TUI's fare policy is a tried and tested model that is standard for package operators, why would it be unsustainable? My beef is with FlyBe, who are charging about 100 quid more to fly DSA-ALC than Ryanair from EMA. I'd probably pay an extra 40 quid to fly into DSA but not 100.
Catchment area isn't the problem for DSA, its getting more of those living in the catchment area to use the airport when, in cases such as ALC, FAR cheaper options exist down the road.