Retreat in A&A is very limited. The only defending units that can retreat in A&A are submarines (and even they can't in AA50. The attacker can retreat except in Amphibious Invasions (in all versions except AA1 supporting aircraft can retreeat).
The ability of the attacker to retreat gives a significant advantage to the attacker, who can take risky attacks and breakoff if they go badly. It also allows spoiling attacks where the attacker retreats to avoid being stuck in vulnerable position.
The lack of a defender retreat can be criticized for lack of realism. Major retreats were conducted successfully in WW2. The very nature of naval battles made it difficult to pursue a retreating foe, as attacking carriers needed to stay still to recover their planes, while the defenders could retreat immediately.
Here are a number of possible retreat variants:
- Attacking units may retreat from amphibious invasions
- Attacking aircraft may not retreat from amphibious invasions
- Defending units can retreat to adjacent friendly (or unoccupied sea areas). Land units can retreat onto adjacent transports. Submarines can retreat before combat. If the area retreated to is attacked, the retreating units don't participate in the combat, can't retreat again and are destroyed if all the defenders are destroyed.
- Use the above retreat rule, but prohibit retreat into contested areas.
- Limit combat to 1 round. The side that loses more units must retreat (unless its foe was annihilated). On a tie, the attacker retreats. If retreat is impossible, fight a second round of combat, with the attacker retreating if the defender is not annihilated. Submarines may retreat before combat.
- The attacker must retreat if he inflicts no hits in a round. Allow retreats from amphbious invasions.
- Submarines may retreat before combat.