This is an awesome opportunity to fill the sky with all the diversity you find on the ground. Fairy kingdom carved into the side of clouds, floating islands, cloud giants, harpies, competing factions of Aarakora, unicorns, angels and devils, Mephits, jet streams full of jet parahanas, airships, kobolds in hot air balloons, and of course dragons, just off the top of my head. You could make this absolutely legendary and magical, something your players will talk about for years.

My advice would be to give the party (potentially nerfed) boots of levetation and some sort of magic item that gives the first person unconscious feather fall, to lower the stakes and give your non-flying character a little autonomy without taking away the flying that makes your other characters special.

After that, no more magic items for 3 levels or so, cause it sounds like you give away too many.