This debate is quite unbelievable. Air Southwest operate a Dash 8-300 with 50 seats, two engines, two pilots, one cabin crew and to deliver every Gatwick-Newquay flight, they run three sectors due to the stop at Plymouth.
Flybe operate a Dash 8-400 with 78 seats, two engines, two pilots, two cabin crew and to fly between Newquay and Gatwick, they don't have the extra landing/handling fees and additional sector-related maintenance costs of a stop at Plymouth.
Flybe ought to be able to produce seats between Gatwick and Newquay at a significantly lower price - and therefore be able to sell them at a significantly lower price - than Air Southwest. It's straightforward economics and there is nothing predatory about that. If they can't, then they must be doing something seriously wrong.
I fly to Newquay once or twice a year. I prefer to fly with an airline which has non-stop services and charges me a lower fare. I would not put myself in the category of being an aero-masochist who would pay extra for the privilege of a dive-bomber approach into Plymouth and landing in gusting crosswinds which was thoroughly unpleasant when I last had the misfortune to do it. I suspect most other passengers would feel the same way.