Macbook Air's keyboard's first row is not working when caps lock is off

As the Capslock function is entirely software controlled, it cannot be a keyboard fault.

To test - System Prefs > Keyboard > Keyboard > Modifier Keys…

Switch the capslock key to No Action & the Fn key to Capslock. OK the dialog to set the new keys.

Test by watching the capslock light go on/off as you tap Fn.
test the upper row of keys in each case.

If it is still dependent on the capslock light, it is not a hardware fault. You will have to try track down what software may be responsible. Test another account or from safe boot.