You haven't missed anything. The RAF needs pilots, so trapping someone for 5 years (for free) makes sense for Manning. Maybe a bit of a gamble for the individual though, but so is the airline market these days.
On the promotion v PA pay argument - can a Sqn Ldr really expect to maintain ER FP all the way to 55 (or 60) to remain ahead of the PA Flt Lt? And then the Sqn Ldr pension may well be less on the career average scheme if FP isn't pensionable. A 'guarantee' that you could swap to PAS if you didn't crack Wg Cdr might help. But then the Wg Cdrs would chunter on...
von K