Cut onions into 1-inch wedges and separate the layers into bite-sized pieces.
Set up three bowls: mix flour, paprika, garlic powder, cayenne, salt, and black pepper in the first bowl. Whisk eggs and milk in the second bowl. Place panko breadcrumbs in the third bowl.
Coat each onion piece in the seasoned flour, then dip in egg mixture, and finally coat thoroughly with panko breadcrumbs.
Preheat air fryer to 375°F. Spray the basket generously with cooking spray and arrange onion bites in a single layer.
Spray the tops of the onion bites with cooking spray. Air fry for 10-12 minutes, shaking the basket halfway through, until golden and crispy.
Serve hot with ranch dressing or your favorite dipping sauce.