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In the 1980s, the U.S. Air Force predicted that a shortage of pilots would develop in the near future. In response, the Congress authorized the Aviator Continuation Pay (ACP) bonus program in 1989 as an interim measure to improve retention of pilots. Authorization for the ACP program, which both the Air Force and the Navy have used since then, has been extended twice, but the program is subject to reauthorization in the 1995 session of the Congress.

This Congressional Budget Office (CBO) memorandum was prepared at the request of the Subcommittee on Military Personnel of the House Committee on National Security to aid the subcommittee in its deliberations. The memorandum assesses the cost and retention effects of the current ACP program and two alternative compensation plans. In accordance with CBO's mandate to provide objective and impartial analysis, this memorandum contains no recommendations.

Marvin M. Smith of CBO's National Security Division prepared the memorandum under the direction of Cindy Williams and Neil M. Singer. The author gratefully acknowledges the assistance of Amy Plapp of CBO's Budget Analysis Division who prepared the cost estimates. The author also wishes to thank Ivan Eland for his assistance. Sherwood Kohn edited the manuscript and Christian Spoor provided editorial assistance. Judith Cromwell prepared it for publication.
 
 

INTRODUCTION AND SUMMARY

PILOT SHORTAGES IN A CHANGING ENVIRONMENT

• Competition for Pilots Over the Long Term
• Shortages Vary According to Type of Aircraft

REDUCING SHORTAGES BY OFFERING BONUSES

• Alternative Bonus Plans
• Precedents for Targeting Incentive Pay

ANALYSIS OF THE COMPENSATION PLANS

CONCLUSION

APPENDIX: DATA AND METHODOLOGY
 

TABLES
1.	Estimates of Pilot Shortages in the Air Force If the Current ACP Program Is Continued
2.	Pilot Shortages by Type of Aircraft
3.	Bonus Payments Under the Current Plan
4.	Illustrative Bonus Payments in Plan 2 Based on Pilot Shortages
5.	Illustrative Bonus Payments for Fighter, Strategic Airlift, and Trainer Pilots in Plan 3
6.	Summary of Alternative Compensation Plans
FIGURES
1.	Pilot Inventory and Requirements in 2000 by Major Weapon System Under the Current Aviator Continuation Pay Program

 

INTRODUCTION AND SUMMARY

Although the Air Force is adjusting its complement of personnel to compensate for the drawdown in force structure, it continues to project an overall shortage of pilots in the near future. The Air Force must contend with the dilemma of slowing down the training of new pilots to meet the needs of downsizing and simultaneously undertaking measures that will increase the retention of skilled pilots to combat its projected shortage. Among recent personnel management actions, the Air Force is reducing the number of officers in undergraduate pilot training (UPT) and reassigning (or banking) some UPT graduates to nonflying jobs until flying slots become available.

In order to improve pilot retention, the Air Force has also relied heavily on its Aviator Continuation Pay (ACP) program. But authorization to pay ACP expires this year, and the need for reauthorization is likely to be the subject of Congressional debate.

Under the current ACP plan, the Air Force is authorized to offer a bonus of up to $12,000 to qualified pilots of fixed-wing aircraft who agree to remain on active duty through their 14th year of service. The Congressional Budget Office (CBO) estimates that with the current ACP program, the Air Force will have a small shortage of pilots in 1996 and a somewhat larger one by 2000. The shortage will vary considerably, however, by major weapon system (that is, by fighter, bomber, tanker, strategic airlift, theater airlift, helicopter, and trainer aircraft). In fact, pilot surpluses are projected in 1996 for the bomber, tanker, and theater airlift types of aircraft.

In addition to examining the current ACP plan, CBO looked at two alternative plans that involve further targeting bonuses as a means of combating the projected shortfall. The first plan would target bonuses based on the projected shortage of pilots by type of aircraft. Under this approach, pilots in communities (that is, groups of pilots who fly similar types of aircraft) with greater shortages would receive larger bonuses. The second scheme would not only tie the bonus to the shortage of pilots by type of aircraft, as in the previous plan, but would also target by year of service (YOS), mirroring the approach used by the Navy.

According to CBO estimates, all three bonus plans would meet nearly 99 percent of the projected requirements for pilots in 1996 and at least 90 percent in 2000. Each plan would retain almost enough pilots in all major weapon systems to meet or exceed total flying requirements. Total flying requirements include the critical "cockpit" positions and personnel needed to employ operational aircraft. Thus, all three plans would increase pilot retention sufficiently to keep more than the required number of pilots to fill critical cockpit billets in both 1996 and 2000. The two alternative plans that involve more targeting of the bonuses would cost less than continuing the current ACP plan; the most targeted plan would be the least costly.

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