exchblg and Sanabas have it right : your overhead is killing you : basing in Western Europe or USA will do that, its the high staffing costs allied with the 'known' over-staffing for small aircraft issue: Japan is also poor : only solution there (for 30-seaters) I found was to get as many aircraft flying as possible and hope each made enough to help out. It worked, just, but never made enough to get past that point.
I also agree with the notion of building each route-set up to earning something before opening the next set : I aim to get coverage of the fatter routes first where I can get several daily flights in, push the prices a bit when they are developed, and use that income to fund the next mini-expansion : other tip is keep them flying : an extra trip a day is where the profit can really be made, so sweep up the close-in traffic early too.
Flying the small-birds is about micro-managing a lot more aspects of the game : leaving prices at default will hurt you : you either wont fill the seats or you wont earn the maximum from the seats you do fill. : but smart pricing will allow you to bend a few of the 'rules' : early take-offs, red-eyes, late arrivals ; which may be required to fill the schedules, can be made better earners with careful pricing. Check both legs of a route, one may be able to be price-raised, the other, landing after midnite, may need lowering : look at slot costs too, sometimes moving the flight times 10-20mins can reduce costs significantly as you go out of a high-price period.
Red-eyes are our friends : in major airports, you can fly in at night for a very low slot cost and, if demand is big enough, you can fill several flights and earn a nice wedge doing so. You dont need a major slice of the pie, after all, 30-60 seats out of a 1000 demand doesnt need a big market share
this is where I differ a bit : its based an advantage smaller aircraft have competing on higher-demand routes ; in that you dont need so much RI to start filling them to decent levels. Larger aircraft, with more seats, need a bigger share to do that.
while you wnat to target virgin routes, don't be always scared of competition : look at the numbers a bit : a demand of 300 means your 30-seater will soon pick-up enough pax, even with a low RI, to start earning well. RI of zero is actually equal to a 20% 'recognition' : so from day 1, 60 of that demand 'know' you. Convince half and you got a full plane. A demand of 50, with a competitor flying maybe a 60 seater is also fair game : match their flight, tweak your prices, and you'll get a decent chunk of that market too. But, a demand of 60 with two competitors already scrapping for it... mmm... leave that one for later.
its a tough way to start an airline, it needs patience and work, but it can be done and it is a nice buzz when achieved.