In part because there's no capacity for more services, unlike if Crossrail 2 is built and run services from Waterloo to Plymouth. Also if you think the business case for the route through Okehampton was bad the DAL is noticeably worse with little scope for improving it.
Before I am accused of saying that just because it happened in the past, there's a lot of population of the SWML area who currently have to head North or even North East before heading West. By being able to avoid needing to travel via Reading (on a 1tph service) chances are the ability to leave later/arrive earlier could still be done.
No whilst it's unlikely to significantly reduce demand through Reading it may be enough to allow some additional capacity.
Add to that the potential for people opting for an easier journey (for instance Southampton to Salisbury and then Salisbury to Plymouth vs Southampton to Reading using XC and then Reading to Plymouth, potentially having to stand from Reading to Exeter at busy times) then it's for the potential to generate a fair amount of extra income. Certainly more than the DAL would, even though (even allowing for redoubling of the WofE line) the DAL would cost more
1. If there's that much demand from "the SWML area" to places west of Exeter then wouldn't it be a lot simpler (and a billion pounds cheaper) to find a single 158 to reinstate the through services from Waterloo to Torbay/ Plymouth that BR/ SWT used to provide?
2. Under your proposal, presumably lots of people from "the SWML area" would still have to "head North or even North East before heading west"; the only difference is that they'd be heading to somewhere like Basingstoke onto a 1tph service rather than heading to Reading onto a 1tph service?
3. If the Reading - Exeter service is so busy that you have to stand all the way then isn't the priority to improve that service in the first instance?
Then there's the running costs, if you're running services on each branch (Okehampton and Tavistock) then the extra trains/staff to run them as a through services would incur almost no extra costs but they would generate some extra income as more than zero people would use it if it existed
It's 23 miles by road between Okehampton and Tavistock - unless you are going to build this line to particularly fast alignments I'd doubt that one unit could provide an hourly service between the two (based on the fact that one DMU cannot manage to provide an hourly service on lines like Huddersfield to Bradford or Wakefield, given the need for turnaround times)
I think one DMU requires around £250,000pa staffing costs (given the fact that you're probably talking about twelve hours a day/ fifty two weeks a year, so need holiday cover etc - plus we need to cover NI contributions/ pensions), as well as the costs of the train itself (depreciation, fuel, maintenance etc), so you'd be needing a lot more than "zero" people on board
And there are suggestions of building the line for two trains per hour throughout? Which is a problem with these threads - people want this to be both a simple cheap route (in the "how hard can it be" league of projects) but also fast enough to allow two InterCity trains per hour from Plymouth to Exeter at comparable speeds to the Dawlish route)
Yes it's £1bn however that's not all that much in the greater scheme of things
£1bn is a lot in the greater scheme of things
it wouldn't require much (if anything) in ongoing support beyond what is already being spent anyway (unlike a lot of other reopenings into rural areas)
See above re the cost of just one DMU in service - you'd need to cover the ongoing subsidies (e.g. nobody talks about the drain that routes like the Borders line are on public finances - meeting expected passenger numbers doesn't necessarily mean that a line breaks even in terms of operational costs)