I'm not sure if either you or the person you're replying to are correct about safety. The way I see it, safety is completely orthogonal to regulations about routes, passenger services and so on. Safety's been on a rough upward trend throughout history as technology improves. No matter what tools are given or taken away from airlines for extracting value from their passengers, I don't see how it impacts safety, since actual flying is its own separate thing. The one exception is rules on e.g. crew composition, maximum working hours for pilots, and so on. But in these cases, deregulation would hurt both.