Yes avman but that is because you are confusing "service" and "product". In this case the product may include better service but premium class travel is a distinctly different product.
If you are going to sell a premium product you need to do so at a higher price otherwise you may as well stick to the basic product ( economy in this case). If you are compelled to give the product away in certain circumstances then it is better to do so to staff or where it overcomes another greater problem as described.
Airlines want their customers to pay a premium price for the premium product. Their aim is to fill those cabins with premium fare paying customers. Where staff passengers sit is by and large irrelevant. However if a premium cabin is not full, using staff to give the impression that it is may well suit the airlines commercial department ( and often does).
I suspect there are many industries where staff receive a substantial discount on the product and also receive or ( expect ) better service. That is a benefit of knowing the system and the people employed in it. I am sure if I work for a bank I might get a good discount on their mortgage or loan products. I also suspect my application may be processed as a priority. It wouldn't surprise me if some hotel staff receive discounts on rooms and also get free upgrades to better quality room types if available. The same with some car hire company employees etc.
Concorde is a classic example. This was a premium product that was failing. Not enough full fare customers. Some passengers were upgraded from other classes of travel in an attempt to promote the product but that still failed to generate enough new business. It may even have had a negative effect on full fare paying customers who wondered why they had to pay a premium fare when others were being given the product for a lesser price.
Staff were offered this product at a very low price because again it doesn't really matter where you put staff if you want to utilise them to increase your load factors and give the impression of a more in demand product without offending those who have paid for the product.
In summary what you give to your staff is irrelevant. The business survives or dies on the revenue you generate from selling products at the right price to your customers.
(P.S Waitrose is a supermarket. Waitresses ?)