Flash Builder 4.7 - How to update AIR SDK « Starling Forum | Everything about Flash | Scoop.it
Different to what some of us had hoped, the SDK update process didn't get much easier with Flash Builder 4.7.

Furthermore, a fresh install contains the already outdated AIR 3.4, which produces lots of compiler errors (at least on my system). Thus, you should upgrade to AIR 3.5 directly after the installation.