is the absence of free electrons, the only reason for insulators to prevent charge flow? we know that two plates of capacitor are at different voltages with charge on them. But charges don’t flow in air. Why?

Yes the reason is only the lack of free electrons. What happens in capacitor is that, even free electrons need to overcome the potential exerted by the lattice of metal. Free electrons doesn’t mean they can fall out of the metal, it only means that electrons are free to move in the metal lattice, which are absent in insulators.