The staff are in one place. The engineering cover is in one place. The aircraft are based in one place. The passengers are fed into one place. This is the hub and spoke concept, the one that Emirates uses really well too remember.
If 1 HKG flight was moved up to LHR, that frees up those pax to go MAN-HKG direct, the old LHR-HKG slots could be used to open up a new needed route from LHR so not only are pax staying with BA/CX, but they will be happier thanks to a direct service and BA gets its much needed expansions and BAA doesnt loose out at the pax/slot void would soon be filled with another route. Win win win for all sides!
Yield wise, say a ticket MAN-LHR-HKG was £500, pax are obviously happy paying this and BA/CX are obviously happy with the returns of this. They could still charge £500 for said ticket MAN-HKG, but lower landing fees and the removal of the need of the MAN-LHR segment means profit per ticket actually increases!
What you say makes good sense but I have to say that it really, really doesn't work like this in reality. One hub at either end, not a split hub between the UK capital and another airport.
Do you really think BA has Cathay's arm up it's back preventing them flying HKG-MAN? In the real world, a direct MAN-HKG would cost more for a ticket more than MAN-LHR-HKG. Why pay more to fly direct when Emirates has a good one stop service for less? Remember that one less flight from LHR, in some eyes, makes LHR less competitive. If Cathay moved a flight to MAN from LHR, what can happen is that the competition juggle slots and fly the same route at your old time and nick your premium passengers.
This was the reason the "BA Hub Without the Hubbub" concept crashed at LGW. Every flight they moved to LGW left the front end at LHR with the competition. Yes I agree that's a little mad but there we go!
I doubt anyone would drop a LHR slot in favour of MAN, the question remains why CX have failed to add a complimentary service on the A340 say. For that, I suspect the reason is the Emirates A380 and the rise of Qatar and Etihad at MAN.