The payout stipend waives the employee's right to require the company pay for the C-class seat he is eligible for. The payout stipend is not for the employee's promise to sit in a big seat in front.

Therefore, no ethics problem.

Similarly, my company pays $40 per diem. Whether I actually spend $40
to eat, or pocket the $40 and eat TV dinners using my hotel room microwave, is irrelevant to the company. They know that each day I am travelling for them is $40 out of the company's funds. It's not important whose pocket that $40 ends up in....mine or some restaurant's.

I used to work for a company in Southern California. One Friday, they told me I had to be in Las Vegas on Monday for a huge week-long convention. All flights were sold out; they finally found a Y-class ticket for $677 round trip. The usual fare is $78.

I kept the Y-ticket and drove there myself (300 miles one way). The Saturday following the convention, I drove myself back.

Later I applied the full-fare ticket (as good as cash) to several personal trips.

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On another occasion, I needed to report to OKC on Monday for a job interview. A Y-ticket was sent to me. Again, I kept the Y-ticket, found a M-class ticket (requiring Sat overnight) to DFW. On Sat, I flew to DFW, hung around DFW eating delicious BBQ, and got in my self-paid rental car and drove to OKC Sunday night. I turned in my bargain National car, and picked up the Hertz car that was already waiting for me. Monday night, I turned in the Hertz car, got into another rental car and drove to DFW for my flight home. Even after the additional hotel, car rent, and BBQ charges, I came out ahead.