>> Does frequency of flights matter? Is a 7 PAX plane flying 14x/week better than a 30 PAX plane flying 3x/week, for example?
Yes. Frequency matters! however, it's a combination of the previous flight and the next flight, the penalty is calculated by the MAX of those 2 values. (therefore if the international airline flies very frequently to your hub, then you are probably Okay to have infrequent flights - as most passengers can just time the inbound flight so the layover is bearable). On the other hand, if the international airline doesn't fly too frequently to ur hub, increasing the frequency on your end would help. Now the question is how to figure out frequency of competitor - the departures board will give u some hints
>> Is there a good way to increase the portion of your passengers willing to connect at a hub? I've added service to a bunch of smaller cities in my home country that few or no other airlines service, and I was expecting a lot of connecting passengers as my airline is the only one there.
This is because the virtual passengers around the world probably has no idea about your airline! Virtual passengers become "aware" of certain flight service by either one of 2 ways:
1. The airline has presence in their city - that is called awareness
2. The airline is known internationally - this is called reputation
As for the 1., it's very hard for you to establish service in every single town in the world so you would want to work on 2. - to make your airline more famous in the world
Hope this helps!