Virgin Atlantic has announced plans to stop running its short-haul service, Little Red, next year.
The service was launched 18 months ago with a view to "reintroducing consumer choice" on key domestic services.
But bosses said the odds were stacked against the operation and it was not able to make a "positive contribution" to the group.
Virgin Atlantic had hoped that passengers would use the Little Red service to connect onto its long haul network, but most customers ultimately used the routes as a stand-alone "point to point" service.
Its daily Little Red services between London Heathrow and Manchester will continue until the end of March next year. Its flights between Heathrow and Edinburgh and Aberdeen will continue throughout summer 2015 with the final flights in September next year.
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Virgin Atlantic chief executive Craig Kreeger said: "It was always a huge challenge on behalf of the consumer, as the totally inadequate number of slots made available by the European Commission did not deliver close to BA's network position, even when supplemented by our own slots to fly between Heathrow and Manchester.
Virgin Atlantic president Sir Richard Branson, said: "When the competition authorities allowed British Airways to take over British Midland and all of its slots, we feared there was little we could do to challenge BA's huge domestic and European network built through decades of dominance.
"To remedy this, we were offered a meagre package of slots with a number of constraints on how to use them and we decided to lease a few planes on a short term basis to give it our best shot.
"The odds were stacked against us and sadly we just couldn't attract enough corporate business on these routes."
Ross Martin, chief executive of the Scottish Council for Development and Industry, voiced disappointment at the news.
"There was always a concern about the future of these services once the restrictions on how the slots could be used were lifted and it is disappointing news, especially for Edinburgh and Aberdeen, that they are indeed to end," he said.
"While Scottish airports have been making good progress in attracting new routes, this is a blow to Scotland's connectivity and there is a need now to focus on how our links to, and through, London and directly to international markets can be maintained and strengthened."
Passengers can continue to book with Little Red and the airline stressed it remains committed to its operations in both Manchester and Scotland.
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