EI aren't selling the tickets or setting the price you're paying for them, hence they're not the ones who need to "compete"
I find this very strange and unique, so you are basically saying that EI accept whatever amount of money that KL or MH decide to give them? And that any web based travel agent can sell tickets for whatever amount they desire?
Strangely enough, that isn't the way it works! EI may have pulled themselves off reservation systems such as Amadeus, but they are still the only people that can set fares for their seats! And if KL or MH are selling seats on EI aircraft, then these are at fares set by EI.
With the increased capacity offered by EK/EY from Dublin, where are the passengers coming from? Are they a newly created market or are they people who would have used EI to travel to a connection airport in the UK or Europe? If its the latter, than any increased in capacity offered by EK/EY will have a detrimental affect on EI.
Mutt