I have been assigned to 12 Y-wings. I am currently in one of the 12 and I was told to Squad up the ships and go on patrol. But I seem unable to do so. Someone said to have the remaining 11 be NPC controled, but how? Do I have to hire 11 NPC pilots?

No, you do not need NPC pilots at this time. Simply go to your ship inventory screen, and select "Manage Piloted Ship".
There, select all 11 Y-Wings that you aren't in by clicking the checkboxes next to their image, then select "Set NPC Controlled" and click the "Execute" button.
They should now set to NPC Controlled and will follow the Y-Wing you are piloting.

I only see, ":: [ Manage Faction Owned Ship ] :: [Manage Faction Assigned Ship] ::"
Do I have to be the Commander as well as the pilot?

Go to your personal ship inventory, not the faction ship inventory.

AH HA! got it, thank you both very much.