I am by no means an airline economics wizard, but I have noticed that on "thin but premium" routes, frequency of service appears to be the key to attracting and retaining customers.
Where I live (Victoria, BC), we have a similar set of services to what is being discussed here. A large ferry operates between Vancouver Island (City of Victoria) and the Mainland (City of Vancouver) at approximately 2 hour intervals. The ferry terminals at each end of the route are some distance from the city centers, thus a 'downtown to downtown' transit is about a 4 hour excercise. Information about the ferry services can be found here:
BC Ferries.
A helicopter operator offers S76 service downtown to downtown, information about the helicopter service can be found here:
Helijet schedule. Note the fare premium for the helicopter.
A similar service - downtown to downtown - is offered by a DHC-6 operator, using float equipped Twin Otters. Information about that service can be found here:
West Coast Air.
All three operators have co-existed for well over 15 years (in some cases, 35 years or more) and appear to have carved out their niche in the market. The ferry is the least expensive, but the slowest, especially for passengers who do not bring their own vehicle with them. The helicopter is fastest (by a small margin) but very expensive. The Twin Otter is priced in between the ferry and the helicopter and offers the best frequency (a total of 6 Twin Otters are used, although not all at the same time).
For sake of full disclosure, I have to acknowledge that I favour the Twin Otter, perhaps because I work for the company that holds the type certificate for the Twin Otter...
Michael