[kbenson]

I think the point is that you also can't do Toronto -> New York -> Washington D.C. and the reverse. presumably, you could get some people that wanted the full trip and some that wanted either leg and together have a profitable full route, but instead they are stuck with two separate routes, Toronto -> New York and Toronto -> Washington D.C. with no other options, and must rely on a a domestic airline to approximate that.

[madcaptenor]

Two-leg flights with one end at Toronto would certainly work. But if it weren't for the national borders, I could see Toronto acting as a hub in the North American air travel system like Chicago or Detroit. For example, say someone wants to get between medium-sized cities in New England and the upper Midwest - say, for the sake of concreteness, Providence and Milwaukee. On this route you can fly Delta and change in Detroit, or United and change in Chicago, or other routes that don't make geographic sense (Delta via Atlanta, American via Philly or Charlotte). Why not Air Canada through Toronto? This particularly works in Toronto's case because of its position so far south in Canada, where a lot of flights between eastern and western US destinations might actually pass over Canadian airspace.

(Map: http://www.gcmap.com/mapui?P=pvd-mke,+pvd-yyz-mke,+pvd-dtw-m...)