In a nutshell Liverpool suffers because it is so close to Manchester.
If you look at other comparable regional airports like Bristol or Newcastle, they are still the primary airports for their regions.
East Midlands and Leeds less so because there is certainly stronger competition from Birmingham and Manchester respectively, but are undoubtedly much less effected than Liverpool with an airport carry 5x as many passengers only 40 minutes away.
If you take the East Midlands/Birmingham example, there is a bit of a split with the mix of traffic they have. East Midlands is mainly Low-cost and holiday charter, Birmingham is also holiday charter but has lots of domestic and hub services by regional and full service carriers with much less low-cost.
If you look at Liverpool/Manchester, in only 2 years Ryanair have gone from only operating a Dublin route from Manchester to making it a base airport bigger than Liverpool! EasyJet have also shifted traffic and are only slightly bigger at Liverpool now.
Manchester is certainly the most diverse airport in the UK as it covers pretty much everything to a high level. It has long-haul, short-haul, hub, domestic, full-service, holiday charters, low-cost... pretty much everything you could think of.
Liverpool now has nothing unique so to speak and with Manchester now with pretty much everything now covered, is there still a place for Liverpool in the market?? It's certainly very concerning.