I don't use protective sleeve, I know the MBA 11" is just a bit wider than the iPad. According to the spec given of the bag and the MBA it should fit but I had doubts after seeing the post of the iPad in the medium bag so I just want to be confirm.
It does it. I carry mine in the medium, along with lots of other items. The only thing is that it obviously makes the bag keep it's shape, so it looks very rectangular and doesn't curve or slouch at all.
Oops I see my typo - yes, I meant it does FIT, and you can comfortably close it, leaving lots of room since the air is so slim. The only caveat is that it changes the look of the bag and makes it a little more briefcase-y... I don't mind but definitely prefer the look of it without my computer.