Not much more to tell you than what you already know. It literally says
"Commemoration of Retirement" on the left and right side of the plane. Then, on the bottom it says
"3rd Air Squadron, Yokkaichi"
There isn't much further to expound upon. I don't know that this kind of flag was a standard retirement gift, or if it was just something that this particular group gave out. It resembles the senninbari that were made during the wartime, but this flag has no markings other than the above, so I can't even tell if it was made during the war or after, although the writing (which goes from right to left) was the customary way of writing to about the middle of the 1900s. Also, the use of the old kanji for 連 (聯) hints at this being a wartime item. But these are no guarantee that it is from the war, and they are things that can be easily faked.