VH,
Pruners have lots of theories, so you certainly are entitled to yours. However, any investor or group of investors in a new regional airline would need to clearly see how, when, and where, their potential investment will yield a return in order to gauge the level of risk.
With the existing level of coverage provided in the eastern states by Qlink and REX the risk would be very high indeed. So the potential gains for these investors on their speculative investment would need to be correspondingly high. Unfortunately, airlines are and have always been, very poor risks because of their high setup costs and uncertain and changing market conditions.
Highly profitable existing airline operators don't just roll over when a competitor comes along, they fight for their 'turf' using all their resources, including price discounting, schedule frequency variation and service. So in the end the winner is always the operator with the deepest pockets and this is generally not a new competitor who is trying to both manage their start-up costs as well as get 'bums on seats'.
You mentioned the ATR, which at the moment is $16-18 Mill (USD) per copy for an ATR 42-500, with the new 600 series even more expensive. The ATR 42-500/600 has only slightly better performance than the Saab 340's operated by REX and much higher capital costs on lease or purchase. So that means REX Saab's could compete head on with the ATR and beat it on price and frequency all day every day.
Apart from the capital fixed costs there are other substantial setup costs, not to mention the hourly direct operating cost of the operation.
Governments in the states and or territories of the proposed operations need to issue route licences, which in NSW occurs on a 3 yearly cycle for existing licence holders. If the 'new' operator wants any of the existing licences they need to apply well in advance, immediately alerting the incumbents who will fight to retain profitable licences.
If your 'new' operator wants to operate to currently unserviced ports such as Cowra or Ivanhoe or Young, etc, they could apply for these licences, again telegraphing their intentions to the incumbents. However, these towns and others like them currently don't have RPT services because they are within reasonable country driving distances to larger centres that are serviced by Qlink and/or REX.
Earning enough profit from these smaller towns sufficient to justify the investment would be difficult indeed and the restrictions on 'slot' availability at Sydney may not enable the operator to offer a schedule that would be attractive for the all important business travellers.
As you said, time will tell.
The Oracle