British entrepreneur Richard Branson arrives at the Virgin Atlantic 25th anniversary party in New York

Virgin Atlantic has shocked the markets by axing its Little Red short haul service after only launching it 18 months ago with Delta Airlines.

Little Red, which had flights between London Heathrow and Manchester, Edinburgh and Aberdeen, will end its service in 2015 after lack lustre passenger uptake.

"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," said Sir Richard Branson, Virgin Atlantic's president.

"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."

Civil Aviation Authority data shows that Little Red flights were sometimes flying more than 60% empty.

British Airways' owner International Airlines Group's CEO Willie Walsh called the domestic venture a 'mistake' recently.