Separate arenas--rather, the lack of separate arenas--has always been a huge weakness of AH. AH is now experiencing many of the big problems I have been predicting for years. Fixing the lag--if that's even possible--won't make all those problems diappear. The CT, while a noble cause, represents a poor alternative to the MA due to odd settings and limited choice and it appeals mainly to a special segment of players.
As for the suggestions of a "Euro" and "Pac" arena--the lack of Japanese planes set does NOT matter. Remember folks, they're talking about arenas, NOT an Allied vs Axis matchup--every side would still have all the planes. Just instead of the arena having ALL planes available, one arena would have EUROPEAN aircraft and the other would have PACIFIC ones (some exceptions apply). As noted, this idea worked fairly well in AirWarrior so there's no reason not to believe it couldn't also work well in AH. AH has the planesets and Maps already available. That is but one possibility to have two available arenas that would each maintain a unique character. There are plenty of other options available.
IMO the AH MA usually starts to crap out, both connection and gameplay-wise, after it reaches about 400-450 players. Having two MA's, each limited to 350-400 players, might be a great solution. While at first there would be problems, eventually each would develop its own character and maintain a constant population.
J_A_B