The career cost: does it pay for a military pilot to leave the service for the airlines?

Abstract

The military is experiencing a pilot retention problem that is getting worse. The government spends millions of dollars training pilots in the most advanced aircraft in the world, only to watch them leave for the commercial airline industry at the first opportunity. As airline pilot hiring continues to improve, military pilots will depart the services for the assumed increase in financial compensation of the airlines. This thesis compares two scenarios: one in which a military pilot leaves the service to become a commercial airline pilot upon completing the initial active duty service obligation (ADSO), and one in which a military pilot defers becoming a commercial airline pilot until after reaching military retirement eligibility. The comparison is made by calculating lifetime income cash flows of both scenarios, and then discounting them to achieve a net present value (NPV). The findings conclude it is financially prudent for military pilots to remain in the service until retirement. The current policies enable a retired military pilot to earn over 9% more in NPV when compared to the military pilot who separates at ADSO completion. Military pilots who voluntarily separate prior to retirement for financial reasons are incorrectly evaluating the assumed pay disparity between the airlines and the military.