On the airbase display, select an air wing. (Or several.)
Click the "Reorganize Air Wing" button in the top bar. (It looks like a plane taking off, surrounded by a circle.)
In the top left bar of the window that pops up, you should see four icons to mark the air wing as "Reserve", "Regular", "Elite", or "Specialized".
* Reserve - equip only with obsolete aircraft
* Regular - equip with current or obsolete aircraft
* Elite - equip only with current aircraft
* Specialized - equip only with the models that are already in this air wing
You mark aircraft models as obsolete or current in the list of available types in the Production display. (There's a button in the upper right of each type labelled "Decommission". See also the "Show Outdated Equipment" checkbox at the top.)
Within those restrictions, the game will still automatically upgrade the air wing with the best available aircraft that the wing is allowed to fly.
If you want to create an air wing, but don't happen to have any of a new type of plane in reserve, it's okay to use the default type (Regular) with older equipment. That wing will automatically upgrade, along with all the others, as planes become available. You don't have to create a wing with the latest model for it to upgrade to that model. (To guarantee some of the latest model in your stockpile, it might be helpful to think of the problem the other way around -- you have to prohibit all your existing units from taking upgrades, which is to say mark them "Reserve", and mark their aircraft as obsolete. You can then change them to Regular one by one if you want to control exactly where your new planes go.)
Personally, I'm not a huge fan of Elite, because I'd rather have the wing at full strength even if it's half older stuff, than just have it at half strength. They do have the advantage of higher priority on the new production if you also have Regulars.
Jets are not considered upgrades to prop planes, but are their own type of equipment. So, your maxed out fighters, tac bombers, and strats won't start accepting jets. Jets have to go into all-new air wings.