Rivet - Birmingham and Manchester are both much bigger cities than Southampton which makes for a far larger demand for air travel and able to support greater competition. Please remembere that Flybe as a commercial company are not exactly making huge profits - they nearly went bankrupt a couple of years ago - better to have an airline with based aircraft serving a range of destinations than none at all.
Before people slag me off, I should point out that I used to live in Swaythling, about a 20 min walk from SOU.