I understand what you are trying to do, however this would be alot easier if done at the beginning of a game. For years now we've flown as squads. Speaking for myself, the reason I play this game, actually has little to do with the game, and more to do with the interaction I have with my friends in my squad.
By creating this setup, it fragments squads as not all will be able to be in the same arena together. The chances of everyone in the squad coming on at the same time for a squad night, being able to fly together is slim at best.
I believe a better setup would be for squad COs to select an arena they wish to populate. They are then registered to that arena. Anyone in that squad may enter that arena at any time.
During registration, they could be told by you that although they selected LW1, it is over populated and they must be registered in LW2. That would be fine, because atleast that way the whole squad could be together.
The current setup makes me feel as though Im playing offline at times. It lacks the sense of being in a unit, and where many of us use this game as a "Cheer's Bar", (Norm!)...it feels empty.
Please re-think the setup, for our sake. Whatever your motives, please don't take away from us what we love about the game. There is more to it than just flying and shooting.