The problem is this: Grandma gave two options, either give the cremains or fly her to the memorial service at full expense. From what I read in the opening post and the followups, I get a very strong impression that grandma won't react well to a new plan, an alteration of her proposed plans or plain 'no, can't do'. And on top of that, your mother, while she has every right to say 'can't do' will actually never do so, no matter how much people here insist it's ok. Your mother is desperately looking for a way to placate grandma and keep her happy.
In that case, the solution is simple: Fly grandma over there, in the way she expects and wants to be flown and treated.
Of course, if you'd ask me 'what is the right and ok thing to do'? my answer would have been different, but to all the excellent suggestions here the reply has mostly been 'but grandma won't accept it and mother won't stand up against grandma'. And with the combination of grandma's stubborness and your mother's soft spine, that is the only solution left, isn't there?