Step 1

Stir together flour, garlic powder, and salt in a shallow dish. Stir together eggs and water in a separate shallow dish. Toss together panko and oil in a separate shallow dish to evenly coat.

Step 2

Working in batches, toss shrimp in flour mixture; shake to remove excess, and dip in egg mixture. Dip in panko mixture; shake to remove excess, and place in a bowl.

Step 3

Preheat a 5.3-quart air fryer to 360°F for 2 to 3 minutes. Working in 4 batches, place about 14 shrimp in air fryer basket; coat with cooking spray. Cook until shrimp is crisp and cooked through, about 2 minutes per side. Transfer cooked shrimp to a platter.

Step 4

Stir together mayonnaise, lemon juice, Old Bay seasoning, and sugar in a small bowl. Serve with shrimp.