The kindest thing the Aussie government could do for the Nauruans is say: 'right, Ozjet you have the route, you MUST now deliver and if you don't,there is a huge penalty which will then go to Nauru as compensation because they have lost their air service. Because if they had a service funded 100% by someone else to that tiny island they would be so much better off. Of course the Aussie Government can not do that.
Reality: the Nauruan people have a lot of pride and regard 'Our Airline as 'Their Airline' (which it still is). Nauruans would only travel by an alternative operator if that operator gave them a free ride, and even then some of those that can still afford to fly would not, because of their pride in the only business the poor buggers still have. 6000 people live out there, give or take a few. What remote country town in Australia would support one B737 service a week, let alone what is now being proposed?
This is probably an Ozjet bluff to scare the Nauruans off Norfolk. No one in their right mind could believe it would do anything other than convert fossil fuel into noise.