Woofrey,
AFAIK, The "airport express group" is a joint venture between National Express AND BAA. Please correct me if wrong here.
BAA's stranglehold on the London market is well known, and I believe was commented on by a number of airlines in their White Paper response. It does at least look like LTN will be fighting now for a bit more market share, but it is still a very small piece of the pie, and LCY is a mere few crumbs (even if they are premium pax).
If capacity is scarce on a rail route, it makes little sense to stop half the services in the middle of the route - that then creates a vacuum between LGW and Brighton half of the time. No-one's saying it is a perfect solution, but doesn't it make the best use of scarce resources? Trains can be shunted around, new track is a totally different ball game.
I don't know how realistic the re-opening of the line between Uckfield and Lewes might be - that would take some of the pressure away from the Brighton route, although I presume that would then mean a longer journey from Lewes? I know Chiltern are looking at an Oxford to Marleybone alternative route too, so sometimes a little extra mileage can be overcome by better scheduling, easier parking etc - I know they've taken a certain amount of pax from Virgin by opening facilities like Warwick Parkway.
The only other way of increasing capacity would be to increase train length (already done?), use double deckers (too many low bridges?), or reduce headways (no chance of getting past the safety lobby?).
Isn't that why the SRA solution may be the best, or perhaps just least bad, option?