Thanks for the reply, PoolDoc. I forgot to mention that I see bubbles coming out of the return when the water level is low. The pump is fairly new (less than 2 yr old) and so is the basket. There are no cracks and it is correctly installed.

From my observation (I am a complete novice, though), it looks like the air keeps coming in from the suction side and the water level in the pump basket is going lower very slowly. One time I noticed the water level went down noticeably while the pump is running. The o-ring looks okay though. How can I 'seal' the pump lid area to make sure it is not the cause of air leaks? BTW, I don't see water coming out of lid when the I stop the pump.

Thanks again.