What is your approach to languages?

I do character generation slightly differently than the strict rules interpretation.
When a player rolls for a skill, I allow them to roll the die and select which skill among the eligible tables he wants.
For example, Bob's character is in the Navy career and has an EDU of 7. He is rolling his one-skill-per-term. He rolls the die and gets a 4. I allow Bob to select from the 4 result on the Personal Development, Navy Service, or Branch Skill Tables. This gives Bob a bit more agency in focusing his character skills... he has a better chance of generating the Engineer he wants instead of a character that has 10 skills at rank 1.
This coupled with my Language skill ruling generates a much better chance of developing higher language skills.
Mind you, YTUWV and all that. This just works for me.
Every full rank of Language is fluency in a separate language. The skill is only rolled for a language you don't know, either to get across a few very common words without a reference, or translating with a reference work.

None of these scale well against character creation. If rolling randomly you may exit char-gen with Language 1 but not often higher. And I think, as with other skills, start by assuming competence.

In fairness these are all closer to the book than my own house rule. So I see how you get there. But the book, I think, is misguided in this case.
That's assuming 16 weeks of intensive training gets you to sufficient fluency to communicate without making a roll, which it absolutely does not. What 16 weeks will usually get - for the people at the "top of the class" is about A2, maybe starting B1. This absolutely is competence: a hotel clerk would be able to offer service at this level, for example, but not hold an entirely natural conversation. Service professions require a narrow range of vocabulary to do the job in that language. There is a lot you can do with Level 1, even if you assume it is not "fluency". And Level 0 should be sufficient to order in a restaurant (though the food you get might not be what you were expecting), or take orders of the sort that are often repeated.

The character creation falls down on languages in that there are not sufficient opportunities to acquire the skill. Levels up to 2 or 3 in a foreign language should be a possible outcome of background skills: no idea how that could happen, but for example, IRL my kids, 19 and 17, each have native level in two languages and basic competence in three more, and so do many of their friends. This is normal. While some people acquire languages as adults, many, probably most, multilingual people get that way as children, or during their secondary schooling .

The Imperium has two main languages and many other widespread ones - so people in Navy careers would have opportunities, and necessity, to acquire languages. Scouts would train on or pick up languages in their service, for example. That Traveller was originally written by Americans, and re-written by Brits really shows in the language modelling.
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I can’t remember if I already said something about this in a previous post, so bear with me if I did. It has come up before, but speaking alien languages has another factor that we have to consider. One species does not have the physiology to speak the language of another.
Or hear; ears and the brain's auditory processing could simply not recognize differences in sounds that are obvious in a different species (sort of like the colour magenta is an artificial construct our mind uses to change a linear progression of colours into a colour wheel)

I think there's room for basic voice extension / acoustic extension cyberware that would allow someone to speak and hear an alien language (of the audible sort) with significantly greater proficiency than untampered with biology would allow. It would be specific to species rather than languages, but good models would be able to integrate with the appropriate language kits (Expert systems, translators, etc.).
'Bout the same as what I came up with.

What do you get on Tier 5 with a 2 SOC, I wonder? Probably entertaining, but neither diplomatic, nor elite.
You could if you have sufficient intelligence, but I've seen native speakers of English (my native language) not understand what people have said to them in English.
I think in cases like that, you might come across as a Shakespearean fool, or maybe a gutter poet..
I can’t remember if I already said something about this in a previous post, so bear with me if I did. It has come up before, but speaking alien languages has another factor that we have to consider. One species does not have the physiology to speak the language of another.

There probably exists a median language between various species. Humans speaking Trokh, Vargr speaking Ithklur, K’kree speaking Galanglic. I would imagine that members of each species who are more cosmopolitan, who spend time among other species, learn to understand that median language that exists between the two alien languages. Only by using technology, some sort of translation device, can they truly hear their native tongue spoken by an alien.
This is a very good point - a character may not have the physiology to speak a language properly. For example, the Classic Traveller Alien Module for Aslan indicated that Trokh has ingressive sounds; the human speech apparatus is simply not designed to handle those. You'd better hope that Trokh doesn't have any minimal pairs that are distinguished by direction of airflow...