My advice: dump more capacity. In other words, put more planes on the route. Sure, it's less profitable, but it makes a point that you're not going to be pushed around & not going to be the one to quit first.
I don't understand this. Why it's better to put more planes on the route than putting less planes with more capacity? I thought it's more efficient with huge plane than multiple small planes?
Other than efficiency, I can't think of other differences it will make.