Need to know how it's install, CL or from Sump? If it's on a CL you don't need the holes on the return. The air is most likely coming from a poor connection before the pump, causing microbubbles. If it's from the sump and it's microbubbles your pulling in air before the pump. If you are geting larger bubbles from a CL or sump then it's the holes in the return line and you need to make sure its below water a bit.