The debate about bmi and Virgin being the perfect match has been debated long and hard and would have had its merits. The networks and operations would have been complimentary. However, the issue is one of scale. Even a combined bmi and Virgin would still have been small by comparison to BA.
Range of destinations ex London, range of airports ex London, generally scale of frequency of departures ex London and a good product to boot would always have given BA the edge. And it is working.
Sadly for the history books as another airline is gone. The upside here is that for Virgin, it has a strong backer and the brand is in demand. Lets hope it sticks around for the long haul, pardon the pun...