You need to have higher exp pilots to counter altitude advantage.
One tactic that may lessen your casualties is so called "split CAP" where you put 2 units in same base to CAP on different altitudes.
One thing I wrote in thread about Sweep vs Escort:
Thats again interesting results Sardaukar. :)
Thought it was the other way, but this could depend on aircraft type also, no?
What I think is that is't bit of paper, rock, scissors-situation, where you often have more than one thing stacked against you.
For example, if enemy has better plane (SPD, MVR, Climb, DUR, Armour), it's advantage. Experience and skills are big advantage, altitude is also big advantage.
In some situations, for example, not many tactical decisions make you win the battle. Lets take for example Malaya with Zeroes vs. Buffaloes. Now you are against way better plane with way better pilots. If they also come from above (as any IJ player would unless escorting), you are in world of hurt. No amount of split CAP will offset at least 3 advantages, maybe at least 4 if they also have better Air Leader. It may lower the kill ratio a bit, but Buffaloes are going to get creamed even if numbers are similar. I have no doubt about that numerical advantage skews the results even more.
I tried to have approx. same number of planes engaging in my tests and achieved it with max. +/- 2 plane difference. But if enemy also has double number planes with all those advantages...
In situation like that, I suggest not to fight but pull back and train your pilots so that at least skill levels are comparable before engaging. Sometimes there are no other options but to fight, though. On the other hand, if opposition is sweeping, those planes are not escorting bombers, so you may be able to even the score now and then by killing unescorted bombers. Kills raise pilot exp and skills quickly.
To me, it seems that saving better pilots (70+) and sticking them to elite formations is best way to counter enemy a/c superiority locally. Exp/skills seem to be big modifiers. For Japan, it probably also pays to invest R&D to planes that can somewhat compete with allies in altitude. For example, Ki-61 Hien/Tony was historically about only plane that could challenge Allied planes high during mid-war. If starting to get high-altitude sweeps from planes like P-47/P-38, that is bad place to be in Zero/Oscar.
There are many modifiers in A2A combat in AE, but some patters can be distinguished. Like, altitude itself is not only thing that kills. Altitude and Exp/skill edge combined is big killer. Add to that better planes and situation gets darker for defender. Defender can lessen the impact by building his pilots to higher exp/skill level and hope for better planes. Or just try to outnumber enemy with experienced pilots. But it's always bad situation if number of factors are stacked against you.
Bingo....we have a winner.
WAR IN THE PACIFIC: Admiral's Edition - Air Team Lead
IN PERPETUUM SINGULARIS SEDES
"To meaningless French Idealism, Liberty, Fraternity and Equality...we answer with German Realism, Infantry, Cavalry and Artillery" -Prince von Bülov, 1870-