"The new airplane flies above a big city."
Translation:Az új repülőgép egy nagy város fölött repül.
You said almost always :)
One thing is sure: it is not always optional. When we need egy and when it is optional is a quite difficult question, it would worth a separate post.
For me, as a native Hungarian speaker, "Az új repülőgép nagy város fölött repül" simply does not sound natural.
Yes, it should accept it in this context. But if you check some grammar, like Hungarian Essential Grammar, you'll see that fölött has more occurrences. When I lived in Hungary I've hear more "fölött" than "felett", on the other hand, when we where talking about directions, like I'm going up, felmegyek was more common than fölmegyek (I lived in somogy). As far as I know, in the latter case, the Hungarian normative grammar only accepts the verbal prefix fel-. I'm guessing it also applies to "fölött": the normative grammar only accepts fölött, although people also use its variation "felett". I'm guessing this is the reason. But report your answer!
Thanks for the note J.Looijen. I no longer feel alone. At the time, my Chromebook was new and I didn't know how the auto-translator worked. Because Duolingo was not configured for Chrome at that time (and still may not be) I think the auto-tranlator went into some kind of loop that was translating for me. Very handy, but not when one is trying to learn a language. Since then, when it happens, I turn off the computer and reload the program which then works fine.