That's the issue i have. If First were to cut the 38 east of Linlithgow in it's entirety then residents along the route would have a poorer service than they did before the launch of the EX2/X38. Ideally you'd want Lothian to extend the EX2 and/or X38 to Falkirk (might actually make it viable off peak), but that's not going to happen. Somethings going to give as there's not demand for 3 buses per hour along the corridor off peak, never mind 9 per hour. I'm not going to speculate who will cut/pull what first as it's near impossible to know in this scenario. I know those living on cloud 9 like to think the services are busy offpeak, but they ain't.
I don't see First maintaining the 38's Linlithgow to Edinburgh stretch for that reason, and to be honest I think this is part of the longer term strategy now that First are free from the SPT undertakings. Lothian Country will service the route between Linlithgow and Edinburgh through the EX2 and X38 (perhaps slimmed-down, depending on experience over the next year or two) and First will retain the Stirling to Linlithgow section with their own 38. There's surely very little demand for travel across Linlithgow (eg Kirkliston to Polmont), and a railway station at Winchburgh might mop up a lot of that anyway.
I guess the big question is when First decide to pull the plug. From that point it leaves Lothian Country in a position where they really do need to make money from the route because they won't have the luxury of being able to withdraw themselves without public uproar.
This is what i keep banging on about. Certain people (who seem to favour Lothian) keep expecting First to just cut/pull away, as already proven in the main WL area this is not the reality! What your post is basically saying is that First should pull their long standing service so that Hall & Co can profit off their new service, this wouldn't be a win at all. Everyone along the route of the 38 would loose out. Also i believe the opposite, there would be a bigger uproar if the eastern section of the 38 was axed rather than the X38, as the 38 being cut affects a far wider population. If the X38 was cut there would be no real loss as all the connections it provides are offered by the 38, EX2 and other services. Whereas if the 38 was cut vast numbers of links are lost.
How do you know they are all empty?
It's a well known fact at this point that all 3 services are practically dead offpeak and are not exactly carrying anything impressive onpeak.
