If they were not offering the bonus miles, there is a good chance that seat would have gone empty, and they wouldn't have the $750. Hilton is giving you 50,000 bonus points (actually more if you book online, etc) for what you could get as little as 2,400 points for.

Upgrades don't cost the airlines much, they certainly are not turning away people who want to pay for Business and first to give to upgrades. Same thing with free first class seats, they aren't turning away a paying customer to give up their seat.

Why not take it to the other extreme? Get rid of the consolidator, tour, etc fares? They cost way too little money. Don't sell any seats on hotwire or priceline, they certainly don't generate enough money. Loyalty, as any airline entering bankruptcy will show, is something the airlines need very badly right now.