People seem to writing Flybes obituary on LCY routes vs Cityflyer quite quickly here without thinking about a few facts:
1/Costs - Flybes will be less than half the cost of the equivalent Cityflyer flight on the same route as the dashes sip fuel in comparison to the jets.
2/ Corporate deal market. Business is under pressure to reduce cost and if Flybe have corporate deals in place with City businesses and compete favourably on price then they will use Flybe and not BA. The frequent flyer schemes don't come into it. It's the businesses corporate travel policies that govern which carriers their employees use.
3/ IAG. Don't be under any illiusions about how fast BA would cut Cityflyer loose if they lose money. Ask any former BA Connect/Regional staff. BA/IAG cares about LHR, nowhere else. There will be no propping up of a loss making Cityflyer.
Flybe seem to have their house in order and know what their niche is and now seem to have the management team in place to capitalise on this.