Errr what exactly is the problem here!!!
Flybe have changed massively from the airline they were when they launched this route. Their success as a low cost airline means that the necessary changes to their fleet no longer support this route so they are ditching it. Sorry but I don't see the problem here. It makes complete sense.
Flybe took over this service from VLM who operated the route once a day, Flybe then grew the route to 3 return daily flights. It's a profitable route so you can't seriously expect an airline to give up a profitable route in this day and age without full assessment of its yield in the future.
It is clear that with the 37 seat Q200 leaving the fleet that an aircraft double the size cannot sustain the low passenger levels that the route generates.
I would anticipate that this route will be snapped up as soon as Flybe drop it and given their current expansion I would expect it will be by VLM.
We'll see what happens.