I think what people miss here is the RFDS don't bid for these contracts just because they want to. They use these contracts to help with things like economies of scale and to provide funding for rural health and keeping the traditional parts of the RFDS operating. They arent in this for shareholders or company directors, but for the general public in rural Australia.
To state they use their donations or otherwise to help them get these contracts is crap, they have had their funding reduced dramitically over the last 10 years, and have to compete with a myriad of other charities chasing peoples money. They are also very extensively audited in how they spend the money they receive.
They aren't perfect, the RFDS is a hugely political machine (which i have experienced), and they have had problems with the AAV contract, especially earlier on (remember those day Wally!) but i think maybe the government and MAS has made an error here.
All the best for the current crop of pilots..good bunch of guys and girls.