IMHO the reason the new guys can come in and undercut is that their accountants/business managers lack airline/airport/handling experience/knowledge.
The result is that they make significant errors in the "assumptions" used to build the business plans and budgets (they use "supermarket" methodology believing it can apply to every market place/sector).
Based on these, they then invest in equipment/manpower believing that after after the first few years they'll start to see a payback.
As the penny drops they start by tightening the manpower numbers and then by doing the same with equipment numbers/maintenance where they can.
The result is that the agreed service levels can't be met .. customers start getting uppity and making threats ... eventually customers walk elsewhere.
But .. at the base of this are customers (airlines) who either can't/won't use their knowledge to realise they're being offerred a deal that just can't stack up.
Or maybe they do and are taking the view that handling agents are a "disposable item" and will just move on to the next low cost handling offer?
As for the "big boys" such as Servisair etc. they make the same promises but can survive longer because of the larger customer base.
Basically if you've upset airline A last week then for the rest of the month you make sure they get a good service and let airline B suffer for week two ... the following week you try and keep A & B happy while upsetting C .. and so on.
That way you give the impression you're doing something and as long as the gap before you get back to upsetting A is long enough they don't realise what's going on.
For this to work the customer base/flight nos simply need to be large enough.