Unfortunately, by 1965 the headlong rush to rid British Railways of its steam locomotives was in full swing with the last ones gone from service by the end of the decade, but I understand the point you are making.
Even in the late 50s I became very excited one day with the realisation that our usual Castle class steam loco had been replaced by a Warship class diesel hydraulic on the Paddington to Bristol TM express that we travelled on (the foolishness of youth in hindsight).
Back to Exeter, I believe there was a venture two or three years ago when a service from Exeter to Luton was provided. Can't remember by who or which aircraft other than they were very small (a dozen seats or so?) and tickets expensive. Presumably it made no financial sense because it did not last long.
I think ABO probably answered his/her own question - the distance is too short for effective competition with land competitors. Similarly there are no air links between Bristol and London or Birmingham and London for the same reason.