Auto racing used to be a lot more dangerous for spectators than it is today. We're only 30 years or so removed from a time when bails of hay and waist-high walls were all that separated crowds from the track. Go back a little bit further and you'd see things that would be laughably unsafe by today's standards like gigantic trees lining the sides of several race tracks.

I'm not even sure where you could begin improving safety for crowds at air racing events without forcing them to move much further back from the action. With cars you can move back 50 feet, put up a barrier, and improve your safety tremendously. For planes, you'd probably have to move the crowds way further back than they are now. I imagine being up close and in front of the action is part of the spectacle though.

One unorthodox approach could be restricting these events to landscapes where the crowds could be on an elevation above the planes. I watched the video and in the background are hills/mountains where crowds could safely be located above the planes.