It's a very small aircraft that at peak times takes up a valuable landing slot. The major airlines have made this point time and time again...As long as people are willing to buy seats on NTL-SYD and the airline prioritises the route within its allocation and pays the landing fee, it has just as much right to exist than any other route.
Inefficient. If Rex wants to operate this, why not to Bankstown? That's still in suburban Sydney.
And remember for connections to/from international airlines, one still has to get from/to the domestic terminals that again chews up more time.