I think this is a very interesting question, and one that I’ve been thinking about, too. The problem is, however, that I believe there are a hundred different answers, and they’re all correct.
On one end of the spectrum you have a case where a pax gets an op-up at the gate. There will be no costs for premium ground services. Pax will get a seat that would otherwise have remained empty. The costs include an amenity kit and slippers (probably less than 5 EUR), meals (let’s say 45 EUR*), drinks (AY J drinks are not particularly premium, and they’re tax&duty free, the average pax probably won’t wash down more than 15 EUR during a 10-hour flight) and the washing and cleaning of headphones and bedding (3 EUR max?). That’s 68 EUR for a long-haul flight if my prices are in the right league. Overbooking Y costs 600 EUR/pax + possible hotels and/or rebookings on other airlines, so op-ups to J are practically free for AY.
On the other end of the spectrum you have a AY+ Basic member who will potentially buy a J ticket if the price is right. But if there is upgrade availability, he will only buy a Y ticket and use points to upgrade. Say the J ticket is 1300 EUR ow and the Y ticket 300 EUR ow – quite a big loss to begin with. Then the Basic pax uses priority security (AY pays to the airport), the lounge (AY pays to the lounge operator), packs an extra bag and eats&drinks for the 68 EUR on board. This would be very expensive for AY because the other alternative would have been to show the pax U0 and have them buy a J ticket!
And in the middle you have a AY Platsku who will only buy Y tickets, who would never consider paying for J so there is no additional potential revenue to be had, who uses priority security and lounges anyway, who perhaps doesn’t check a bag so there will be no extra costs for that etc. To give him a seat that will otherwise remain empty in J doesn’t really cost AY much more than the 68 EUR we just calculated. But it makes sense to upgrade him last-minute to make sure those seats are available for purchase if a paying customer turns up.
* many many years ago, I read somewhere that a generic Y hot meal tray costs the airline (not AY in particular) about 20 USD. That’s quite a lot of money for what you get, and of course it’s not the ingredients, but all the logistics that make up the costs. The watered-down penny-pinched J meals AY serves today are not far from a substantial longhaul Y meal 20+ years ago. If we guess 25 USD/EUR for the first meal and 15 for the second, plus 5 for snacks, that amounts to 45 USD/EUR for the meal service, excluding drinks. Might be more for flights ex-HEL or ex-US, and definitely less for flights departing from cheap countries.