Live in pictures is not working in Photos on the Macbook air.

Boot into Safe Mode (How to use safe mode on your Mac - Apple Support) by booting with the Shift key held down and try the Live key again.  Reboot normally and test again.

NOTE: Safe Mode boot can take up to 10 minutes as it's doing the following; 

• Verifies your startup disk and attempts to repair directory issues, if needed

• Loads only required kernel extensions (prevents 3rd party extensions from loading)

• Prevents Startup Items and Login Items from opening automatically

• Disables user-installed fonts 

• Deletes font caches, kernel cache, and other system cache files

Thanks for your reply, mohanrahul

Follow these steps to backup

Video: https://www.youtube.com/watch?v=geJiTXOb37w

Follow these steps to apply backup to reset Mac

Article: https://support.apple.com/en-us/HT203981

Unfortunately, Pictures app is built-in to MacOS so if something is not functioning something might be corrupted

How are you syncing the MacBook Air with your iPhone or iPad? Are you using iCloud Photos? Then you may need to wait for the download of the video component to complete. Do you have plenty of free storage on your MacBook Air, so there is enough storage to download the video component?

If you cannot enable the Live Mode, open the photo in Edit Mode, then revert it to the original, then try again.

Hello mohanrahul

Right click on the photo and "Turn Live Photo On."