You are absolutely correct on that one IB. The problem with that though is the government will subsidise only as far as is necessary to keep us running if that is in fact their intention, using the airline for the sole purpose of bringing in business.
But if they realise that they could actually compete if they tried, and by doing so boost everyones morale and the overall product, provide jobs etc, they'd be pleasantly surprised that there might be good revenues to be made.