Some people, yes, but not most people. It is merely human nature that if there is a high likelihood of obtaining an upgrade for free, as there would be for top-tier elites, then people will take the risk of sitting in the back to save large sums of money. Las Vegas was built and continues to profit on much slimmer odds than that. Also, see below for BigBit's calculation...

My wife and I average something like 8 round-trips a year between the two of us, usually between SFO and IAD (the two most elite-heavy UA hubs), and I'm often at SFO to pick up or drop off my parents when they come to visit. I have rarely seen the elite check-in or security lines "nearly as long" as the GM line. I'm sure it happens, but based on my experience, most of the time the 1P/2P lines are much shorter. That is a pretty darn reliable benefit, in my opinion.

Yes, because it's not about the seats on any particular flight, but about the attitude and expectations that giving away those seats would engender. UA loses very little for a particular flight by filling otherwise-empty seats... but those passengers who receive the complimentary upgrade, especially if it happens multiple times, will be much less inclined to then ever purchase upgrades.

You don't pay for premium cabins, and you rarely upgrade, but imagine if you did pony up the money or 15K (or even 30K) hard-earned RDM to sit there. Would you seriously not feel somehow ripped off if your row-mate got called up from the back to fill an empty seat, knowing that he got it for free? Would you not then think to yourself, "Man, I could have had that seat for free if I didn't pre-pay for it" ? Would it not then make you think twice about paying for it in the future? That's the problem with complimentary upgrades.

UA isn't trying to be a low-cost carrier, nor is it trying to be a business airline. It is trying to be an all-around airline that offers relatively low-cost economy travel along with premium cabins, for those who choose to pay for it or who earn upgrades through their loyalty. If UA wanted to be purely an airline for business travelers who are willing to pay more, it would rip out all the economy seats altogether and become an all-C/F airline. That model has proven to not be economically viable, as evidenced by the other airlines that tried this model and subsequently failed. UA doesn't want to be an all-business airline, nor does it want to be an LCC. It wants to offer both options, to gather the largest customer base possible.

Moreover, the fact that "biz travelers are willing to pay more" speaks exactly to the reason why UA should not give out complimentary upgrades... because biz travelers are willing to pay more to sit in premium cabins. If they could count on getting even a 25% batting average on complimentary upgrades, why would they pay more at all?

So there you go. If even one 1K member decides not to buy F because s/he knows there is a high probability of getting into F for free, UA needs to sell an extra 4-5 Y tickets just to make up that lost revenue. Given the high chance of success, there will be many 1Ks who decide to gamble on the free upgrade, so now UA needs to sell 4-5 times as many Y seats to make up that lost revenue... except there aren't that many more seats to sell nor passengers willing to buy them! Raising Y fares to make up that difference will drive away many more customers than the marginal loss of 2Ps and 1Ps who continue to earn status but give the occasional trip to other carriers, and raising F fares will mean even fewer people actually buy F. For all of these reasons, giving out complimentary upgrades would result in less, not more, revenue for UA.

Only CO has implemented a similar program successfully, and that's because it (allegedly) has a superior F product for which people are willing to pay, and prices it lower than UA so more people are willing to pay it... at the same time, low-tier elites have to route themselves on relatively unpopular and elite-deficient routes in order to have a good chance at upgrading.

I'd say UA's strategy is working relatively well, actually... it's not really doing that much worse than any other legacy airline in terms of overall financials.

Any other 2P? I doubt that. There are a number of 2Ps and 1Ps out there who pay outright for premium cabins. They don't fly enough to make status, but status means little when you're already paying for a premium cabin. They likely contribute more to UA's coffers than your coach fares, even the high-priced last-minute fares.

Besides, UA has made it clear that they're interested not only in revenue but in how often or how much you fly. Mileage Plus is a mileage-based system. Elite status is earned through segments (number of flights) and/or miles (length of flights), not through revenue. GS is the only tier tied directly to revenue. The way MP is structured, how often you fly is more important than your revenue, although for the most part (MRing FTers excepted ), those two tend to be correlated.

You are thinking of CR-1s. e-500s are earned for every 10K BIS, regardless of quarter. The counter resets only once a year, on Jan 1. (Notwithstanding that, CR-1s are actually earned even if your 10K BIS straddle quarters... it's not the advertised criteria but that's what happens in practice.)