Before anyone comments on this, let me preface it with a couple of thoughts. Firstly, I've been annoyed with AC's "transition" in the merger with Canadian as much as everyone else. Secondly, my post is simply for the sake of argument, and doesn't necessarily respresent my thoughts on the issue.
Industrial Organization theory covers the economics regarding how industries and firms allign themselves within various markets. One section of this is a natural monopoly. A natural monopoly occurs when it is the most economically efficient in terms of costs and competition that only one firm operate within a market. This is due to decreasing average costs, and increasing economies of scale. With respect to airlines, regulators and competition law look at specific city pairs with analysing anti-competitive behaviour. Many Canadian city pairs are low demand, and perhaps Air Canada is the only firm that should be on those routes. Because of the high cost of obscure routes, they may be the only ones able to cross-subsidize it, as all of the other low cost carriers work on such low margins - what allows them to effectively compete. Is it possible then that C3 in it's big buying scheme, and Roots Air (as awesome as I think it is) maybe trying to compete in a market just may not foster competition?