I used to have to travel from Manchester to Bristol quite a lot.
The problem with the plane was that Bristol airport was a long way out of town (and you have to factor in all the security nonsense too) plus limited flights.
The problem with the train was that I resented being scammed by Cross Country for having to pay for Anytime early train journeys that didn't even go via London.
The compromise I came up with was to use the train but in the afternoons, and spend an extra night in a hotel in Bristol which was more or less the price difference between off-peak and peak travel, also I discovered trains which started at Temple Meads as opposed to somewhere in the South West which meant they departed on time and empty. And I was in the office bright-eyed at 8 a.m. sharp
So both modes of transport lost out, and Ibis hotels gained.
Of course, if the train fare was a flat fare for all journeys, which was substantially below what an airline could offer, it would have been no problem at all. But it wasn't.
I've done that journey, and others like it going from the midlands to south west.
XC is a poor experience, from Plymouth to Aberdeen. Expensive, perpetually overcrowded and not even that fast - especially between Manchester and Birmingham. The stuff north of Birmingham is almost unbearable, not to say things are great south of Birmingham either.
My flatmate in Manchester at the moment is originally from Southampton area and frequently chooses flying over the train (or mostly getting a lift by car these days). Flying is faster, but can often be cheaper, or just a more comfortable experience (which is saying a lot). Other people I know from the area fly if they are in a hurry, or just drive. I know my friend in Bristol has used the coach to come visit me, as it's much cheaper. Personally I take the train because I'm very susceptible to travel sickness, especially by road, plus I'd go insane on a coach for that long. Even XC beats a coach (barely!)
What doesn't make sense is the train could easily be cheaper, faster and more comfortable than these modes. It's the most energy efficient, capable of the highest speeds and should be able to provide the lowest cost, considering the number of drivers, etc.
From what I can tell, XC services are expensive to run because of the fuel requirements of thirsty Voyagers/HSTs, the trains are often just 4/5 carriages long, with fairly low capacity per coach. Plus, they are running over fairly congested bits of track, especially round Birmingham, where express running is virtually impossible (this also impacts journey times).
What is needed is rolling stock capable of 200mph, which will be "classic compatible" with HS2. Then electrify Plymouth - Bristol - Birmingham, Leeds-York, and Bournemouth - Birmingham. GWR should be electrified anyway, so that would tie in quite nicely. Have these trains be at least 8 cars long, running at 30 minute frequencies, I can't see a reason why they wouldn't be immensely popular.