, which then went tech. Unfortunately they were landed with a two-plane model by the previous States of Guernsey administration, which forced this through in full knowledge of its fragility.