Highlands and Islands air battle launched
The dramatic move follows the breakdown of a partnership between Flybe and Loganair, which ends in August.
Loganair said it was "extremely disappointed" but it was "up for the fight".
Eastern will operate flights for Flybe between Sumburgh in Shetland and Edinburgh, Glasgow and Aberdeen, between Stornoway in Lewis and Glasgow, and between Kirkwall in Orkney and Aberdeen, from Septemmber.
Flybe pledged shorter journeys using faster aircraft on the routes, which are among the busiest it currently operates with Loganair.
It said one-way fares would start at Â£49.46.
Aviation consultant John Strickland told The Scotsman: "This brings a whole new level of competition to a number of important Scottish domestic routes.
"The key to success will depend on whether the market grows to allow profitability for both operators or whether it a simply develops into a price battle for existing traffic."
Flybe said: "We believe these new services provide an excellent proposition for our Scottish customers, increase market competition, and with the links into the broader Flybe network, provide seamless connectivity to a broad range of UK and international destinations.
"We are confident customers will value the benefits provided that include larger, faster aircraft."
Loganair managing director Jonathan Hinkles said: "We are extremely disappointed and surprised at this announcement.
"We have been negotiating in good faith with senior Flybe staff about a continuing relationship to ensure customers could connect from all of Loganair’s extensive Highlands and Islands network to the rest of the UK.
"Many of these connections will now be lost as a result of Flybe’s decision.”
"Flybe is intent on challenging us head-to-head on a few of our traditional and established routes that make up our extensive network in Scotland, but we are Scotland's Airline, and I can promise them that we are up for the fight.
"We’ve invested a huge amount in the infrastructure – engineers, ground handling, support staff – to provide our Highlands and Islands services and we’re here to stay.”
"Although we've been flying as a Flybe franchisee on these routes for the last eight years, we have been serving these communities for over 50 years.
"We will continue to offer best value and service to our customers including a free checked bag and no credit card payment surcharges on all routes.
"Flybe’s extra charges add at least Â£44 return for a bag and Â£6.95 surcharge to pay by credit card – a huge extra cost for passengers."
"As we get closer to the date of our transition from franchisee to flying as a solo airline on September 1 with a continuing codeshare partnership with British Airways for connections to London and worldwide and a new relationship with bmi Regional for UK and Scandinavia connections, we are all very much looking forward to providing the highest standards of safety, punctuality and service synonymous with the Loganair name."