Note that they didn't even try to offer a trade-in of ipads for the surface, which would be a more reasonable comparison if the surface was successful as a tablet
if they tried to pull THAT, they would have a crapton of people with older ipads trading them in. They'd be buried alive. A lot of iPad2's are out of warranty, and that's about the time schools and others consider an upgrade.
They're MS... they're big, and could take the hit, but it definitely would sting.
The surface though is more of a laptop trying to also be a tablet, than a tablet trying to also be a laptop. (sort of the iPad's territory) So I don't agree that it'd be a trade within the same market. It makes more "sense" to go against the air, but not many are going to bite, because the air isn't trying to be a tablet, that's what the iPad is for. As someone else has said, Macintoshes have an amazing ability to retain their value for resale, and MS isn't offering as much as the machines could get you on craigslist. Trade-ins for the competition's gear are a "try to pull people off the fence onto your side" maneuver, but the problem is it's only going to attract people that have already decided they didn't like their new mac, so it won't really serve its intended purpose.
Looked at another way, they're trying to enter two different markets with one product, and neither is going to do a really good job as a result. The surface isnt' really a tablet, it's more of a laptop that has some of the features of one. They were wise to see they'd lost the straight-up tablet market before they'd started. Targeting the MBA is probably the smartest thing to do right now. (I just don't think this is a very smart approach they're taking)
They could have had a lot more fun with this, and generated an enormous amount of publicity by just taking it all the way. Don't "trade" it in. Bring in a WORKING air to their store, and you get to go into a box and smash it with a sledgehammer. And then collect your discount. That would be money well-spent on marketing, for less than the cost of a few commercial spots.