Yes, that is extremely unfortunate. However the two alternatives (a national list or a pure rolling constantly at risk meritocracy) would be every bit as full of injustice as your example.

Besides, chances are your hypothetical Pan Am Captain probably flew with tons of right seaters (and thousands more at the regionals, military, etc that he never even met) who could out do him on whatever test you threw at them all. But he got his slot in the first place with seniority. So how about that.

The seniority system provides stability, predictability and job security for most pilots far in excess of attempting to unleash chaos on the industry by letting anyone bid on/bribe/kiss up/sleep with/blackmail/take a test/whatever for anyone else's job. Not to mention, corporate America is full of experienced execs, many from still profitable companies, suddenly out of work who can't find an entry level job anywhere while their old position was filled by a hot shot recent grad who does it for less. Is that really what we want?

The sting of some pilots having to start over sometimes is bitter indeed. But its far superior to watch your back rear end kissing chaos that would ensue without the protections and benefits the seniority system provides.