RJs can make some great profits if used on a captive audience with no other direct flights available. I believe XJT is making a good profit on at least their Mexican flights and probably on quite a few overall. As far as showing that RJs can work right now- look at the American Connection flights out of STL. STL was greatly reduced by mainline AA a few years ago, but it is now a hugely profitable mini-hub with the RJs doing direct flights, mostly to airports that have no other direct flights for competition, and charging very big ticket prices for these direct flights. They specifically avoid going head to head with Southwest and most other carriers unless the other carriers are also charging big bucks for the flights. Another factor that helps is keeping the connections to a minimum so that almost every seat is paying the full price for that specific leg. To work, an airline definitely needs to closely watch the competition and avoid any possible fare wars on RJ routes since they cannot win a fare war against a 100+ seat carrier with big pockets. There are definitely quite a few things that limit the opportunities for an all RJ carrier, but if very carefully planned and operated, it can work in some cases.