It is very difficult for a company to undercut a "not for profit" or subsidised organisation that can quote low and make up the shortfall by asking for donations from the public.
Bushy, while I generally agree with your 'not for profit organisations should not have AOC's' mantra, I think it is important to remember that not one cent of donations from the general public goes to running 'Government Contracts'!
In fact quite the reverse, profits from any contracts the RFDS have, go to providing funds for their more 'traditional' rural services. Of course there are tax benefits to being a 'not for profit' organisation which may help reduce their overheads, however the RFDS are currently paying their pilots considerably more than any of their GA competitors!
Personally I don't see too many other GA companies with the facilities, or resources able to cover the State of Queensland, Pelair included!