Grupo Mexicana, the holding company of one of Mexico's leading airlines, said Wednesday it expects passenger traffic to rise 8 percent this year from 2009, with a more visible recovery from July.

Mexico's air industry, reeling from high fuel prices, suffered a major blow last year after the H1N1 flu epidemic in April scared off local and international tourists, although it recovered some of that traffic in recent months.

Grupo Mexicana forecasts passenger traffic of 12 million in 2010, compared with 11.1 million last year, CEO Manuel Borja told a news conference.

The company operates its flagship Mexicana brand and two smaller airlines targeting business and budget travelers.

The company competes against AeroMexico, which has forecast 5 percent passenger traffic growth in 2010 as Mexico bounces from a steep recession.

Mexicana is the leading Mexican airline serving the US market, while AeroMexico is the No. 1 in the domestic market.

Both private airlines contribute strongly to revenue generated by airport operators Grupo Aeroportuario del Pacifico, Grupo Aeroportuario del Centro Norte and Grupo Aeroportuario del Sureste.

CROWDED MARKET

Mexico's air industry has gone through several changes over the last decade.

Money-losing Mexicana and AeroMexico were government-owned, but were sold to private investors several years ago. A group of six low-cost carriers launched in recent years, but now most of them have closed or are near extinction after high fuel prices and low demand cancelled any chance of profitability.

In recent weeks, Communications and Transport Minister Juan Molinar has said Mexico's airline industry could benefit from consolidation.

"There are too many players in the market," Borja said when asked about the possibility of his company merging with AeroMexico and added Grupo Mexicana believes it would make more sense to have a few, profitable airlines in Mexico.