A notable lack of looking at what the passengers actually want. Cardiff - Newport - Bristol is a busy corridor and people along this route will take whatever extras they can get, as long as there is the rolling stock for it. Would've thought that GBR and TFW could co-operate to enough of an extent that focus is put on providing a predictable, modern and frequent service instead of squabbling over who gets the money, but I guess I'm too optimistic.
It's not as with OAOs where rail profits mostly disappear from the rail network - both GBR and TFW's revenue is used to maintain and improve the network, whichever side of the (in practice arbitrary for logistical reasons - cultural is another thing) border gets that money doesn't really matter too much as it's all spent in roughly the same region.
Though ultimately, in a nationalised railway, funding priorities are based on political gain rather than network gain (not that fully private is any better), so any investment in Bristol routes by TFW, owned by the Welsh gov, wouldn't win any votes so may be lower priority - it's a tricky one to figure out as ultimately you could make the same argument for GWR's Swansea/Carmarthen routes, but cutting these for the same reasons would be (rightfully) seen as misguided.
This debacle is a great advertisement for a passenger/society-first rather than profit-first (or minimal-subsidy) railway, as perfectly sensible ideas like extending a few west Wales services to Bristol are points of contention - on paper, implementing such a service would be a good use of taxpayer money (from either nation), yet if the focus is on ticket revenue rather than the many other wider benefits of increased rail usage, it suddenly becomes a bad idea. Not to bring up one of the most common analogies in rail, but a taxpayer-funded road from England to Wales would likely face the same issues if it were a toll road, yet for some reason there'd likely be no motivation to make it a toll road even if it does reduce subsidy.