Question: What's the profitability to passenger ratio generally? Like is it linear? If so then this really isn't an airline problem it's a policy and customer problem. They are offering the flights as they are allowed by policy, which means it has to go to Adelaide, but customers don't want to fly there, so the plane is largely empty. If the customer demand was there then would the airline be so against selling more tickets like the article implies?

If it's not linear, and like 30% capacity is less profitable than both a full plane or a near empty plane, then sure the airline could be abusing policy loopholes. I wonder if the policy penalizes cancellations then? Like what if the airline wanted to cancel these "ghost flights" for the sake of being more green? So they just always canceled the last leg.

Flying the mostly empty legs allows them to fly more times on the routes people want to go. Increasing supply on those routes should reduce passenger cost, even if the extra flight increases the airline cost.