White wood off too. If you do it correctly, the limb will either die(YOU FAIL!!) or grow roots. If you do incorrectly, it will stay alive, scar up, and you'll feel like an idiot. If the branch is really small, I like to take all the white wood off, 360 degrees - it roots faster and has more of them - just be careful bagging it up as you could pluck it right off. If the branch is larger, you may want to leave a tiny side on so that the limb doesn't just snap off in the wind.
What is really cool about airlayers is they were supposedly developed by the Chinese who would bag the roots and keep bagging them until the roots reached the ground - providing that scragly, runty, whatever limb with its own roots - in 10 or so years, that limb would be as large or larger than the apical meristem.
Here is some reading for you.
Lychee propagation:
Attempts to grow the lychee from cuttings have been generally discouraging, though 80% success has been claimed with spring cuttings in full sun, under constant mist and given weekly liquid nutrients. Ground-layering has been practiced to some extent. In China, air-layering (marcotting, or gootee) is the most popular means of propagation and has been practiced for ages. By their method, a branch of a chosen tree is girdled, allowed to callus for 1 to 2 days and then is enclosed in a ball of sticky mud mixed with chopped straw or dry leaves and wrapped with burlap. With frequent watering, roots develop in the mud and, in about 100 days, the branch is cut off, the ball of earth is increased to about 12 in (30 cm) in width, and the air-layer is kept in a sheltered nursery for a little over a year, then gradually exposed to full sun before it is set out in the orchard. Some air-layers are planted in large clay pots and grown as ornamentals.
The Chinese method of air-layering has many variations. In fact, 92 modifications have been recorded and experimented with in Hawaii. Inarching is also an ancient custom, selected cultivars being joined to 'Mountain' lychee rootstock.
In order to make air-layering less labor-intensive, to eliminate the watering, and also to produce portable, shippable layers, Colonel Grove, after much experimentation, developed the technique of packing the girdle with wet sphagnum moss and soil, wrapping it in moisture-proof clear plastic that permits exchange of air and gasses, and tightly securing it above and below. In about 6 weeks, sufficient roots are formed to permit detaching of the layer, removal of the plastic wrap, and planting in soil in nursery containers. It is possible to air-layer branches up to 4 in (10 cm) thick, and to take 200 to 300 layers from a large tree.
Studies in Mexico have led to the conclusion that, for maximum root formation, branches to be air-layered should not be less than 5/8 in (15 mm) in diameter, and, to avoid undue defoliation of the parent tree, should not exceed 3/4 in (20 mm). The branches, of any age, around the periphery of the canopy and exposed to the sun, make better air-layers with greater root development than branches taken from shaded positions on the tree. The application of growth regulators, at various rates, has shown no significant effect on root development in the Mexican experiments. In India, certain of the various auxins tried stimulated root formation, forced early maturity of the layers, but contributed to high mortality. South African horticulturists believe that tying the branch up so that it is nearly vertical induces vigorous rooting.
The new trees, with about half of the top trimmed off and supported by stakes, are kept in a shadehouse for 6 weeks before setting out. Improvements in Colonel Grove's system later included the use of constant mist in the shadehouse. Also, it was found that birds pecked at the young roots showing through the transparent wrapping, made holes in the plastic and caused dehydration. It became necessary to shield the air-layers with a cylinder of newspaper or aluminum foil. As time went on, some people switched to foil in place of plastic for wrapping the air-layers.
The air-layered trees will fruit in 2 to 5 years after planting, Professor Groff said that a lychee tree is not in its prime until it is 20 to 40 years old; will continue bearing a good crop for 100 years or longer. One disadvantage of air-layering is that the resultant trees have weak root systems. In China, a crude method of cleft-grafting has long been employed for special purposes, but, generally speaking, the lychee has been considered very difficult to graft. Bark, tongue, cleft, and side-veneer grafting, also chip-and shield-budding, have been tried by various experimenters in Florida, Hawaii, South Africa and elsewhere with varing degrees of success. The lychee is peculiar in that the entire cambium is active only during the earliest phases of secondary growth. The use of very young rootstocks, only 1/4 in (6 mm) in diameter and wrapping the union with strips of vinyl plastic film, have given good results. A 70% success rate has been achieved in splice-grafting in South Africa. Hardened-off, not terminal, wood of young branches 1/4 in (6 mm) thick is first ringed and the bark-ring removed. After a delay of 21 days, the branch is cut off at the ring, defoliated but leaving the base of each petiole, then a slanting cut is made in the rootstock 1 ft (30 cm) above the soil, at the point where it matches the thickness of the graftwood (scion), and retaining as many leaves as possible. The cut is trimmed to a perfectly smooth surface 1 in (2.5 cm) long; the scion is then trimmed to 4 in (10 cm) long, making a slanting cut to match that on the rootstock. The scion should have 2 slightly swollen buds. After joining the scion and the rootstock, the union is wrapped with plastic grafting tape and the scion is completely covered with grafting strips to prevent dehydration. In 6 weeks the buds begin to swell, and the plastic is slit just above the bud to permit sprouting. When the new growth has hardened off, all the grafting tape is removed. The grafting is performed in a moist, warm atmosphere. The grafted plants are maintained in containers for 2 years or more before planting out, and they develop strong taproots.
In India, a more recent development is propagation by stooling, which has been found "simpler, quicker and more economical" there than air-layering. First, air-layers from superior trees are planted 4 ft (1.2 m) apart in "stool beds" where enriched holes have been prepared and left open for 2 weeks. Fertilizer is applied when planting (at the beginning of September) and the air-layers are well established by mid-October and putting out new flushes of growth in November. Fertilizer is applied again in February-March and June-July. Shallow cultivation is performed to keep the plot weed-free. At the end of 2 1/2 years, in mid-February, the plants are cut back to 10 in (25 cm) from the ground. New shoots from the trunk are allowed to grow for 4 months. In mid-June, a ring of bark is removed from all shoots except one on each plant and lanolin paste containing IBA (2,500 ppm) is applied to the upper portion of the ringed area. Ten days later, earth is heaped up to cover 4 to 6 in (10-15 cm) of the stem above the ring. This causes the shoots to root profusely in 2 months. The rooted shoots are separated from the plant and are immediately planted in nursery beds or pots. Those which do not wilt in 3 weeks are judged suitable for setting out in the field. The earth around the parent plants is leveled and the process of fertilization, cultivation, ringing and earthing-up and harvesting of stools is repeated over and over for years until the parent plants have lost their vitality. It is reported that the transplanted shoots have a survival rate of 81-82% as compared with 40% to 50% in air-layers.
Just pretend it is in quotes. It is easier to read when it is not.