Ever fly YYT-YYZ-LHR, that's a real pain in the butt! The YYT-LHR route was given the YHZ on account of YHZ passengers having to deplane in YYT for customs and complaining too much.
Reality is that neither YYT or YHZ could sustain the route on their own, so as a consequence, YHZ has generally lost their route as well during the off-season.
Back to the original topic, the Air Labrador cuts are indicative of the lack of traffic on the route and that it's just not feasible to have two airlines flying identical milk-runs to Labrador from St. John's via YDF. Labrador has a total population of about 30,000 and lets face it, unless you're government or a business with ties to the Island, you'd take the Jazz service to Montreal instead of flying to St. John's.