I did wonder if the reason for saying no was simply because as they hadn't sold any tickets, they weren't planning on staffing it as you say. As part of the conversation they asked if I wanted to pay to upgrade but given it was a short flight, didn't entertain that or ask how much it would be.
I think probably fair to presume that given they hadn't sold any tickets for it, there was a risk the only 2 people sat in the cabin were there for free and then the impact that has on stock levels etc