
As of the HHNF, we've seen internal combustion engines. The steam engines we've seen are probably similar to the engines developed by the Doble/Bresler brothers.
http://en.wikipedia.org/wiki/Doble_steam_car
One engine was successfully used to power an aircraft in the 1930's.
http://en.wikipedia.org/wiki/Steam_aircraft
So power plants are available.
The HG universe is set around the 1930's, based on the Krakatoa eruption.
Wilhelm Kress, Samuel Pierpont Langley, Gustave Whitehead, and the Wright Brothers were all contemporaries working on powered flight around 1900. Their failures and successes were based off work on gliders in the 1890.
It is possible that Sharonon's powered flight, but it's still in it's infancy. Voices, plotters, and distance viewers all remove some of the military advantages of pursuing flight. Early military aviation was for reconnaissance and dropping things, it was only after pilots started trying to kill each other that guns were added. Why pursue aviation when Talents provide more reliable, safer, and faster recon? And if you can see it, you can probably shoot it(Distance Viewer gun or battery Captains)
Commercial aviation may also be a non-starter, as Voices and Flickers can move information and small packages. There are even Teleporters for VIP's.
Based on all of the above, I could see a small group of aviation enthusiasts working on aircraft design and theory in garages and at universities/colleges. The designs will be than the Wright Flyer, but mostly one off prototypes or kits.
Against this Arcana has a 20 year production cycle for dragons. 20 years from Kittyhawk, aircraft were far more capable.