Fares are dictated by the market, not costs. On the other hand, if competition is such that one cannot charge enough to make a profit, one eventually ceases operations.

The recent history of commercial aviation is littered with examples of fares which are likely too low for the circumstances coupled with insolvency.

The market is also limited. There are any number of people quite happy to pay BA's fares because they get a free drink in a lounge.