Rad Alt, the first 330's are among the cheapest as they were compensation for the 380 delays. The newer ones are being paid for at more like market rates. The routes Jetstar fly could all have been done by the 767, however, it would increase their costs compared to the 330. The one goal of management is to ensure JQ keeps its low cost base, even if it results in an increased cost to mainline.
In the AO days, there were fewer 330's. The 767's cost a lot more to maintain given the fact the majority are closer to 20 years of age. Have you been in many lately - they are getting unreliable, showing their age, and are not popular with the business class punters.
As to whether AO was a raging success or not, it was obviously not financially worth it, as it was replaced again with QF mainline. I was not up there so I have no in depth knowledge of the Cairns market.
Also, why do we have a JQ CEO who gets judged by the performance of JQ, and a QF CEO who gets rewarded based on the performance of the group, not just QF. Therefore there is nobody with an interest in Mainline, just executives driven by the success of JQ.
An interesting snippet was that all other LCC's created by legacy entities have failed prior to JQ. This case is probably going to be the first whereby the legacy carrier ends up dead and buried because of their own LCC. The competition are loving the way QF and JQ are more focused on competing with each other rather than those they should.