not sure, but perhaps if the existing service has competition it might be cheaper to rebook your pax via them, rather than axing the new route with no competition where 2+ flights and compensation might be involved for pax. Reputation takes a hit whatever services get chopped.
But surely the route with no competition if cancelled those pax can’t go elsewhere? The routes with competition you are actively giving pax to your rivals. Maybe it’s less costly but seems bizarre and counter productive.