Airline may not supply over 200% of the estimated passenger demand on any route. This rule is in force regardless of the passenger volume or competition on the route. The rule is the same even if the estimated demand is 10pax or for example 1000pax per day, and also valid even if there are no other competing airlines on the route (the large seat oversupply would potentially block other airlines wishing to enter the route)...In practice this means that if estimated passenger demand on a route is 100pax per day (weekly average) the airline may not fly more than 200pax per day on that route segment. Any more seats supplied would be considered dumping the seats and thus trying to limit competition and entrance of other airlines to the route.
http://www.airwaysim.com/game/Manual/General/Rules/#CompetitionAnd if you have 10 airlines flying 1000 seats each on a 500 per day demand route (= at the 200% limit) then the total supply would be 10000, and it's still perfectly fine. Rule is per airline.
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