Very much like a PSO, there is a stipulation in the regional connectivity fund that if an airline is prepared to start services without RACF funding then any application for the same route by another airline requiring RACF funding becomes null and void. It is a sensible move to ensure that taxpayer funding is not wasted in launching competing air services on a route that one airline is quite happy to provide at its own commercial risk.
If Flybe do press ahead with SOU-MUC, it's therefore without funding and a pure kamikaze retribution mission. I hope it meets with the lack of success it deserves.