I think that you will find that Skytrans is owned in it's entirety by the Wild family - who do have some business interests in PNG but I can assure you are quite Australian!
Best thing is - it's also a Queensland company and from what I can see around the area it contributes to the communities it flies through - so I can't imagine there's been (entirely) a Government plot to oust locals.
It's probably a case of the numbers not stacking up in Westwing's favour. The B1900 is a terrific aircraft, but is horribly expensive to operate in comparison to Metro's, etc.