I agree that airlines should not limit upgrades by capacity controls. I disagree with your upgrade pecking-order here, however. I think volume over time speaks more than an occasional full-fare passenger. I reward airlines that treat me well regardless of fare paid with my loyalty. If airlines start adopting the "what are you doing for me right now?" policy, I'm not going to concentrate all my travel on one or two airlines, I'll just go for the cheapest each time. I'll re-order your list for you:

1) Paid 1st-class
2) Elite upgrade
3) Full-fare coach, elite (assuming higher elites already upgraded)
4) FF mile upgrade
5) Foreign airline elite upgrade
6) Paid upgrade
7) Full-fare coach
8) Airline employee

As you can see, full fare should be used to break ties among elites. After that, I think it should come just before putting airline employees up front. Otherwise, FF programs and alliances are meaningless.

[This message has been edited by Spiff (edited 01-07-2002).]