From an airline operational point of view the fares are about right for the costs involved. In any airline you have a difficult balancing act to make money, if you put the prices up, less people will travel, if you keep them low to try and attract custom you run the risk of making a very large loss. The problem with the Island has always been the same (and its getting worse) too many airlines, not enough people. John Seymour's gimmick of selling some of his tickets at gbp 28 is a clever one, it highlights the costs these guys have to bear. RWY is a very expensive place to operate from, and lets face it you don't get a lot for your money! Prices wil always find the right level and on the Island at least there is always the boat to keep everyone honest
You pays your money and you takes your choice, the only people who can break this cycle are the government and until they do air traffic on the IOM will continue to decline.