So it's unreasonable for Continental to require their subcontractor to be on time?

There's nothing wrong with pressuring a subcontractor to perform its contractual duties. There's everything wrong with a subcontractor who cuts corners and sacrifices safety in response to that pressure; wrong response to a valid request.

A big problem with the commuter airline industry is they frequently operate with low-time pilots who gladly work for low pay (and lousy hours) just so they can build up their flight hours to try to move over to the big boys.

I don't know how that equates to railroad subcontracting, but it may not be so different.