This is not a BACF / Flybe / BA carve-up, of that I am sure. It smacks of desperation with Flybe which has five spare Q400s this winter (and perhaps many more!) and needs to do something to avoid contracting too far, particularly as some of the spare aircraft will be accompanied by a loss in turnover from contract flying for Brussels Airlines. Although much lower yield, I stick by my views that they'd have been far better off on GLA/EDI/BHD-SEN than this crazy mission in LCY.
And if they have a commercial deal at LCY, you can also be sure that BACF will be meeting with LCY management very soon to ensure that their deal is better than Flybe's, given that they are a much larger operator there.