Was there perhaps some behind-the-scenes political agreement whereby the CAA/DfT refused to designate Ryanair UK as a UK airline under the treaty unless Ryanair Group agreed to establish a substantive UK subsidiary ?
The CAA refused to sanction Ryanair UK because they didn't think the original RYR plan was sufficiently British - I think it didn't include ANY UK registered a/c, they were all going to be all leased in from the parent company, thus they were deemed to not be a UK airline.
The CityJet situation is covered by Article 14. They are SAS flights.
While we are at the UK-Norwegian bilateral, I wonder how new carrier Norse Atlantic (which seems to be the old Norwegian Airlines reincarnated) can now offer London to New York direct.
Don't Norse have a UK subsidiary who have applied for a UK AOC?