How or who has determined it is a "balls up"?
Well for a start VA assumed Alliance were going to be able to take up the slack, but Alliance have limited capacity as well. Having old airframes may save dollars on charter, but getting them to do RPT and stay serviceable is another proposition.
Secondly, the exodus of crew from the ATR has had a bigger impact then VA's decision to reduce the fleet to 6 frames. So what aircraft could have filled the gap and saved the day....oh yeah, right....the one were getting rid of...paying tens of millions to pay of leases that didn't expire for years.