The regionals are not designed to have "lifers". It is supposed to be a stepping stone to move on to the majors. The parent airlines want to limit the pay increases at the regional level to keep the cost low. Their solution was to cap the yearly raises. With a 12/4 contract, after 4 years as a first officer, you no longer receive a raise until you upgrade to Captain. If you do upgrade to Captain, you no longer receive a pay raise after 12 years.

In the past, the upper part of the seniority list tended to fill up with lifers, which leads to less movement of people at the bottom of the seniority list and increasing costs for the airline. It stagnates, becomes expensive, and hiring new FO's becomes difficult due to long upgrade times.

This 12/4 works fine as long as there is plenty of movement on the seniority list and FO's are able to upgrade in less than 4 years, and then are able to move on to a major in less than 12 years. If the market stagnates again (economic downturn, 9/11 type event, age 65 rule, etc....) it can really hurt the pilot group.

Companies like PSA will have a great deal of movement on the seniority list in the next 5 years. There is the guaranteed hiring by AAG/US that occurs each month, but more importantly there is a great deal of experience coming in the door.

There are people that argue that it is a terrible thing. And to a point, it can be. It does, however, benefit the new hires as it decreases the time on reserve and upgrade times. The trick is to get in, get your time, and get out. Do not stay at a regional more than 10 years.