Virginblue:
In answer to your question, Blue Island probably haven't done a London city routenot from the want of trying, but because the powers that be in the Guernsey States don't want Blue Island to do it as it will take pax from the Gatwick route. ie the states are using their power to authorise routes which only suits them.
Can the States also regulate the sale of connections through JER? What if SI simply offered an additional early morning / late evening departure from/to GCI on an ATR42 that continued - under a different flight number - from JER to LCY?