Willie- Your name asks the question and I think you know the answer.
The problems Canadian and US airlines have in common are that the bright new jets (even RJs, I think if they can manage to get out of everyone else's way) need lots of punters in the back. To get lots of punters in the back you either get a bunch of paxs in one spot or make lots of stops. Don't think there are more than a half dozen or so places to get enough paxs together in Canada, so you then have to feed with smaller aircraft. The feed with commuter/smaller carriers trick is somewhat disruptive, but does require more pilots.
The economics of the situation don't support many carriers and flights, including charters. Certainly can appreciate a degree of protective/restrictive policy to benefit the locals. Believe the benefit runs mostly to airline owners/operators that want a cozy little monopoly and indirectly but more importantly to the banks and other capital investors that want their investments to be safe. The pilots and staff are on and off work as needed and many want to be mobile internationally so they are on work more than off. This is especially important for staff in a relatively small aviation industry like Canada's. It is somewhat easier for Canadian staff to be mobile, I suppose, because of their rep (well deserved from my experience) of being well trained and well qualified and some even speak english (eh?).
Remember that the best way to make a million $ (even Canadian ones) in aviation is to start with 2 million