If there is a flight on google flights will the game reflect that demand? Or does it do nothing.
It may or may not. In general terms AS demand and traffic flows is based on real life traffic flows (2012~2014 data, depending on country/region, USA is the most actual one as it was updated recently with 2014 traffic data), but flights that exist in AS (and get booked well) may not exist in real world and vice versa, flights that exist in real world might not be feasible in AS.
Traffic Flows are only accumulated and then distributed by Airport size. Therfor there can be a quite a variation between real life and in game demand on specific routes....