A merger between flybe and BA Connect at least guarantees that some of the routes will be safe. If the merger doesn't go ahead, then BACON will simply be closed down, or potentially offered to another airline, as British Airways has no interest in operating from the regions, as they cannot do so profitably. Whilst this may mean frequencies decrease, I don't see a major drop in capacity if there is market for these flights. Taking GLA or EDI as an example, flybe will be providing frequent flights, bmibaby will be on these at least three times daily as well as thrice daily from EMA, and there is also a decent rail service from Virgin Trains. With all of this competition, you can see how BACON were potentially being squeezed. It would be a real shame if flybe didn't take this opportunity to fill in gaps in BHX's shorthaul route network such as Italy, Eastern Europe and Scandinavia; as well as keeping up the excellent BACON network in Germany, virgin ground it seems for flybe.
I have heard that flybe are now nearly confirmed to be operating from Terminal 2 to be handled by Swissport. This seems like the best solution for both the airport and flybe. The airport doesn't see a huge imbalance between T1 & T2 as they did after the closure of duo. flybe get to scream the benefits of regional airport flying - ie quick from the car, to the check in, to the departure gate - minimal fuss which is what business passengers want. I think it's a shame that flybe might not be offering Executive Club benefits, as these would be a major incentive to keep people loyal to the proposed 15% owned by BA flybe. Hopefully flybe and Swissport can offer the high levels of customer service that BA Connect passengers have come to expect.