Luton’s biggest market is London and not markets served by EMA and BHX. Even for my neighbours who live 5 minutes from Luton's terminal when it comes to saving money a trip to Gatwick by road or rail is often made when it comes to IT holidays.
Luton’s position has not been helped by years of summer overcrowding in the terminal, an airport that can take an hour to travel the last mile and a shuttle bus fleet that up until the start of winter was woefully inadequate and is not great even today.
A bad experience is long remembered and for Luton there are a lot of alternatives when it comes to taking the kids away for a two week break.