Not sure if Palmair will be hit too badly if the TOM base goes ahead. Palmair have dropped seat only prices from £230ish to as low as £99 return, this I presume is to compete with Flybe at Southampton and Easy at Gatwick.
I personally know of a lot of people who deserted Palmair when the lo-co's got going at Gatwick. Our neighbours have just flown to Palma from Bristol with Easy even though there are 4 flights a week from BOH with flight only from £99.
On the positive side for Palmair though, a lot of people in the area will only ever book Palmair/Bath Travel. Its almost a local tradition down here.
Re European. Who knows? I have no idea how things are going for them.