Brazil air travel demand rises 23.5 pct in 2010

* Air traffic rises record 23.5 pct in 2010, Anac says

* Occupied seats rise as economic boom fans air travel

* TAM maintained No. 1 spot in 2010 with 42.8 pct share

SAO PAULO, Jan 13 (Reuters) - Air travel demand in Brazil increased a record 23.5 percent last year with more passengers booking flights as employment and wages continued to rise in a thriving economy.

The load factor, a gauge of the percentage of average occupied seats per flight, jumped to 68.8 percent in 2010 from 65.8 percent in 2009, the civil aviation regulator, known as Anac, said on Thursday.

The country's airline sector, which for years has struggled with a strained infrastructure, accidents and overbooking issues, is being watched closely by investors as Brazil prepares to host the 2014 World Cup and the 2016 Olympics. President Dilma Rousseff's administration has pledged massive investments to enlarge airport capacity.

Among the host cities are Sao Paulo, whose two airports are Latin America's busiest, Rio de Janeiro, capital Brasilia and Belo Horizonte, the fourth most populous city in the country of 190 million.

Brazilian airline TAM (TAMM4.SA)(TAM.N), which is planning a merger with Chilean peer LAN LAN.SN, remained the market leader with 42.8 percent market share last year. Gol Linhas Aereas (GOLL4.SA)(GOL.N), Brazil's second-largest carrier, finished the year with a 39.5 percent market share.

Azul Linhas Aereas, which was launched in December 2008 by JetBlue founder David Neeleman, saw demand for its flights more than double and had 6.1 percent of the market last year.

Still, the rate of expansion in Brazil's domestic air traffic slowed in December, when the industry faced the threat of a strike by pilots and flight attendants. The number of passengers in domestic flights advanced 18.6 percent compared with the same period a year earlier.

INTERNATIONAL FLIGHTS

Demand for international flights operated by Brazilian airlines climbed 20.4 percent last year, while the load factor rose about 7 percentage points to 76.4 percent.

TAM and Gol are the main Brazilian airlines that fly abroad. Last year, almost 88 percent of all passengers flew with TAM, while about 12 percent did with Gol, according to Anac.

(Reporting by Cesar Bianconi; Editing by Gunna Dickson)