OK, so on G1 Germany invades Yugoslavia.
Say they hit and run, leaving 1 surviving infantry in Yugoslavia.
Before the noncombat movement phase, Yugoslavia is no longer neutral. It is an alliied territory, but not controlled by any of the allies. Germany could fly aircraft over Yugoslavia on G1 non-combat movement (doesn’t help them, but that’s not the point. The point is, they can)
Yugoslavia is now considered a part of the Allies (but no one gets its income). It’s not neutral anymore, so anyone can fly over it just as you fly over any Axis or Ally’s territory during normal game play.
On UK1, the UK COULD land aircraft in Yugoslavia. It is now friendly to the allies.
As long as Yugoslavia is not conquered by an Axis power, an Allied power could activate it by getting a ground unit there. They would then convert the surviving infantry to their own infantry, take control of the territory, increasing IPC income by 2 for that Allied power.