I live in the West Country (Bristol, although some in Devon and Cornwall believe that Bristol is South Midlands) and FGW seems always short of coaching stock with trains packed in the rush hours with promises but little action about improving matters. Plymouth, much worse off than Exeter for any connectivity, has been trying to get better train services from London for years without success.
I doubt that there is any spare stock going, especially HST units, unless it's diverted from elsewhere in the region - unlikely!
Most of railway South West England is destined to remain in the diesel age for years perhaps decades to come, with electrification only coming to London-Bristol-South Wales (plus Newbury and Oxford) from Paddington in the next few years.
EXT-LCY does look marginal versus the train.
In 2003 and 2004 Air Wales tried a service, 3 x daily at first, from Swansea via Cardiff to London City. Within a few months Swansea was dropped and the CWL-LCY leg reduced to 2 x daily, which by the following year had become Monday and Friday only and that was then axed completely before the end of 2004.
Cardiff-London Paddington is typically about 20-25 minutes shorter in rail journey time than Exeter-Paddington. An air alternative didn't work for Air Wales from Cardiff. Would the extra 20-25 minutes swing it for Flybe? Must be something of a gamble although I certainly hope that Flybe wins the bet.
Addendum
I meant to say also that there might be a difficulty in finding a path for an additional train at peak time into the extremely busy Reading-Paddington section.
Last edited by MerchantVenturer; 23rd April 2014 at 10:28.
Reason: Addendum