Quote: "Since BA doesn't operate a feeder from BHX to LHR, and therefore loses a chunk of what could be their LHR business to the likes of LH, AF, KL, LX etc I would have thought this would be a reson why IB should serve MAD from BHX, thus bringing revenue into IAG that is currently going elsewhere - or have I lost the plot on this one?"
IIRC LHR-BHX was a BD route which ended sometime in the late 1980s/1990s. Is this correct?
BHX is just one of a number of airports that needs a link to LHR for exactly the reasons you mention, ATNotts.
Unfortunately, with the lack of available slots at LHR and the price of them, combined with high landing charges and APD, it ain't going to happen.
What is needed are more direct flights out of BHX, GLA, MAN and the rest, but only EK appears to be able to make money doing this.