Whether or not there was previously an advantage for urban travellers doesn't make a difference; the activist only needs to establish that deregulation caused a disadvantage for regional travellers. The starting point could have been even or uneven; the activist doesn't need to assume either way.

The activist's argument is limited to the cause-and-effect relationship at play and doesn't involve any recommendations about what should be done. Because recommendations are beyond the scope of the argument, it's not necessary to make any assumptions about them.

The typical impacts of regulation don't determine the impacts in any specific case, and for airline deregulation to harm consumers it's not necessary that regulation is usually advantageous.

In other words, deregulation actually played a causal role in the change in airline routes. This must be true for the argument to work, even though it's not something we predicted. If the airlines' maintenance of regional routes was unrelated to deregulation, then the argument that the government caused the disadvantage falls apart.

(E) might look promising because it strengthens the argument, but upon closer examination it's not truly necessary. (E) gives one reason that regional airlines aren't a good enough replacement, but it's not the only possible way to prove that point. Maybe regional airlines have resources, but they also prefer to focus on more profitable routes—then (E) could be false, but the argument would still stand.