...much of the reduction is the result of the removal of an aircraft that is Luton-based
The traditional reaction of airlines during any recession (sorry, "period of belt-tightening") has been to retrench into what they perceive to be their "core" markets and operating bases (= usually LGW). In past times, this has often left LTN high-and-dry. What now remains to be seen is whether LTN is still considered to be something of an 'outpost' or whether it's now seen a being very much part of that "core" business, particularly with the improved surface access (except of course, the Central Terminal Area and associated not-so-magic roundabout) from the end of this year and its public visibility as an established London Airport.
With diesel at £5/gallon and petrol at over £3/gallon, if I lived anywhere north of the M25, why the hell would I choose to drive down to LGW if I can fly from LTN? Trouble is, the traveller's choice is too often dictated by the airline strategists many of whom appear to subscribe to the "Dr Beeching Technique"
(run it down, reduce the services, then claim that pax stats show a fall in numbers thereby making the route unviable, so close it...) 
