REX could be actively engaged in manipulating the flight frequencies on certain city pairs. Cancelling flights, but still moving the same number of passengers.
By blaming the "pilot shortage", they possibly increase the load factors on some routes (namely the underperforming ones..). By cutting out flights they save variable costs, but still get roughly the same income.., because the passengers on these cancelled flights are moved to earlier / later connections.
The passengers are relatively happy because they still get to go where they want to go to, albeit at a different time. And just as they accept the "ever rising fuel surcharges" as inevitable, they tend to accept the "pilot shortage" as a uncontrollable reality. But it is in fact just spin...
This would seem to be rather smart yield management, and it is therefore unlikely that the management can be characterised as "stupid", but rather as "utterly ruthless".
One wonders where the optimum is would be for REX.....; a 1000 sectors a week? 900 perhaps???
Nevertheless, uncontrolled rapid outflow of experienced captains (and trainers) is worrying for the stability of the company. What would be the plan there ... ?