Yes the domestic market is very competitive but I wouldn't say that it is a total money loser. For instance BA's EDI-LHR service is one of BA's top 20 most profitable shorthaul routes from LHR and BACF make a very nice profit on there EDI-LCY service.
You may be right, but airlines never give this sort of information out and only a very few select people within an airline know how particular routes are doing.