I would say that it is difficult to lead on cost when you don't have the economies of scale of the jet LCC operators but the prices are reasonable and the product good. There is no reason for them to give the seats away through cheap fares.
I thought the ATRs we're going completely? There is no mention of them in the 2014 trading update I read. The fleet was to be made up of lots of Q400s and a handful of EJets. There are numerous low cost airlines operating mixed fleets but they're still low cost.
I agree they should find their niche and stick with it. I can't see London working for them whatsoever, be it LCY, STN or SEN or which other random airport they pick out of a hat. Regional UK - Regional UK and Regional UK - Nearby Mainland Europe is what they do best. All of the rest is highly competitive.