A small nonbreakable locker mirror can keep kids entertained for a long time. Besides the obvious "look at your face in the mirror", there's also the trick of using it to see things behind you, or put it on the floor and look at the ceiling...that kind of thing.
The best airplane toy I know of is a set of photos, laminated (you can get this done at an office-supply store or copy centre) and with a hole punched in one corner. Hold them together with a binder ring. They take up practically no space in the diaper bag but provide a lot of entertainment. "Can you find the photo of Grandma? What's Grandma doing in this picture? What will you say when we see Grandma next?"
And when all else fails, ask the flight attendant for a cup of ice. My dd will eat those little ice cubes for a loooooong time, and it keeps her hydrated too, so she doesn't get cranky from dehydration.