School sports was never that much, unless you played for the school, when you did more.
I don't know if it's changed when our kids were at school if they didn't do GCSE then they were pretty much left to themselves and as all subject areas are all about the end results the PE teachers concentrated on those who were doing GCSE PE. Our eldest daughter hated sports with a vengeance, that said she is and always has been the slimmest of the 3 children. Their PE lessons weren't that different from mine and the wife's and ours weren't anymore than game playing in the gym or outside, unless it was the few weeks prior to sports day or the BS of a cross-country run.
As for supposed lack of fitness in the modern era, blame society, ie jobs that are less active, out of town centres forcing town based facilities to close thus making people drive, roads are at best a lottery for meaningful cycling, ie going from one place to another for a real reason (not the riding around in a circle or taking your bike to ride around in a circle), people don't like the idea of driving to shops. supermarkets etc and just order it it all online and get it delivered, all the other things that have been spawned by the electronic revolution, which mean people sit indoors and one of the biggest things, parents concerned about their kid's safety driving them to places. Read the thread about the lad who was shot and you can see where they are coming from. Even in their mid to late 20s, we aren't happy until the kids get home, even if they let us know what's going on.
Trying to make the ATC some sort of paragon of PE virtue is nonsensical and wouldn't enhance it, in any way. If people want to do it, they will do it in their own way.