OK so the problem was NOT with my code. It WAS in fact when I overlaid AIR 3.7, The files for air-config.xml, flex-config.xml, and airmobile-config.xml were still targeting too low of version of flash player. It was 11.1 and swf version 14.
It should have been 11.5 and 18 respectively. Once I changed these files, it worked perfectly!