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It wasn’t so much BA’s decision to “cut back” (as it hasn’t really cut back – there are broadly the same number of BA shorthaul aircraft there now as was the case a decade a go).
It was more an explosion of low cost carriers introducing a cost base which BA simply could not match with the then existent crewing and other costs.
Thankfully, BA’s Gatwick operation was able to make pragmatic choices, supportd by the more reasonable Union reps, to reduce cost to go some way (though far from all the way) to approach the cost base of the LCCs while still offering a premium product.
The market moved to a highly cost sensitive model, in which a bundled product was simply uncompetitive. The introduction of some elements of unbundling (such as the “no bags” fares) is going some way to resolving this.
There’s still some way to go at Gatwick, but the lower costs and increased reliability of the airbus shorthaul fleet being deployed gradually from this summer should make competition more effective, though I’m afraid there is only one answer in the medium term for Gatwick’s shorthaul operation, particularly with more slots now at Heathrow, so take advantage of your Club Europe breaks while you can!