Cut a tiny sliver off root and stem end of onion; peel off onion skin. Arrange onion, stem side up, on a cutting board. Cut into quarters, cutting to about ¾ inch from bottom of onion (do not cut completely through onion). Cut each quarter into thirds, cutting to about ¾ inch from bottom of onion.
Combine flour, ¾ teaspoon garlic powder, salt, and paprika in a small bowl. Whisk together water and egg in a bowl. Place onion in a shallow bowl; sprinkle with flour mixture, gently opening onion wedges to coat all surfaces. Shake off excess flour, and pour flour into another bowl. Stir cornmeal into flour mixture. Place onion back in shallow bowl; brush all surfaces evenly with egg mixture. Sprinkle with flour-cornmeal mixture, gently opening onion wedges to coat all surfaces.
Spray air fryer basket with cooking spray. Carefully place onion in basket and spray generously with cooking spray. Air-fry until breading is crisp and onion is tender, 15-18 minutes.
Meanwhile, combine yogurt, mayonnaise, horseradish, ketchup, and remaining ½ teaspoon garlic powder. Serve sauce with onion.
Serving size: one-sixth of onion and about 1 tablespoon sauce