I think gleff is pointing out a slightly different scenario. It's not that the airline feels that they are upgrading someone into a seat they could sell, but, rather, they aren't always able to upgrade the elite on the expensive fare.

In other words, at the airport, you end up with, say, 4 seats open for upgrades at that last minute. But you have 15 people on that upgrade list, and some of them are mileage runners on cheap fares -- taking the seat away from the business traveler on a higher fare.

Most airlines upgrade based on time of request, not, for example, fare class.

Steve