From: Kinmel bay
I think Trappenjagd is very difficult for the German player. My own view is that the Soviet side is probably about right for the early game, but that the German side needs some strengthening to give the Germans any chance of actually getting his forces anywhere near the actual force levels available at the start of Case Blue. I think that the German replacements levels need to be higher for the first 10 turns whilst the Case Blue forces start to build up and I also think that there should be a little bit more prestige to give the German player to have a chance to create the corps and armies that were actually available in Case Blue; to that end it would be useful if a couple more generals showed up in the force pool. The other problem that the German player has, is that the Case Blue objectives seem to happen far sooner.
In my game against Reconvert with me as Soviets, I had a simple plan for the early game, just to attack and needle the Axis as much as possible. In the air I didnt care how many fighters I lost as long as I took some Germans with me each turn, I think the losses were working at about 3:1 in Reconvert's favour, yet that was still to my advantage in the long run. By the sounds of it the AI plays a similarly crazy game to me
As for the Luftwaffe I am really not sure what the best tactics are. I got them badly wrong in my latest game and was doing similar to you by the sounds of it. I'm sure there is a good way to manage the Luftwaffe so it can keep at least local air superiority until later in the game, I just havent figured it out, in ever game I play I seem to lose air superiority fairly early on.
The only thing I can think to try, is to give up the fighter sweeps and use fighters as escorts when attacking enemy units, in the hope that destroys more Soviet fighters, I'm not totally convinced it would work though. One thing I would say, is that I wouldnt play with a house rule to protect the Soviet airforce on turn one any more, I think the Germans need to destroy some on the ground to have a chance of keeping air superiority for longer. If I was using a house rule I'd say restrict the amount of Soviet airfields the German can attack to two or three on turn one.