(For every passenger that wants a full or partial service on EU shorthaul or Domestic there are dozens and dozens and dozens that don't.)
Perhaps so but that will be why the likes of Ryanair will operate B737-800's and the likes of Lufthansa Regional, KLM Cityhopper and BACON will operate the likes of F50's & 70's or Bombardier & Embraer Pocket Rockets. It's a little like saying that there is no need for a High Street coffee shop because McDonalds is available.
Where BACON fall down as opposed to the other regionals I mentioned is that they do not offer the flight connections on a 'through' fare that others do. As an example BA and LH compete on the BHX-DUS route, with LH you have all the onwards connections but with BA your journey stops in DUS, there's only so many people that want to travel to DUS from BHX.