It does not need to be the end of O'Connor airlines if they will just change their ticketing practices.
Some small airlines have such simple reservations systems, that their search engines cannot offer multiple fare classes, or conditions. If that is the case here then a simple change of search engine and ticketing policy will save that airline.
O'Connor already have a huge advantage in their code share arrangements with Qantas. Just don't squander it.
Air NZ deliberately oversells seats by 145% to get it's load factors and unless you have a reservations search engine which allows you all kinds of flexibility, then come the day they fly you will have 33% cancellation rates even without competition from REX.