Tradiditonally FR have always enjoyed a significant cost advantage over all other operators for reason that are well known and don't need repeating, the move to airports where they have to pay rather than be paid will slightly erode this margin but not by much.
Of course bigger airports will have more compertion, but most importantly the customer base changes and becomes more decerning, FR will often operate from gates miles from security that are cheaper in some cases it the bowels of an airport using facilities that have long being bypassed by newer CI desks.
These same customers also want mobile check in, free text updates and increasingly access to wifi for free, in other words we are seeing a change where the Loco is moving closer to the legacy offering but with a much lower cost base.
Managing this cost increase is crucial, Ryanair have moved very quick this last 12 months to in the words of MOL stop pissing people off for no good reason, but all they done is to pick the low hanging fruit so far, cutting the arrival fanfare, easing the sell sell meanality during early/late flights and allowing a little more discretion on hand luggage, but so far as I know they will still charge for a boarding card, hold luggage is still just 15kg, the interior decor is dire
I think the likes of Monarch are at serious risk if FR continue to up their game, but I think it will be some years before they are voted best low cost airline in skytrax or which magazine