What Will a Year Cost Me?

The Pilot Network recently had a great discussion of a question I hear all the time: "I'm at risk for a non-flying 179-day (or 365-day) deployment. Should I put in separation papers right away to preempt deployment orders, or roll the dice and risk getting stuck in the military for an extra year?" I also hear a related question very frequently: "I'm only a few years from retirement, but if I stay in my final assignment will be a non-flying one. Will finishing my career in a non-flying job hurt me?"

I participated in that discussion, but felt like it was worth trying to quantify the opportunity cost of delaying your departure from active duty in these situations. This post walks through that process.

(I've already compared total lifetime compensation for staying in the military until retirement, versus separating after 11 years. In a way, these two new questions are just a different way of looking at the same thing. However, I think these questions offer a useful perspective for the situation.)

The answer to the second question is easy: Yes, it will hurt you financially. (More on that in a bit.) The answer to the first question starts with "It depends...," but before anything else it's important to note one critical caveat:

USAF (and presumably other service) regulations allow you a "3-day option" if you get orders for an extended deployment. If you don't want to deploy, and you aren't trapped by an active duty service commitment (ADSC) that ends after the deployment return date, you can file separation or retirement papers within 3 days of receiving your orders and get out of the deployment.

At least, that's how it used to be.... In case you haven't noticed, the pilot shortage is here. The military staff officers tasked with filling deployment spots spend an inordinate amount of time trying to find people to send. Their pools of bodies are getting shallower, and people are more likely to exercise the 3-day option in today's airline hiring environment. The staffs are sick of the situation and also a little desperate to fill their quotas. As it turns out, the same USAF regulations that give you the 3-day option also allow a General to block that option and force you to deploy if you haven't already filed for separation/retirement before you receive orders. It's a terrible way to treat people, especially when your pilot force is suffering from retention issues, but the military has spent decades training leaders to focus almost exclusively on 5-meter targets. Sorry.

"So what Emet?" you ask.

This means that you can't just sit on the fence and only jump if you get tagged for a deployment. You either need to commit to getting out when your ADSC expires or you need to be willing to delay your departure from the military for at least a year in case you get tagged with a deployment.

"But Emet," you say, "A year isn't that much in the grand scheme of things. You can do anything for a year, right? The airlines will still be hiring when I get back."

If only it were that simple.

The key problem with these deployments is that you'll probably spend the year not flying. (Even a 179 day deployment will likely involve a full year of not flying. Pre-deployment training, transit to and from theater, post-deployment time off, TAP before separating, etc. Plus, the chances of your unit allowing you to requal in your aircraft after a deployment decrease drastically when you file separation papers.)

The USAF used to have deployments teaching allies to fly C-208s or T-6s, flying MC-12s, etc. Unfortunately (or not) most of those deployments are gone. Instead, you're going to be sitting around making powerpoint slides and coffee for Colonel Desktop. While that may be a monumental contribution to our ongoing war against terrorism, the major airlines won't (currently) hire you unless you've flown at least a couple hundred hours in the last year. So, if you decide to get out of the military and apply to the airlines upon returning from deployment, you'll have to be prepared to spend a year or two at a regional airline before the majors will pick you up.

"But Emet," you interrupt, "The regionals are giving better deals all the time. Starting pay is up to $60K, and an experienced military pilot can expect to upgrade to captain within a year or two."

This is absolutely true, and I've been very glad to see these changes! However, you have to remember that seniority is everything in the airlines and think about the opportunity cost of spending a year deployed, followed by a year or two at a regional airline.

In the TPN discussion I asserted that the deployment/regional airline path would cost you at least $500K in lifetime earnings. After I posted that I started wondering what the actual cost would be, so I decided to run the numbers. It turns out my estimate was very low and I figured I'd share the results (and underlying math) with you. Ready? Go!

Here are the numbers I used for military pay:

If you deploy as an O-5, you'll make a tidy $238K that year in total compensation. Not bad! Unfortunately, here's what you're looking at for the next year or two at a regional airline:

Most likely you'll only be making this little for a year or two before you get picked up by a major airline. The first part of understanding the opportunity cost of this delay is to realize that your major airline will have been hiring 500-100 pilots per year in the meantime. Delaying 2-3 years because of your deployment will cost you 1500-3000 seniority numbers. That's not the end of the world, but it will mean a somewhat different career compared to the pilot who separated instead of risking the deployment. That's hard to quantify, but the difference in pay isn't. Here's what I came up with:

Let's start on the top line looking at Year 1. You'll notice that the block for B717 FO Pay is greyed-out for this year. That's because your military pay is actually better than your airline pay would have been for this year...making it seem like you're not giving anything up. However, the critical thing to realize is that by giving up a full year of your life, you've lost a year of major airline flying before you hit the age 65 limit. Since seniority is everything, the year you're missing out on isn't the "miserly" $95K/yr starting pay you make your first year. You have to go through that year no matter how long you wait to join the airlines. The year you're missing out on is what would have been the year you spent as a 64-year-old 777 Captain. You might still attain that position, but you'll have one less year to enjoy it because of this deployment. The difference in pay between what you make during your year on deployment and that lost year as a 777 Captain is $192K.

(Here is the chart I used to get that figure for 12+ year B777 Captain pay. This chart includes some other figures for pay at Delta. We'll reference this chart more later:)

It doesn't stop there though.

Since you have to spend a year at a regional airline before you go to the majors, you miss out on another year of top-end pay at your major airline. That's $430K that you'll never have the opportunity to earn before you reach age 65. It's worse this year though because the fact that you're at a regional costs extra. If you'd gone directly to the airlines instead of deploying, you'd already be a second year B717 FO instead of a first year RJ FO at this point. The difference in pay between those two jobs is nearly $100K. That means your opportunity cost in this second year is a whopping $527K. Between the two years of lost opportunities, your deployment just cost your family $720K.

I think it's most likely that you'd only spend a year at a regional airline. However, I have friends in their second (or subsequent) year at a regional right now. If you delay at a regional for a second year, the cumulative opportunity cost is nearly $1.3M:

Before we try to draw any conclusions, let's look at the other question I've been asked: "Does it hurt (financially) to finish your military career in a regular-length (3 year) non-flying assignment." I included pay calculations for this scenario in a chart we've already looked at:

Here's what the opportunity cost chart looks like, assuming you only have to spend one year at a regional airline after completing your staff tour:

For the first two years on staff, I assume that you missed out on being a B737 Captain, instead of a B777 Captain (in an attampt to give the military the benefit of the doubt in my calculations.) I also assume you stayed in to earn an active duty military retirement, so I factored your $53K/yr retirement pay into each line of this scenario. O-5 pay is "good" enough that, after accounting for retirement pay, you only miss out on about $120K/yr during these first two years. (You'll notice that the B717 FO pay you could have been making during these two years is low enough that I chose to leave it out again.) I assumed that your third year on staff (last year in the military) cost you a year as a 63-year-old B777 Captain, costing you $403K. (It would have been more, but your retirement check offset part of it.) If you hadn't stayed in, you'd be in your 3rd year at a major airline, so I assume that you would have switched to the 7ER (Delta's combined B757/B767 category) for your third year there. That category pays significantly better than 19 year O-5 pay, so I included the difference in your overall opportunity cost of nearly $523K for the year. The overall opportunity cost of finishing a 20-year career in a staff job totals up to almost $1.2M.

For the sake of being thorough, I also ran this scenario with the assumption that you'd have to spend two years at a regional airline:

The total opportunity cost of nearly $1.8M should be fairly intuitive at this point. It's also important to note that in these scenarios you've given up even more seniority numbers during your years on staff. You're most likely looking at an opportunity cost of 3000-5000 line numbers. Again, this isn't the end of the world, but it will significantly affect your quality of life during your airline career. Even if you're retiring from the military, chances are that you'll have a longer career flying for this airline than you did on active duty. That's a long time to be junior to all of your friends.

In that final scenario, I assumed that you'd upgrade to CS100 Captain in your 5th year at Delta. That's probably the only assumption I've made here that opposes my goal of giving the military the utmost benefit of the doubt. However, I feel like for someone who gets to a major airline in the near future, upgrading to CS100 Captain by year 5 is a pretty conservative estimate of your potential. (The junior MD88 Captains at Delta right now have been with the company less than a year. At 13 months in the company I'm only 200 numbers short of being able to hold MD88 Captain in Atlanta, typically a much more senior base.)

It's important to realize that we're looking at raw numbers distributed over a span of 20-30 years. If you want to make a fair comparison of your options you need to calculate the Net Present Value (NPV) of these opportunity cost figures, taking that time into account. Again, I'll refer you to my original post for a more detailed discussion of NPV. The NPVs of these opportunity cost figures probably fall somewhere in the hundreds of thousands of dollars...so don't get carried away when you see figures in the millions.

Still, what could you and your family do with a few hundred thousand dollars? That's the equivalent of being able to pay off a house. With cash. Today. Or...paying for a college tuition...or two...or starting the business you've been dreaming about for years...or buying a pair of matching Tesla Model S P100Ds (one in black and one in red)...but I digress.


Overall, in either scenario, it does hurt you to conclude your active duty military service with a year (or more) of non-flying duty. It hurts you financially, and it will affect your quality of life by reducing your seniority.

I've already said that there is no financial justification for staying in the military longer than you have to. However, money isn't everything. There are plenty of good reasons for continuing to serve in the military and I'm thankful for my friends who do. From a different point of view, an airline career incurs a lot of opportunity costs...things you'll never get to do because you aren't a military pilot anymore.

"So, Emet, should I put in my separation papers or not?"

Sorry, but it still depends. I'm not a fan of living a life driven by fear. I don't think separating because you're "afraid" of getting tagged with a deployment is the right answer for most people.

Does your family have something meaningful to do with all the extra money you could make in the airlines? (How many college tuitions are you planning on covering?) Would your spouse and children like to have more time with you? Does your family have a uniquely expensive health care situation to deal with? Those could be single-issue reasons for leaving or staying.

These scenarios sort of assume that you've already decided that you're leaning toward getting out when you're able to. For some families a 365-day deployment might tip the scales on that decision. However, I feel like most people reach their conclusion before the possibility of a deployment becomes a real threat. If you find so much fulfillment in the military that you go to work excited every day and can't imagine choosing to leave, then don't! Enjoy it! However, if you're planning to get out when you can, there's no reason to delay.

"But Emet, wait! I've had my apps in for a while and none of the majors are calling. I can't jump without a safety net can I?"

That's a valid question. I hear it a lot. Look at the industry for a moment though.

Look on APC at the number of mandatory retirements every year. Compare that to the number of pilots that the military is capable of producing in a year. Someone will hire you. Worst case is that it'll be a regional airline that will pay you a very reasonable salary of $60K/yr. Yes, the opportunity cost of a year at the regional compared to an extra year at a major airline approaches $400K. However, you're far better off flying at a regional airline for a year now than spending a year (or three) not flying in the military...after which you'll have to do your year at the regional anyway. Your chances of getting the call from a major airline are significantly higher while you're flying for a regional than they would be if you're in a non-flying job in the military. For at least the next 15 years or so, you will have no trouble getting a job. (If you seem to be defying this logic, try some or all of these strategies.)

If that still isn't enough for you, then use the guard and reserve as your safety net. They had several hundred pilot positions go unfilled last year. Granted some of those were ART jobs that won't work for you. (If you want to be an airline pilot, do not leave active duty and take an ART job!) Still, there are lots of flying opportunities out there. Sign on as a Traditional Reservist (TR) and fly on the side while you do your year at a regional. The extra income from the reserves won't hurt, right? When you get to your major airline, give them at least a full year before doing any full-time military flying. They'd rather you give them two years, though they can't force you. After that, USERRA gives you up to five years of military leave! You could leave active duty after 11 years, do four years as a TR (1-2 at a regional and 1-2 at a major airline,) then drop five years of military leave and finish up your 20 years. Yes, you won't start collecting a retirement until 60, but you'll have a great seniority number at a great airline. You'll be making 9-year pay at the airline when your buddies who stayed on active duty are getting paid as new-hires. Your annual pay at that point will dwarf theirs, even counting their retirement checks.

Or, continue flying as a TR until your fun meter pegs out. I recently flew with a captain who'd flown Vipers for 30 years in the ANG. 30 years! He was a graduated Wing Commander, still serving because it was fun. He'd made it work along side a full-time airline career. If you serve that long you might not even have to wait for your guard/reserve retirement checks to kick in. You'd start collecting them practically as soon as you make your military retirement official. If that isn't a safety net, I don't know what is.

Let's end it here shall we? Spending your final years on active duty in a non-flying job comes at a significant opportunity cost. By "significant" I mean probably more than a million dollars in lifetime earnings. Even if you reduce that sum to its NPV of a few hundred thousand dollars, it's a lot of money. If finances are a primary concern for your family, then you cannot justify staying on active duty...no matter what final assignment you get. If you love the military, keep going! If your family's priorities say you should go elsewhere, then leave as soon as you can. You will get a job, and the financial benefits are significant.



I wanted to stretch the absolute limits of giving the USAF the benefit of the doubt. To be perfectly honest, these numbers underestimate your potential earnings in the airlines. However, times may not always be so good, so I wanted to present a scenario that isn't wildly optimistic. So...for the scenario of staying "1 more year" for a deployment:

  • I assumed that you're deploying as an O-5. You're equally (or maybe more) likely to go as an O-4, in which case the numbers make the deployment even more costly to you.
  • I assumed that you get hazardous duty/imminent danger pay, family separation allowance, and that your entire year of pay is tax free with you being in a 35% tax bracket.
  • I also assumed that your deployment happens during the 5th year that you're receiving the pilot bonus, and that it's the $35K/yr bonus that Congress only recently authorized. If you have the option of 3-day opting out of a deployment you probably aren't getting the bonus; however, I'm trying to favor the USAF as much as possible to illustrate the magnitude of the opportunity cost in this situation.
  • For all instances of airline pay, I assumed that you won't have access to Tricare and that your annual health care costs will be the worst case value of $15,600. (That's what my company's health care provider quotes for maximum out-of-pocket costs in a given year.)

For the second scenario, completing your last 3 active duty years in a non-flying staff job:

  • I assumed you're getting the pilot bonus every year. This is the new $35K/yr bonus.
  • I assumed that you met your flying gates and get to collect flight pay while you're not flying for three years. (Don't tell the new POTUS that the taxpayers are shelling out $840/mo in flight pay...to pay you to not fly. That good deal has Executive Order written all over it.)
  • I assume that you agreed to a 3-year non-flying job because it'll get you to 20 years and retirement. You retire as an O-5 and your retirement pay is 50% of base pay.

Other background:

  • I got my military pay numbers from the 2017 Military Pay Chart, available here on the DFAS website.
  • For regional airline pay, I used numbers for Piedmont Airlines on airlinepilotcentral.com. Piedmont's pay puts it solidly with the leaders of the pack for regional airline pay right now.
  • I based major airline pay on Delta because it's the system I know best. I assumed 10% profit sharing, though it's been much higher than that lately. The numbers may look higher than what you see on APC because our current contract increases our pay rates every year through 2019. (And in 2019 we'll start negotiating new pay rates.)
  • Here's the Excel spreadsheet I used. Please feel free to download a copy and put your own numbers in there.

Thanks for reading!

- Emet