Note that your XML data needs a root node and that your attribute values should be quoted, i.e. your data file should look more like this:
<!-- data.xml -->
<instances>
<instance ab='1'>
<a1>aa</a1>
<a2>aa</a2>
</instance>
<instance ab='2'>
<b1>bb</b1>
<b2>bb</b2>
</instance>
<instance ab='3'>
<c1>cc</c1>
<c2>cc</c2>
</instance>
</instances>
Now you can use XPath with xmlstarlet to get exactly what you want:
xmlstarlet sel -t -m '//instance' -c "./*" -n data.xml
This produces the following output:
<a1>aa</a1><a2>aa</a2>
<b1>bb</b1><b2>bb</b2>
<c1>cc</c1><c2>cc</c2>