No air force down grades pilots without any reason---they always are graded up if the performance is good-
Who says it was a down grade?
And Pilots regularly transition between aircraft. A fighter pilot today can be retrained to be a Transport driver tomorrow. What decides this is bilet. People make this mistake all the time. They think you get into the military and spend all your life in the same job. No that's not what happens. Military officers don't just get promoted and keep the same job they compete for there positions. They compete by schools, mission successes accolades and more that place them closer to the top postings. It's not the aircraft the aircraft belongs to the squadron. What bird you fly is based on what squadron you are in and what bilet is open.
If you are promoted but the squadron you are in doenst have an open bilet for your new rank that can dead end your career so you would be offered positions IE other postings that have openings you are qualified for.
That can mean moving from say a J20 Squadron XO to a JF17 Squadron CO.
Would it mean retraining? Yes. But it's not like going back all the way to the basics.
That's why you see two seaters and flight simulators and flight trainers.