Would Virgin benefit from a feeder airline? Much of BA's long haul passengers (where the money is) comes from outside the UK, helpfully provided by their short haul operation.
It's been reported many times that Virgin would love to acquire BMI, though it's never happened. Others have suggested easyJet, but they have no Heathrow presence (and probably never will) so the future for Virgin could be rocky.
People who choose Virgin over BA on competing routes do so perhaps for the traditionally better service, or the more modern feel to the airline, but if these attributes are slipping, as reported by others above, then what else can they do to compete with a resurgent BA?
I think the future for Virgin has to include some kind of short haul feeder alliance, particularly in light of growth at Madrid CDG and AMS.
JT