wakeup, interesting point. I think GR management were very careful to assess potential impact on other LON routes before starting the LCY - the rationale primarily being to make up for lost capacity on the LGW following Flybe's pullout and the introduction of the Embraer (which saw a net contraction in seats offered on the route of about 18.4% between 2013-4) to ensure that fares on the LGW are affordable - particularly for leisure travellers - whilst allowing higher yield, less price elastic business travellers to use a conveniently timed LCY service.
Worth bearing in mind the new management tends to want to work with BI, rather than against it at the expense of both (as on the GCI-JER codeshare). CAA provisional stats for Jan indicate 1,344 passengers were carried on the LCY route. Back-of-an-envelope calcs suggest 42 movements so a 64% load factor, which is improving considerably each month. Of course the cost of the ACMI will be considerable - but it hasn't stopped growing yet.
Very hard to attribute patterns on the other LON services to the start of the LCY service - although it's true that the LGW has been in shallow decline for the last six or so years, that accounts for Flybe's capacity reductions and eventual pull-out. However, GR is seeing considerably higher load factors on the Embraer - it seems that being able to sell more seats for less has mitigated some of the capacity loss.
The States increasingly don't have deep pockets - they've just embarked on an ambitious reorganisation of taxation and govt spending - but the plan isn't for GR to consume island cash ad infinitum. Assisted by the Embraer acquisition, (overall) capacity cuts on GCI-LGW and GCI-JER, phasing out of the Tris, declining interest payments on the ATR loan - aside from much cheaper oil - breakeven isn't too far round the corner, although there'll be some big unforeseen costs this year (SB190s for the remaining Tris, ACMI for the Let, Dornier and F50, aside from acquisition costs for the new ATR and interest on the Embraer loan). We will see.