Some very rough ideas for an experience/campaign system, please critique/adapt as you see fit.
Players must keep a roster of available pilots, from which they construct their squads as normal. The lowest skill pilots of any ship are always available (i.e. you have access to an infinite number of Rookie/Academy Pilots, etc).
Pilots gain 1xp for surviving a mission with ship intact, +1xp/enemy ship destroyed. Xp equal to new pilot is required to upgrade, and this xp is expended. (So a Rookie Pilot with 4xp becomes a Red Squadron Pilot and drops back to 0xp.) Generic pilots can become named pilots in this way, but obviously you can only have one of each named pilot.
Roll a red dice for each destroyed ship at the end of a game:
- Critical = pilot killed (be careful with your named pilots!)
- Hit = pilot misses next mission
- Focus = pilot gains vendetta (2xp for destroying the pilot who shot them down)
- Miss = pilot is unharmed, and can fly as normal in next mission
That's basically it - optional additional rules could include introducing new pilot abilities/upgrade slots for certain amounts of xp, although that would require more work to balance. The basic system should be pretty balanced, seeing as you construct squads in the normal way, just from a limited pool.
I'm unsure about the "focus = vendetta". It could just be the same as a miss, or perhaps something else entirely. The system introduces a small amount of bookkeeping, but my aim was to keep it to an absolute minimum.