Gordon, your explanation would be fine and reasonable if we were talking about the cancelation of a few half-empty flights here and there. But Funjet was running several flights a day in some cases, and many of them were sold out. Their cancelation of all flights for the next two months has affected literally thousands of passengers in one fell swoop and their explanations are less than satisfactory. Yes, they reserve the right to cancel trips in case of certain circumstances, but for some, those circumstances do not exist.
For the passengers traveling to hotels not affected by Emily, and the proprieters of those hotels, this is devastating. According to Christi, Funjet was bringing 60% of the travelers to CZM, and the island will not well tolerate that type of drop in the rate of visitors. More likely, other airlines will step up and see the opportunity to make $$ where Mark Travel sees only the opportunity to CYA, and when Funjet is ready to play again, the hotels will not be so likely to make concessions for those who have been so willing to screw them. Not to mention the travel agents who spent days on the phone to Funjet trying to fulfill their duty to their customers. In the short term, the market will adapt to the loss of Funjet's business, and in the long term that will hurt Funjet even more.
I don't think that Mark Travel will be forced out of the market, but I do think that their "business partners" and customers will tug at opposite ends of their margins in the future to "punish" this bad behavior, and to protect themselves. So while this may have been a smart short term decision, it will be very costly in terms of goodwill.