For the second year in a row Heathrow Airport has cut the fees charged to airlines operating domestic flights. The intention of this is to encourage airlines to start new domestic destinations in the hope to gather more support for airport expansion from these areas. Heathrow is billing the 3rd runway as a project that benefits the whole of the UK so they want to ensure there's services from all areas of the UK to Heathrow to connect to their global network of flights.
This particular change won't have any significant impact on competition with VTEC services. The key VTEC destinations already have competition with flights from Heathrow, there's even a flight to Leeds Bradford although that's never particularly busy. Although this cut in fees will knock a few pounds off a flight from Heathrow compared to last year the fees from Heathrow are still slightly higher than Gatwick so it won't make a massive difference to pricing.
The main purpose of domestic flights into Heathrow is to feed connections, those who are using it for point to point are just providing additional revenue by filling up otherwise empty seats. Many people will find the thought of extra domestic flights to be wasteful. My view is I find the flights to be useful competition to VTEC but I'd be much happier if VTEC was going to make their service so appealing that flights would not get a look in. To cater for passengers flying overseas from Heathrow it would make sense if there was a ticket that provided protection in case of flight delays, TransPennine Express does something similar from Manchester Airport but from Heathrow there's no link up between train and plane which means those coming from the likes of Leeds are better flying to Heathrow because they've got protection if their flight is delayed.
Some other countries have integration with airline and rail. For example in Germany you can purchase a rail & fly add on to your flight which allows you to travel to any station in Germany from the airport and your booking is protected in the event of any delays. The add-on ticket is reasonably priced at 34 EUR in standard and 66 EUR in first class. There is limited availability of such schemes in the UK but they're neither well promoted or available on a large portion of the rail network. Having better rail-air integration would reduce the need for domestic connecting flights.