I'm not sure it s a strategic decision to reduce services but one born out of necessity - didn't the new CEO state he wanted to expand the business when he took over?
The UK Pilot market is buoyant at the moment, especially for experienced Pilots with the right to live and work in the UK, Logan are haemorrhaging Pilots far better career enhancing and paying options.
Probably a wise move to retreat to the core business until the dust settled - I think Hinkles saw what was coming.
Scotland actually NEEDS an airline to service the Islands, but the new Scottish tax rates won't have helped.