Here's why:
* Intransitive verbs do not take a direct object. They express an action that is complete in itself.
* Transitive verbs require a direct object to receive the action of the verb.
In the sentence, "fly" is the verb, "birds" is the subject, and "in the air" is a prepositional phrase acting as an adverbial modifier, describing where the birds fly. There is no object receiving the action of "fly".
Therefore, "fly" in this sentence is an intransitive verb.