I don't think competition would play a part, more the number of passengers involved and frequency on the route Ie are there later flights operating the same route etc, aircraft availability and Crew hours.
And I don't think that more disruption will be experienced as Flybe introduce more routes, it is rare at Exeter and thats my local. Flybe have a monopoly there.
Maybe it would be easier for Flybe to pull out of IOM altogether and let the ungrateful gits that moan about the service swim to the UK. Would that be better?