I enjoyed reading this thread, lots of good points!
I feel like this new environment is the norm, APD and fuel prices unlikely to change significantly. Flybe's model was good and I feel it will still be successful in future years providing it can get through the tough times. An airline like Flybe is needed in the UK but perhaps with extra consolidation and codeshares. Perhaps operating all the jets under Flybe Europe and rebranding the q400s under a separate name operating a low cost service (something I believe the q4 can achieve)
In any case if this is the new environment innovation is needed. I hope the new CEO will provide that and not just cut costs to make the shareholders happy and leave Flybe in a poor long term position.