"2"
The new bonus options prove it works.
I'm not so sure this will make a huge change to the take-rate. If, hypothetically, someone who wishes to continue serving is unwilling to sign a five year contract for $25k/year, it seems unlikely they would sign an even longer contract for the same annual incentive.
For most pilots in the era of the 10 year UPT commitment, taking the bonus is a proxy decision for staying until retirement. There may be exceptions, but I think for the sake of argument we can say that if a pilot takes the (5 year) bonus, they are planning on retiring. UPT + ADSC = 11-12. + Bonus ADSC = 16-17. Maybe I'm isolated, but the only guys I've seen get out with more than 16 years in were forced or TERA'd.
So a pilot who doesn't take the bonus either wants to continue flying for the Air Force but isn't planning to do so for five years, or would like to retire, however wants the option to change that plan should he get a terrible assignment or 365.
Why would a pilot in either of those scenarios take a longer bonus? Especially when the value of the annual bonus as a percentage of total annual income decreases as that person makes rank?
Retirement is a powerful incentive the closer you get to it. Put a pilot 3 to 4 years away from retiring and most, though admittedly not all, will stick it out to get in the paycheck-of-the-month club. This new bonus squanders that advantage, and may actually do more damage to retention since it doesn't address the reasons a pilot might not take the bonus.
If Jane Pilot isn't willing to take a 5-year commitment, she's not thinking about retirement as an absolute, so a 9-year commitment would be even less appealing to her. And if she's smart, she would realize that a longer bonus should be accompanied by a HIGHER annual incentive. There's a reason CDs and auto loans have higher APRs for longer terms.
Instead, the Air Force should just double the bonus. 5 years at $50k/year. First it's a good chunk of change, but even better, compared to the old bonus it seems even bigger. Second, it entices the people who were worried about a 5-year extended sentence in the AF without exacerbating their main cause for skipping the bonus. Third, you get those uncommitted pilots to that fabled "final PCS" before retirement, and even after the bonus dries up most will stick it out 3-4 more years for the pension.
I get that a higher annual bonus may require congressional approval, or more work of some sort, but after talking to people about why they did or didn't take the bonus, I would submit that it would be better for the AF to change nothing rather than move to 9yrs@$25k. It's been argued here that the bonus only pays people who were staying in anyways. I don't think that's true, but I do think the number of people who were unwilling to commit to 5yrs@$25k but are willing to commit to 9yrs@$25k will justify the increased cost. If for every 1 pilot you convince you pay 10 already committed pilots an extra $100k, thats an effective change of $1 million per pilot; now you're getting into the numbers people throw around when they talk about what a new pilot costs.
And yes, I'm estimating that at best this bonus will convince one uncommitted pilot to commit for every 10 that were going to take the old bonus anyways. We'll see next year when the numbers are out.