My first thought was "what g_leyser said," but on reflection, this could have been a miscommunication. Obviously if Y is oversold and C has seats, they'd rather get paid buy-ups than op-ups. Taken at face value, the SD would be saying "right, we'd rather IDB Y pax than op-up elites." That would be nonsense, and I can't imagine he meant this. He probably thought OP literally meant free upgrade -- "Gee, Mr. GA, can I sit in C for nothing?" "Why of course you can, sir, and thanks for asking!" -- rather than an operational upgrade, which, we all know, are not given out of the kindness of UA's heart but rather to avoid more costly IDBs. To the OP, are you sure the SD understood what you meant by "op-up"?

OR

The SD was an idiot.