I'm planning on taking my wife 'down under', perhaps I'd better rephrase that...taking her to Australia later this year or earlier next.
According to the KL Mileage finder, using Malaysian it's either 120k round trip Economy or 180k Business. Specifically, Upgrades are not available. Why would that be ? Surely in this day and age, an airline would welcome revenue for even part of a seat, rather than just give it away, or have I missed something here ?

Because the segment KUL - Australia is only operated by Malaysia Airlines ( as KL codeshare) and you cannot upgrade any flights on MH metal.

Upgrades are only possible on flights operated by KL, NW, KQ, CO.

I know that...my question was why ? Why would an airline not want some sort of revenue for a seat as apposed to 'giving it away for free?'

I've often wondered why but also note that it is a very common (near-universal?) practice in many FFPs: upg through FF points are usually only available for flights operated by the airline who established the FFP, and not partners even where BC/FC awards are available on said partners.

Beats me... in fact, FD members are darn lucky to be able to upgrade any fare on KL at least. In all other programmes that I belong to, this feature has been removed ages ago, leaving the possibility to upgrade "select" fares... Stupid, as the marginal cost is... marginal, as long as the higher-class seat wouldn't have been sold anyway. Much better for the airline, surely, that I pay for an economy seat use my miles for an upgrade to an unsold seat, and then pay economy again for my next trip instead of choosing to get it for free as an award. But I fear that, instead, the future all around is the Continental system, i.e. ridiculously inflated milage requirements *and* very low award availability....

<Puts on highly paid consultant to industry hat>

Ever hear of dumpster diving? University students will go to the back door of a donut shop just after closing and extract the big - and perfectly clean - garbage bag full of what had not sold throughout the day - and eat for a few days on the takings.

Some bakeries put their remaining merchandise on sale for half off thirty minutes to closing - and people line up waiting for the price to drop. You need two people to buy what a minute before one would buy, to get the same revenue, excpet now your costs are higher - double the customer contact, twice the bags, twice as many chances to make a mistake at the cash register.

Some very well known chains look at the two options and decide that for price integrity and operational reasons, that they will do the first - dump the product, rather than sell it for less, or even give it away. Really clever companies learn to adjust production and distribution accordingly, and really dumb ones donate the unsold product. Why dumb? Because they found a place to put the unsold product, and the recipient will start to count on the "regular supply" such that neither side has an incentive to improve the balcance between what is offered and what is sold.

<Takes hat off and goes to bed. Bah! Airlines!>

Difference being of course that virtually all purchasers of baked goods will still do so whether it's full or discounted price - whereas the vast majority of paid coach passengers wouldn't dream of paying a C/F fare. So - the seat remains unsold. And we end up using my miles for a free trips that we would otherwise have paid for...

I guess the reason for us not being able to upgrade flights operated by MH is not in KLM`s hands.Asian airlines are known to protect their premium classes more than european airlines, maybe capacity is also a factor or maybe they would charge KLM too much for an upgrade...
I am pretty sure that they want to protect their premium class, if you want to fly C or F, simply pay for it, otherwise better shut up...

BTW, is it possible to upgrade to C or F on MH, if you are a member of their FF product, would be interesting to know.

What I know for sure is the fact that upgrades to Asia and Australia are quite popular ( big surprise considering the flight durations ), but unfortunately KLM cannot offer anything in that regard, actually they cannot offer any substantial premium service in Asia...
Lounge access is still a big question on MH away from KUL, no upgrades, no select seating....

I know that Australia is a way overrated market from Europe, yield wise , but KLM should not underestimate that we have a choice and that most of us will very likely not choose KLM or MH to Australia, both * and OW offer much more choices and secured FF benefits...

But Threy, I still find it difficult to understand...Malay want you to purchase a Business Class seat..understandable, but the alternative is that via KL you can have a 'free' Business seat....the two don't seem to go together.

But I don't think that this is a KLM specific problem as it is handled that way in all programs.

You can always only upgrade on a handful closely related airlines (like KLM and NWA). For example, you can't use LH miles to upgrade SQ flights or BA miles to upgrade CX flights either.

As to why this is done that way, is I persume because the financial transaction is way more complicated across the different airlines / programs involved as you might buy a ticket of airline X and get the upgrade using airline Y's miles. Now, how much is the upgrade worth financially considering different fare bases for the original ticket? Where as if you get a business reward seat, airline Y just pays a fixed sum to airline X for a seat regardless of any special circumstances.

BTW - You can get upgrades using MH's Enrich program; however their earning / redeeming ratio is just awfull IMO...