Phileas,
Surely it's not that Flybe couldn't make it work (although night stopping an aircraft where there is no base is never going to help on a thinish route long term), it's that they got themselves into such a mess financially they had to sell their Gatwick slots, making the route impossible for them to operate.
They fought long and hard, and wrote off what was it £2m? to get a monopoly on the route in the first place, it must have seemed worth it at some stage.
The blame for no long term London route lies squarely at the feet of the inept and naive airport management. Lets see if this latest disaster leads to another payrise.