By the way - I kinda resolved this.
I have created new blueprint but instead of basing it on “character” class, I’ve used “pawn” class (and to resolve issue with skeleton mesh rag-dolling added capsule component that I use for physics manipulations)
This resolved the issue - griffon rotates correctly in the air, but blueprint now misses “Character Movement” component which apparently was the reason for movement issues.
I hope it won’t come to haunt me later 