The whole problem here is one of "derived demand" - put simply people do not purchase an airline ticket because they derive pleasure from the product (i.e. The flight) - the flight is simply an unavoidable hurdle to get from A to B.
As such any airline that undercuts on price will quickly pick up market share. In economic terms it is a very price elastic market. The inevitable product of all of this is a race to the bottom. As one poster said previously as soon as one carrier starts ramming in 10-across seating into their 777s everyone else is forced to follow suit in quick succession.
Ryanair leads the market with a cost per seat of around 27 Euro for a one hour sector. Wizz is close behind at around 30 - the others are scrambling around to do anything they can to hold onto their market.
This, sadly is 21st Century short-haul aviation. My prediction is that Ryanair and Wizz will have 80% of this market by 2030 unless other carriers rapidly sharpen their pencils.