I believe people are willing to pay for steam, and pretty much always will be. And it’s not like the price of diesel doesn’t fluctuate either.
People go to the SMR for the mountain itself, the photo at the top and the views if they’re lucky. As the vast majority pre-book it, the weather isn’t a relevant factor when people make the decision to travel. It’s a tourist attraction in its own right, regardless of traction. I’ve hiked it twice in recent years and the top wasn’t full of diesel bashers, and hikers weren’t stopping to film the diesel trains, but they were the steam… Steam is decisive, name a regular heritage railway that’s always busy that doesn’t have steam…
Err, the SMR rarely operates steam, but is busy. The Manx electric. The Hollentalbahn.
As you say, the SMR is a tourist attraction in its own right. Most people don't come for the steam. And I would say the same applies to most if not all other preserved railways too. Most non-enthusiasts just come for the train ride, steam is just the icing on the cake. This is surely true of the Dartmouth line, which is an attraction in its own right, in a major tourist area. I think they might see a slight drop in custom if they changed to diesel, but that would be more than offset by the savings they would make.
You say people will always be prepared to pay for steam. I think that you are burying your head in the sand. The question is how much. £50? £100? £500? The cost of coal has skyrocketed recently, and is seriously impacting on the viability of many preserved railways. The NYMR, for example, has been running at a substantial loss for the last couple of years. If preserved railways are to survive, they are going to have to charge prices that reflect their costs, and it now costs
significantly more to run a steam loco than it did just a couple of years ago. As I said, people are already jibbing at the prices that the NYMR are charging, and they are not even breaking even.
The SMR now charges a substantial premium to travel on its steam services. Most people prefer not to pay the premium, and are happy to travel behind a diesel. I think other preserved railways are going to be following this example, sooner or later. Hopefully before they go bust.