Iberia care as much about Palma as BA do BHX, MAN, GLA, EDI... can't see them giving up a valuable LHR slot to fly bucket and spaders to Majorca.
But on the other hand bucket and spaders are still flying in more or less the same numbers as before, especially short haul where increased fuel costs have had no significant impact on ticket price.
Whereas I bet Iberia has an awful lot of empty seats in business class on its services to MAD and BCN from LHR due to the credit crunch and demand for relatively expensive city breaks in economy class has probably gone down more than bucket and spade holidays during current recessionary times.
BEA originally ran LHR to PMI (using Tridents), then the mantle passed to Iberia with 727s for several years on their own before Air Europe joined them running another once a day service and their route then passed to British Midland when Intasun went bust (even though strangely Spanish offshoot Air Europa still survives to to this day). Iberia flew the route under Viva colours for the last couple of years after many previous years of full Iberia service from LHR to PMI before they were compelled to axe it along with many other routes when the EU complained the airline was getting too much state subsidy and hence competing unfairly. This then left BMI running the route on its own for the last 15 years or so on a once day basis (then joined by a second flight a couple of times a week during the summer peak in more recent years).
Mallorca has gone upmarket and not downmarket in terms of its tourism in recent years and a lot of the travellers are now self caterers in villas and apartments instead of package holidaymakers. At the top of this holiday tree are wealthy business executives living in the home counties to the west of London with enormous villas and most of them would rather travel on a recognised schedule operator from Heathrow rather than with no allocated seat and scrum for the plane only to be abused by cheeky cabin staff Easyjet from LGW, LTN or STN. PMI handles over 20 million passengers per annum and is nearly as busy as LHR for 6 weeks in the mid summer so I would submit that it could still sustain one flight per day from the UK's premier airport.