01 - Peel onions and slice into 1/2-inch thick rings. Separate individual rings and set aside.
02 - Mix flour, baking powder, paprika, garlic powder, salt, and black pepper in a shallow bowl.
03 - Whisk eggs and milk together in a separate bowl until combined.
04 - Place panko breadcrumbs in a third shallow bowl.
05 - Dip each onion ring sequentially in the flour mixture, then egg mixture, and finally coat thoroughly with panko breadcrumbs, pressing gently to adhere.
06 - Place breaded onion rings in a single layer in the air fryer basket and lightly spray with olive oil.
07 - Cook at 400°F for 10 to 12 minutes, flipping halfway through and spraying with oil again, until golden and crisp.
08 - Whisk mayonnaise, sour cream, ketchup, Dijon mustard, lemon juice, smoked paprika, salt, and pepper together until smooth. Adjust seasoning if necessary.
09 - Serve hot onion rings immediately with the prepared dipping sauce.