I guess Aer Arran got fed up with having to fork out the cost of extending Ronaldsway's operating hours - their last LTN was scheduled to arrive at 2100 and frequently arrived much later.
Airport statistics show VLM IOM/LCY at 781 pax for Sep. Running Mon-Fri that's 20 round trips say, 40 flights total. Average load is thus 19 on a 50 seater. And I've had some pretty cheap tickets, so I guess it's cheaper for them to pay for parking at LCY than operate to IOM.