Hmm, a rather simple way to make a big dent would be to eliminate the whole "upgrade from FO to CPT", in fact, maybe even transitioning to a bigger (higher paying airframe).

Run it like the rest of the world. If you are hired for x position, you work at x position. If there comes a job opening above your position, you can apply for it, just like everyone else that is qualified. So a captain would have experience and could apply as a captain at any airline, and not lose anywhere near as much. An FO could apply to be a captain, which inevitably will happen with attrition, just like anywhere else, only, he won't be guaranteed the job, again, just like the real world.

You could still have seniority within your "grade" or position, which would determine schedules and other important aspects, but if you separate the jobs and the "owed upgrade", you'd immediately break apart the biggest problem with seniority IMO.

Course the pilot workforce doesn't want to "fix" seniority as a whole bad enough yet.