Stir together flour, smoked paprika, and 1/4 teaspoon of the salt in a shallow dish. Lightly beat egg and water in a second shallow dish. Stir together panko and remaining 1/4 teaspoon salt in a third shallow dish.

Dredge onion rings in flour mixture, shaking off excess. Dip in egg mixture, allowing any excess to drip off. Dredge in panko mixture, pressing to adhere. Coat both sides of onion rings well with cooking spray.

Place onion rings in single layer in air fryer basket, and cook in batches at 375°F until golden brown and crispy on both sides, 10 minutes, turning onion rings over halfway through cooking. Cover to keep warm while cooking remaining onion rings.