macOS upgrades now require about 35GB+ of Free storage space due to the dual CPU support of the macOS 11.x+ installers...even more is better just to be safe. If installing using Internet Recovery Mode or USB installer, it would require at least 45GB+ of Free storage space.
I'm assuming you likely have the 128GB SSD which doesn't give you much storage space which complicates things. You will need to make sure to either move some files to external media (temporarily) or delete some files to get even Free storage space for the upgrade.
But this gets more complicated due to the nature of APFS volumes since even if you delete or move enough files, the Free storage space may take 24 - 48 hours to show a change since those deleted/moved items may still be retained in backup APFS snapshots.
In addition, macOS unfortunately focuses on the "Available" storage space everywhere within macOS instead of the actual Free storage space. These two terms in macOS regarding storage do not mean the same thing. The Free storage space value is the only storage value in macOS that you should use & worry about....all other storage values in macOS can be very misleading. Unfortunately the Free storage space value is only shown in Disk Utility and the System Profiler (aka System Information).
If you still have issues after creating at least 35GB+ of Free storage space, then try booting into Safe Mode to see if the upgrade does better just in case some third party software is interfering with the upgrade process. Also, disconnect all external devices in case one of them is causing a problem.
macOS 12.x Monterey is the last supported version of macOS for your 2017 MBAir. The only problem with macOS Catalina is if you are trying to access the Internet or other online resources. The Safari browser and other apps (both macOS & third party) which are used to access online resources may have issues accessing those resources since the Internet & Internet services keep changing, but your old apps are no longer being updated with similar changes. Otherwise, there is nothing wrong with macOS Catalina.
If you are using any anti-virus software, cleaning/optimizer apps, or third party security software, then uninstall them by following the developer's instructions. These types of apps are not needed on a Mac (or any computer really) and they usually cause more problems than they solve because they interfere with the normal operation of macOS. These types of apps can easily cause issues with an OS update or upgrade.
I hope you have good backups for your computer.
