In June 1997, with the announcement that Sierra On-Line was developing a sequel to the original Red Baron simulation, JG 1 pilots started reconvening on The Rook's Unofficial Red Baron Site. Because of the incredible interest in seeing JG 1 take to the air once again, it was decided to officially re-organize the squadron, once again under the leadership of Baron von Helton.
At first, JG 1 flew missions offline. Using the original Red Baron Mission Builder, missions were exchanged between members via email. Then, JG 1 had the opportunity to get involved with the open beta for Simguild's Flying Circus.
While Flying Circus, as a game, is often forgotten when recounting the history of online simulations, it does represent a very important milestone for JG 1. Previously, with INN, air battles were restricted to 2 versus 2 affairs, never allowing the squadron to fully fly with itself. With Flying Circus, however, JG 1 was able to field up to 20 pilots at once, finally allowing the squadron to fly with a large section of its official roster. This, along with the advanced qualities of the game when compared to the original Red Baron, drastically changed how JG 1 both flew and fought.
JG 1 would fly Simguild's Flying Circus almost exclusively until Red Baron II was released on 30 October 1997. By 2 December 1997, the majority of JG 1 was once again flying on a Sierra owned online gaming system, this time called the World Opponent Network (WON.net). However, WON.net was plagued by terrible problems, and many JG 1 pilots found themselves instead flying off of Kali.
On 24 January 1998, Baron von Helton retired from JG 1, deciding to focus on his Revenge of the Jastas patches. At this point, JG 1 was comprised of over 50 pilots, many of whom had very different ideas as to how JG 1 should adapted and evolve. The main conflict during this period was over whether JG 1 should be a “multi-sim” squadron, flying both Flying Circus and Red Baron II, or whether it should dedicated itself solely to one or the other.
Citing Red Baron II's poor flight models, as well as the continuing problems with WON.net, approximately half of the squadron wanted to see JG 1 exclusively dedicate itself towards Simguild's Flying Circus. This schism resulted in JG 1 being reduced to approximately 18 Red Baron II pilots, as many of the Flying Circus advocates left JG 1 in order to join or start new squadrons.
Despite the internecine conflict, however, JG 1 continued to grow. In June 1998, JG 1 was the first World War One cyber-squadron to see the need to create a dedicated ground attack wing. At first called Bogohl 1 (BG 1), this group was soon re-designated Schlasta 2, and specialized in multi-functional bombing, reconnaissance, escort and ground attack duties, much like the real Schlachtstaffeln did in World War One. Schlasta 2 was eventually demobilized in November 2001.
JG 1 also had the honor of being involved in the beta testing of Red Baron 3D, which was eventually released on 27 October 1998. Red Baron 3D, a heavily patched version of Red Baron II, fixed the majority of problems found within the original game, and as a result, JG 1's numbers swelled.
In March 1999, JG 1 participated in its first "War Tournament", flying alongside the KA7 squadron against the Wing Walkers, the Lafayette Escadrille and the RAF 209. In April of that same year, JG 1 also became involved in the "Great War" tournaments, hosted by the RAF 209 and JG2.
It was also in April 1999, when the “Stabs Offiziere der Flieger von JG 1” (Stofl) was officially founded. The Stofl (then called the SODF), was designed to consist of the Jastaführers (Jasta commanders) and the Geschwaderkommandeur of JG 1 so that they could vote on matters ranging from promotions, medals, commendations, and various other intra-squadron matters.