Would the low cost carriers have forced them out?
Not necessarily. Airlines like Aer Arann, manx2.com and Air Southwest have all secured their niches in parallel with loco operators.
Would the low cost carriers have even come to Newcastle if Gill were still here...?
Yes, as Gill probably wouldn't have been perceived as a direct competitor on most loco-friendly routes.
Would Gill be flying 737s as they dreamed and become a Jet2 affair?
I think not, as there wouldn't have been room in the market. I think they might have tried to develop the 360 and AT7 services as BA regional services faded away.
Would they have been swallowed up by the likes of flybe?
Not if they had secured their niche - but flybe has certainly since moved into the area of the market that I would have expected Gill to be in if it had survived.
Don't think there's room for a return to the UK market, sadly.