Wrong.. It is not the "ON BOARD" staff who re-assigned the seats, but rather the gate agents. The "boarding door" close event is important, since all seat assignments have to be settled by the Gate agents before the boarding door is closed. So while it would have been nice for your issue to be sorted out at the gate, it was sorted out before the boarding gate was closed. The FA's onboard ("on board" staff), have limited to no powers with respect to seating (except to handling minor seat moves to handle inconvienences). The Onboard staff in AI and most airlines DO NOT have the power to Upgrade or Downgrade between class of service (Economy to Biz/ First and vice-versa) - That had to have happened before the boarding door is closed.

Again, the airline can urge you to upgrade (how many times have you checked in the kiosk, and you get screen prompts to upgrade for a fee), but the decision to upgrade was purely your father's. No one told him, that he would not be able to fly if he did not upgrade.

You can check with AI - but your case certainly deserves no compensation of any kind. AI fulfilled its obligations for both the Revenue and Non Rev passenger.