It does need the competition I agree, and the sale will help this but its also a case of airlines going where its most attractive. And I'm not so sure about the competition on the mentioned routes...
From Gatwick:
Alicante:
EZY - 31 weekly
BA - 21 weekly
Monarch - 11 weekly
Thomson - 2 weekly
Norwegian - 1-3 weekly
Thomas Cook - 1 weekly
Malaga:
EZY - 42 weekly
BA - 27-34 weekly
Monarch - 12 weekly
Thomson - 3 weekly
Norwegian - 3 weekly
Palma:
EZY - 36 weekly
Thomson - 19 weekly
Monarch - 14 weekly
Thomas Cook - 9 weekly
Norwegian - 1 weekly
Tenerife:
Thomson - 10 weekly
Thomas Cook - 9 weekly
EZY - 8 weekly
Monarch - 8 weekly
BA - 5 weekly
Norwegian - 4 weekly
Iberworld - 1 weekly (For Thomas Cook)
Now at Stansted we have:
Alicante:
Ryanair - 14 weekly
EZY - 12 weekly (Until 16th July)
Malaga:
Ryanair - 15 weekly
EZY - 9 weekly
Palma:
Ryanair - 11 weekly
EZY - 11 weekly
Thomson - 3 weekly
Thomas Cook - 1 weekly
Iberworld - 1 weekly (For Thomas Cook)
Tenerife:
Ryanair - 7 weekly
Thomson - 2 weekly
Thomas Cook - 2 weekly
Easyjet are the largest airline on a number of the routes from Gatwick but they have a lot of competition, so they probably only account for around 1/3 or less of the flights/passengers on each route. With Ryanair at Stansted that percentage is generally nearer to 1/2 or 2/3. I could see Jet 2 at Stansted though, the bigger question being, would they risk entering the London market especially being less known further south and having to compete with a much larger scale of MOL's army than anywhere up north?!