A lot of shorthual destinations need the feed from longhual as well. You mentioned ARN as not being servced from LCY. It was dropped last October. I flew it a few weeks before it was dropped, and the mid-week morning flight was empty. I imagine a similarly timed LHR-ARN flight would have been filled, mainly with connecting traffic.

Whilst originally LCY was dominated by business traffic, I think that was mostly due to it's location nearer the City and C.W., plus the short runway limiting aircraft size, than any mission statement alligning itself to the business market.

New aircraft such as the Embraers and A318 mean that new longer flights are possible. When the "standard" business destinations aren't filling the seats, there is normally enough demand to fill the seats to more leisure-orientated markets. Supply and demand. If BA were making more money flying LCY-MUC than LCY-IBZ, then they'd be flying it. They're not, so they don't. A lot of the holiday destinations have gone upmarket over the years. What used to be all charter flight destinations now are swamped with 5* hotels and luxury villas. The people using these high end tourist options are happy to spend more to fly BA, than easyJet or Thomson.