I understand that all of the airlines that fly 50 seaters want bigger airplanes, and I do agree that they will need larger airplanes (and newer airplanes) if they are going to survive, but there is a problem of scope. Unless AWAC can fly the larger airplanes for cheaper than the other airlines, why would AAG give them larger airplanes? They will simply fly the 50 seaters until they are no longer needed, and then either transition to something else or go out of business.
At this point, the scope is pretty close to maxed out on larger airplanes. There just isn't room to give AWAC larger airplanes unless they take them from elsewhere.
At this point, I would imagine that they will raise pay at the WO'd and keep the 700's and 900's at either PSA or Envoy and put the 175's at Envoy. That will be the cheapest option, unless AWAC or somewhere else can be cheaper. Since all profits at PSA and Envoy go to AAG, they have a significant cost savings even if the pilots get the same pay and benefits as AWAY.