I flew KUL-CGK and the flight was 100% full, so I guess there are some profitable regional routes. The question is if an airline can survive doing only KUL-CGK
This is not surprising, only 738's and plenty of business traffic between the two cities. Based on my experience flying a couple of times SIN-MEL return on MH since MH 370 went missing, the loads on the 3 out of the 4 KUL/MEL sectors were very low, yet 3 out of 4 KUL/SIN sectors were virtually full.
When booking my flights and looking at expert flyer it seemed their ability to sell more seats on long haul were constrained by capacity at key times on the shorter connecting flights. MH use only 737's on their regional connections, but look at SQ, TG, and CX who use a mix of wide and narrow bodies on their regional flights (counting MI, KA & Thai smiles flights as well as mainline carrier).