Well, there are a few ways to get upgraded. Most depend on the airline, the specific flight and in many cases on the crew members' attitude.
A "free" upgrade would occur when:
1. There's room in business (or first).
2. (usually) Coach is overbooked. This condition may be waived if you're a VIP, or if you're lucky enough to know a crew member...
When both of the above happen, there's the question of who to upgrade. I guess the answer varies among different airlines. Some will only upgrade members of their frequent flyer program, some will upgrade those who have purchased the most expensive coach tickets, and some would upgrade those who seem to "most deserve the upgrade". For example, I was once upgraded on BA
, after having paid over 1500$ for excess baggage. I guess they figured that since I practically paid the cost of a business class ticket, I might as well fly in that class... All in all, I would say the human factor is important. There's always someone who could decided whether you're the chosen one or whether you're not.
A "purchased" upgrade is actually simpler. Occasionally, when there's room in business, the airlines offer last minute upgrades on a "first come first serve" basis. This upgrades is usually cheaper than the difference between the tickets, but it's last minute cash for the airline. Recently, I flew LX TLV
, and they suggested the upgrade for about 450$. I declined, and actually enjoyed the flight in the half-empty coach section. BTW, even though there's probably an incentive to the agent selling the upgrades, I would assume the airlines do not tend to suggest them frequently - they'd rather have the business travelers buy the expensive ticket ahead of time, than wait to the last minute for this cheap opportunity.