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The Authors Found That Recent Trends in Civilian Pilot Demand and Changes in Supply Will Increase the Opportunity for U.S. Air Force Pilots to Be Hired by a Major Airline

• Assuming an increase in commercial airline hiring to 3,200 hires per year (corresponding to a probability of being hired of 50 percent), a net increase in civilian pilot pay of 13 percent, and a net increase in civilian non-pilot pay of 4 percent through 2018 relative to 2014, the authors found evidence to support an increase in the aviator retention pay (ARP) cap from the current $25,000 per year to $48,500 per year, a 94-percent increase.
• A larger range of ARP, from $38,500 to $62,500, would be required to cover net increases in civilian pilot pay from 9 to 14 percent and an increase in major airline hiring to 3,800 pilots per year (corresponding to a probability of being hired of 70 percent).
• The dynamic retention model capability developed for this report can be used to consider an array of compensation policies for pilots, thereby providing the Air Force with an empirically based analytical platform to determine the special and incentive pays or other pay actions needed to sustain retention. It can also be applied to hypothetical scenarios, such as a near-term surge in major airline hiring.

An increase in pilot hiring at major commercial airlines could increase the outflow of U.S. Air Force rated officers and create manning shortfalls. In addition, because aviator pay (AP) and aviator retention pay (ARP) are now discretionary programs under Department of Defense Instruction 7730.67 and budget requests for them must be defended, the Air Force requires a capability to help anticipate the range of possible changes in civilian pilot pay and hiring and estimate the level of AP or ARP needed as a countermeasure. The authors provide data and analysis of airline pilot supply, compensation, and demand and conclude that major airlines are increasing both pilot pay and hiring, which could decrease Air Force pilot retention. They extended RAND's dynamic retention model to include the choice of ARP contract length and airline hiring. They estimated the model using longitudinal data on Air Force pilot retention for 1990 through 2000 entry cohorts followed to 2012 and incorporated new estimates of the civilian age-earnings profile of ex-military pilots employed by major airlines. With the estimated model, they simulated the effect on pilot retention of increases in civilian pay and airline hiring, as well as the elimination of AP for pilots assigned to non-flying positions. The authors found the levels of AP and ARP needed to offset those effects and sustain Air Force pilot retention. The findings vary by case, but a range of foreseeable increases in major airline hiring and pay would require increases in ARP to at least $38,500 and potentially as high as $62,500, well beyond the current cap of $25,000 per year.

• Chapter One

  Introduction

• Chapter Two

  Selected Previous Studies

• Chapter Three

  Sources of Pilot Supply

• Chapter Four

  Pilot Pay

• Chapter Five

  Evidence Related to the Demand for Pilots

• Chapter Six

  Dynamic Retention Model Overview, Estimates, and Model Fits

• Chapter Seven

  Simulations Results

• Chapter Eight

  Concluding Thoughts

• Appendix A

  Civilian Earnings Analysis for Pilots and Non-Pilots

• Appendix B

  Present Discounted Value of Earnings

• Appendix C

  Aviator Retention Pay Program, 2000–2013

• Appendix D

  Simulation Tables