Why do you think being regulated utilities would preclude having multiple classes of service? Airlines had first class before deregulation: https://en.wikipedia.org/wiki/First_class_(aviation)#History

That's not how regulation works. Or at least not how it has to work.

I don't pay a flat fee for my water, electricity, or gas usage, regardless of how much I use. I pay for the gallons, kWh, and therms I actually use. (Yes, there are other fees on those bills, but my usage actually matters.)

Airline regulation doesn't have to specify standardized seat pitch, etc.

Ah yes, because I am also forced to buy the same amount of electricity and water from my regulated utility regardless of need.