Hello All,
Thanks for the response. Finally I was able to do some work done. Replaced spark plugs with Denso Iridium and Air Filter. Lag is gone. I don't see hesitation. However I will try to clean throttle body and MAF. I still need to do the pending services such as timing belt, replace water pump, replace both upper and lower front arm controls, rear suspension struts, and transmission fluid change not flush( according to my service technician at the dealer)
Looking at the way it behaved, I would think that it should give some indication when air filter is so bad. Of course spark plug recommended replacement time is 120K miles.
Now this is so much of better.
Thanks again.