If the business is truly run in such a way described then none of them deserve to succeed.
Unfortunately, to a large extent it is. But they do deserve success. The bottom line is that the margins on most routes from regional airlines simply will not bear much competition - there simply is not the sort of demand as there is at, say, Gatwick or Stansted. So what tends to happen is that a new operator appears who spends on marketing, offers more tempting fares, and drives the incumbents out, as bmibaby did with BA (which is what I suspect Flower was getting at). Someone could do this to baby in turn, and in the fullness of time probably will.
What won't help Cardiff is (a) someone coming in and taking all the short routes away (as CV noted, you don't get PRG without EDI), and/or (b) a price war on a limited number of destinations.
Can Cardiff sustain more than one scheduled operator to the Spanish destinations? I would say yes, but it is going to be lower yield than baby are getting now. Could this happen on the PRG route? I would say no, one operator will fall off the route. Perhaps in a few years when CWL has grown a bit, but right now, no. For routes like DUB it is possible - business people need morning and evening, the general punter doesn't care but wants a lower fare - so for example, Ryanair and Air Wales co-existed quite happily on this route.
Basically, we are in danger of seeing an almighty scrap developing here, if all the rumours are true. That is in no-one's interest, least of all the people who keep the infrastructure at the airport ticking. It is up to the airport management, as I noted earlier, to keep a little bit of order, follow a strategy and get the best longer term result for the place.
This will involve the airport doing the right thing for the longer term, rather than what seems to be a good idea at the time. Uh oh...