My argument to any airline is that even though customer culture has changed - years ago airlines could charge £500 return for demanding domestic routes and offer a good meal even though it's a short flight to help justify it. Now, it's entirely different, or is it? Sure customers want cheap - but I think customers are wanting to see their money go further, hence where BA succeeds on routes quite well. If BMIbaby grasped that charging a bit more and delivering a punctual and desirable service, they're on to a bigger winner. There's a reason the all business class from LCY to JFK is constantly sold out, going that extra mile works for customers. The industry hasn't changed too much to the extent of nobody caring about the frills, because people do.
Hopefully the top dogs at bmibaby aren't as brain dead as they seem.