I'm gonna confirm what everyone has been saying here.
Short Range High Frequency is good. Regional airlines can be very profitable for several reasons :
1. They take low capital investment so you can be quick to start.
2. The routes you want to fly with a regional aren't generally overcrowded.
3. Many home bases that are viable left in the game that have no based airlines.
4. On mediocre demand routes, such as 150 passenger, you will have an advantage over larger airlines that try to fly 1 150pax a/c while you can fly 3 50pax aircraft. People will prefer your route because you have more flights.
Secrets to making a regional work.
1. Use only one aircraft.
2. Don't be tempted to use larger aircraft, just use more route frequency.
3. Stay away from crowded airports.
4. Look at aircraft before you choose which fleet to use. Speed does matter. Look at the stats. People don't care if a plane is Turboprop or a jet, what they care about is the speed. While most jets are faster, they are also more inefficient. Also, some turboprops are very fast like the Saab 2000 which is nearly as fast as some jets.
5. Efficiency matters. If you have a low turn around time, you can fly many routes with the same plane each day. Also, do some math on just how fuel efficient your planes are and compare it with your speed. I worked it out in a spreadsheet for most of the planes you might be considering, and found the fuel consumption per passenger per 1000nm. What is the most fuel efficient plane? no surprises here, the A380, at 23kg fuel / pax / 1000nm. As far as regional airlines go, some of the most efficient are the BAe ATP, and the Dash 8 q400. I Chose to have a fleet of ATP72's because the ATP is not in production, and the Dash 8 has a very large order backlog. PM me if you want my list, it's on Google docs and you can sort it by efficiency, or price or range, or whatever. Equally important to what planes are efficient are which are not. The fokker f28 3000 is 3 times less fuel efficient than these mentioned.
6. Use the size of your airplanes to your advantage. Most larger airlines will stay away from 40-100 pax routes which leaves you with plenty of room since you operate smaller aircraft that will still turn in good profit even if they are only 70% full.
7. Look at the hours of operation of your airport. Some airports are 9-5 (9-17) which cannot be great for regional as you miss out on 11 hours during which people are willing to fly in significant numbers.
I know it was long, but there is some good info there for people who are starting the game late and are forced to make a regional airline.