<PAGE>

                                                                 EXHIBIT 10.13

                             ALASKA AIR GROUP, INC.

                              1995 ELECTED OFFICERS

                          SUPPLEMENTARY RETIREMENT PLAN

                             EFFECTIVE AUGUST 8,1995

<PAGE>

                                TABLE OF CONTENTS

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PREAMBLE...................................................................................................     1

SECTION 1 - DEFINITIONS....................................................................................     2

         1.1      Actuarial Equivalence....................................................................     2
         1.2      Administrative Committee.................................................................     3
         1.3      Affiliated Companies.....................................................................     3
         1.4      Authorized Leave of Absence..............................................................     4
         1.5      Beneficiary..............................................................................     4
         1.6      Board....................................................................................     4
         1.7      Change of Control........................................................................     4
         1.8      Code.....................................................................................     5
         1.9      Company..................................................................................     5
         1.10     Company Service..........................................................................     5
         1.11     Compensation.............................................................................     5
         1.12     Competing Activity.......................................................................     6
         1.13     Disabled.................................................................................     6
         1.14     Early Retirement Date....................................................................     6
         1.15     Effective Date...........................................................................     6
         1.16     Elected Officer..........................................................................     7
         1.17     Elected Officer Service..................................................................     7
         1.18     Employee.................................................................................     7
         1.19     Employer.................................................................................     7
         1.20     ERISA....................................................................................     7
         1.21     Final Average Monthly Compensation.......................................................     7
         1.22     Hour of Service..........................................................................     7
         1.23     Late Retirement Date.....................................................................     8
         1.24     Normal Retirement Age....................................................................     8
         1.25     Normal Retirement Date...................................................................     8
         1.26     Participant..............................................................................     8
         1.27     Plan.....................................................................................     8
         1.28     Plan Administrator.......................................................................     8
         1.29     Plan Year................................................................................     8
         1.30     Qualified Plan...........................................................................     8
         1.31     Qualified Plan Benefit...................................................................     8
         1.32     Retirement Date..........................................................................     8
</TABLE>

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
<PAGE>

Table of Contents, Continued

<TABLE>
<CAPTION>
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<S>                                                                                                           <C>
         1.33     Social Security Benefit..................................................................     9
         1.34     Terminate................................................................................     9
         1.35     Termination For Cause....................................................................     9
         1.36     Wages....................................................................................     9
         1.37     Additional Definitions in Plan...........................................................     9

SECTION 2 - ELIGIBILITY AND PARTICIPATION..................................................................    10
         2.1      Eligibility and Participation............................................................    10
         2.2      Termination of Participation.............................................................    10
         2.3      Inactive Participation...................................................................    10

SECTIONS 3 - RETIREMENT BENEFITS...........................................................................    11
         3.1      Target Aggregate Benefit.................................................................    11
         3.2      Normal Retirement Benefit................................................................    12
         3.3      Early Retirement Benefit.................................................................    12
         3.4      Late Retirement Benefit..................................................................    12
         3.5      Cost of Living Adjustment................................................................    13

SECTION 4 - PAYMENT FORMS..................................................................................    14
         4.1      Forms of Payment.........................................................................    14
         4.2      Automatic Form of Payment................................................................    15
         4.3      Payment Form Election....................................................................    15

SECTION 5 - CHANGE OF CONTROL BENEFITS.....................................................................    16
         5.1      Change of Control Benefit................................................................    16
         5.2      Form of Payment..........................................................................    16
         5.3      Amount of Change of Control Benefit......................................................    16

SECTION 6 - DEATH BENEFITS.................................................................................    17
         6.1      Death Benefits Prior to Benefit Commencement.............................................    17
         6.2      Death Benefits After Benefit Commencement................................................    17

SECTION 7 - VESTING........................................................................................    18
         7.1      Vesting..................................................................................    18
         7.2      Forfeiture...............................................................................    19

SECTION 8 - POWERS AND DUTIES OF THE COMMITTEE.............................................................    20
         8.1      Appointment of Administrative Committee..................................................    20
         8.2      Powers and Duties........................................................................    20
         8.3      Administrative Committee Procedures......................................................    20
         8.4      Appointment of Agents....................................................................    21
         8.5      Administrative Committee Expenses........................................................    21
</TABLE>

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995
<PAGE>

Table of Contents, Continued

<TABLE>
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         8.6      Administrative Expenses..................................................................    21
         8.7      Determinations...........................................................................    21
         8.8      Claim and Review Procedure...............................................................    21
         8.9      Exemption From Liability/Indemnification.................................................    23

SECTION 9 - AMENDMENT AND TERMINATION......................................................................    24
         9.1      Amendment or Termination.................................................................    24

SECTION 10 - MISCELLANEOUS PROVISIONS......................................................................    25
         10.1     Appendices...............................................................................    25
         10.2     ERISA Status.............................................................................    25
         10.3     Unfunded Nature of the Obligation........................................................    25
         10.4     Facility of Payment......................................................................    25
         10.5     Governing Law............................................................................    25
         10.6     Limitation on Assignment.................................................................    25
         10.7     No Additional Rights.....................................................................    25
         10.8     Notice...................................................................................    26
         10.9     Severability.............................................................................    26
         10.10    Tax Consequences and Withholding.........................................................    26
EXECUTION/SIGNATURE PAGE...................................................................................    27

APPENDIX I TO THE - ALASKA AIR GROUP, INC. 1995 ELECTED OFFICERS
         SUPPLEMENTARY RETIREMENT PLAN.....................................................................    28

APPENDIX II TO THE - ALASKA AIR GROUP, INC. 1995 ELECTED OFFICERS
         SUPPLEMENTARY RETIREMENT PLAN.....................................................................    29
</TABLE>

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

<PAGE>
                                    PREAMBLE

         The purpose of this Alaska Air Group, Inc. 1995 Elected Officers
Supplementary Retirement Plan is to provide certain elected officers of Alaska
Air Group, Inc. (the "Company") and of certain affiliated companies with
supplemental retirement benefits, the receipt of which is deferred until after
the covered employee retires or terminates employment.

         This Plan shall constitute a plan which is unfunded and which is
maintained primarily for the purpose of providing deferred compensation benefits
for certain elected officers who constitute a select group of management or
highly compensated employees within the meaning of Sections 201(2), 301(a)(3),
and 401(a)(I) of ERISA.

         The Plan set forth in the following pages is adopted by the Company,
effective August 8, 1995.

Alaska Air Group, Inc.
1995 Elected Officers Supplemental Retirement Plan
Effective August 8, 1995

                                                                               1
<PAGE>

                                    SECTION 1

                                  DEFINITIONS

Whenever capitalized in this Plan, the following capitalized terms shall have
the meanings set forth below except where otherwise provided. As used in the
Plan, the masculine, feminine, and neuter genders shall each be deemed to
include the other or others.

1.1      Actuarial Equivalence

         "Actuarial Equivalence" and its derivatives as the context requires
         (such as "Actuarially") means that the present value of two (2)
         payments or series of payments shall be of equal value when computed as
         follows:

         (a)      For purposes of Sections 3.2 Normal Retirement Benefit, 4.1(c)
                  Ten Year Certain and Life Annuity, 4.1(d) Ten Year Certain
                  Installments, and 5.3 Amount of Change of Control Benefit,
                  Actuarial Equivalence shall be computed using the following:

                  (i)      the annual interest rate on thirty (30) year Treasury
                           securities as determined under Code Section 417
                           (which, as of the Effective Date, is the average
                           annual yield on thirty (30) year Treasury Constant
                           Maturities) for the November preceding the beginning
                           of the Plan Year; and

                  (ii)     the prevailing Commissioners' standard table
                           described in Code Section 807(d)(5)(A), without
                           regard to any other subparagraphs of Section
                           807(d)(5) used to determine reserves for group
                           annuity contracts issued on the date as of which the
                           present value is being determined (which as of the
                           Effective Date is the 1983 Group Annuity Mortality
                           Table, fifty percent (50%) male and fifty percent
                           (50%) female).

         (b)      For purposes of Section 4.1(b) Joint and Survivor Annuity,
                  Actuarial Equivalence shall be computed using the following
                  formula:

                  1.0 - (.12)(W) - (.005)[(2.0)(X) - Y - Z],
                  but not more than one (1),
                  where W equals the Joint and Survivor Annuity percentage;
                  X equals the Participant's age nearest birthday;
                  Y equals the Participant's spouse's age nearest birthday; and
                  Z equals the age at the Participant's Normal Retirement Date.

         (c)      For purposes of Section 5.3(a) After Commencement of Benefits,
                  the Actuarial Equivalent of the remaining benefits otherwise
                  payable is determined as follows:

                  (i)      for a Participant whose benefit, as of the date of
                           the Change of Control, is reduced by the
                           Participant's Social Security Benefit, the Actuarial
                           Equivalent of the remaining benefits otherwise
                           payable is determined assuming that the Participant's
                           Social Security Benefit does not increase after the
                           Change of Control date;

                  (ii)     for a Participant whose benefit, as of the date of
                           the Change of Control, is not reduced by a Social
                           Security Benefit, the Actuarial Equivalent of the
                           remaining benefits otherwise payable is determined
                           assuming that the Participant begins receiving
                           monthly Social Security Benefits on the later of the
                           Change of Control date or the earliest date on which
                           the Participant is eligible for a benefit from Social
                           Security. The amount of the monthly

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                               2

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                           Social Security Benefit assumed to be received by the
                           Participant is determined in accordance with the
                           Social Security Act in effect as of the date of the
                           Change of Control and is based on the following
                           assumptions;

                           (1)      assuming the Participant's Wages exceed the
                                    taxable wage base provided under Section 230
                                    of the Social Security Act for each Plan
                                    Year beginning with the Plan Year in which
                                    the Participant attained age twenty one (21)
                                    and ending with the last Plan Year ending
                                    before the Change of Control; and

                           (2)      assuming the Participant has no Wages during
                                    or after the Plan Year in which the Change
                                    of Control occurs; and

                           (3)      assuming the Social Security Benefits do not
                                    increase after the assumed Social Security
                                    Benefit beginning date.

         (d)      For purposes of Section 5.3(b) Before Commencement of Benefits
                  and After Termination and 5.3(c) Before Termination, the
                  Actuarial Equivalent of the Normal Retirement Benefit is
                  determined assuming that the Participant begins receiving
                  monthly Social Security Benefits on the later of the Change of
                  Control date or the earliest date on which the Participant is
                  eligible for a benefit from Social Security. The amount of the
                  monthly Social Security Benefit assumed to be received by the
                  Participant is determined in accordance with the Social
                  Security Act in effect as of the date of the Change of
                  Control, based on the following assumptions:

                  (i)      assuming the Participant's Wages exceed the taxable
                           wage base provided under Section 230 of the Social
                           Security Act for each Plan Year beginning with the
                           Plan Year in which the Participant attained age
                           twenty one (21) and ending with the last Plan Year
                           ending before the Change of Control; and

                  (ii)     assuming the Participant has no Wages during or after
                           the Plan Year in which the Change of Control occurs.

                  (iii)    For purposes of determining the Qualified Plan
                           Benefit under Section 1.31, Actuarial Equivalence
                           shall be computed using the definition of Actuarial
                           Equivalence under the Qualified Plan, unless the form
                           of payment elected under this Plan is not an option
                           under the Qualified Plan, in which case Actuarial
                           Equivalence under Section 1.1(a) above shall apply.

1.2      Administrative Committee

         "Administrative Committee" means a committee appointed by the Chairman
         of the Board to administer the Plan pursuant to Section 8.

1.3      Affiliated Companies

         "Affiliated Companies" or "Affiliate" means:

         (a)      the Company;

         (b)      any other corporation which is a member of a controlled group
                  of corporations which includes the Company (as defined in Code
                  Section 414(b));

         (c)      any other trade or business under common control with the
                  Company (as defined in Code Section 414(c)); or

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

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<PAGE>

         (d)      any other member of an affiliated service group which includes
                  the Company (as defined in Code Section 414(m)).

1.4      Authorized Leave of Absence

         "Authorized Leave of Absence" means any period of approved leave of
         absence from the Employer taken by a Participant, and granted by the
         Employer in its absolute discretion, including absences for which a
         Participant is granted re-employment rights under any Federal or state
         law.

1.5      Beneficiary

         "Beneficiary" means the person or persons entitled to receive a
         Participant's benefits payable under the Plan. The Beneficiary is the
         person or persons named in the Participant's latest written designation
         filed with the Administrative Committee, provided that the consent of
         the Participant's spouse (if any) is required for the election of a
         nonspouse Beneficiary and for any subsequent changes of the
         Participant's Beneficiary designation. Spousal consent must be in
         writing, name the designated Beneficiary and be notarized.

         If no designation has been filed with the Administrative Committee, or
         if the person or persons designated do not survive the Participant,
         the Beneficiary shall be the following persons in the following order
         of priority: (1) the surviving spouse (regardless of length of
         marriage), and (2) the estate of the Participant.

         If the Beneficiary dies after the death of the Participant, but before
         full distribution has been made to that Beneficiary, the balance, if
         any, shall be distributed to the estate of that deceased Beneficiary.

1.6      Board

         "Board" means the Board of Directors of the Company, or a committee
         composed of fewer than all of the members of the Board of Directors of
         the Company that is authorized to act on behalf of the Board.

1.7      Change of Control

         "Change of Control" means the occurrence of any of the following:

         (a)      the Board approves (or, if approval of the Board is not
                  required as a matter of law, the shareholders of the Company
                  approve):

                  (i)      any consolidation or merger of the Company in which
                           the Company is not the continuing or surviving
                           corporation or pursuant to which shares of common
                           stock of the Company would be converted into cash,
                           securities or other property, other than a merger of
                           the Company in which the holders of common stock of
                           the Company immediately prior to the merger have the
                           same proportionate ownership of common stock of the
                           surviving corporation immediately after the merger;

                  (ii)     any sale, lease, exchange or other transfer (in one
                           transaction or a series of related transactions) of
                           all, or substantially all, the assets of the
                           Participant's Employer; or

                  (iii)    the adoption of any plan or proposal for the
                           liquidation or dissolution of the Participant's
                           Employer;

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                               4

<PAGE>

         (b)      at any time during a period of twenty-four (24) months, fewer
                  than a majority of the members of the Board are Incumbent
                  Directors. "Incumbent Directors" means:

                  (i)      individuals who constituted the Board at the
                           beginning of such period; and

                  (ii)     individuals who were nominated or elected by all of,
                           or a committee composed entirely of, the individuals
                           described in (i); and

                  (iii)    individuals who were nominated or elected by
                           individuals described in (ii).

                  (iv)     any person (as such term is used in Section 13(d) of
                           the Securities Exchange Act of 1934, as amended (the
                           "Exchange Act")) shall, as a result of a tender or
                           exchange offer, open market purchases,
                           privately-negotiated purchases or otherwise, become
                           the beneficial owner (within the meaning of Rule
                           13d-3 under the Exchange Act), directly or
                           indirectly, of the then-outstanding securities of the
                           Company ordinarily (and apart from rights accruing
                           under special circumstances) having the right to vote
                           in the election of members of the Board ("Voting
                           Securities" to be calculated as provided in paragraph
                           (d) of Rule 13d-3 in the case of rights to acquire
                           common stock of the Company) representing 20% or
                           more of the combined voting power of the
                           then-outstanding Voting Securities.

         Unless the Board shall determine otherwise, a Change of Control shall
         not be deemed to have occurred by reason of any corporate
         reorganization, merger, consolidation, transfer of assets, liquidating
         distribution or other transaction entered into solely by and between
         the Company and an Employer, or any Affiliates thereof, provided such
         transaction has been approved by at least two-thirds (2/3) of the
         Incumbent Directors (as defined above) then in office and voting.

1.8      Code

         "Code" means the Internal Revenue Code of 1986, as amended and
         regulations promulgated under the Code.

1.9      Company

         "Company" means Alaska Air Group, Inc., a corporation organized and
         existing under the laws of the State of Delaware, and its successors in
         interest.

1.10     Company Service

         "Company Service" means the period of time measured in completed whole
         years, commencing with the date on which an Employee first completes an
         Hour of Service for an Affiliated Company during the current period of
         employment and ending on the earlier of the date of Termination or the
         date the Employee ceases to be an Elected Officer. Non-continuous
         periods are aggregated to determine the Employee's total Company
         Service. Notwithstanding the foregoing, the Board may increase an
         individual's Company Service, in its absolute discretion provided that
         any affected Participant shall be notified of any such adjustment.

1.11     Compensation

         "Compensation" means the basic monthly salary paid to an Employee,
         excluding amounts payable under the Management Incentive Program, any
         other bonus, transportation allowances, repayment of expenses,
         insurance payments, or similar payments or allowances, but including
         any earnings deferred by an Employee for the month under the terms of
         any

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                               5

<PAGE>

         salary deferral plan including the Alaskasaver Plan maintained by the
         Company, and including any pre-tax employee contributions to a
         cafeteria plan pursuant to Code Section 125.

1.12     Competing Activity

         "Competing Activity" means the following activities if begun without
         the prior written consent of the Participant's Employer:

         (a)      solicitation of business at any time within four (4) years
                  after Termination that is substantially similar to the
                  business conducted by an Employer; or

         (b)      employment at any time within four (4) years after Termination
                  by another airline serving any of the same geographic area
                  served by any Affiliate.

         The Administrative Committee shall determine in its sole discretion
         whether a Participant has or is engaged in a Competing Activity and
         shall provide the Participant with written notice of the determination
         and of its demand to cease the Competing Activity within thirty (30)
         days after the notice. The Administrative Committee's determination of
         Competing Activity shall become final and operative if the
         Administrative Committee determines that the Competing Activity is
         being conducted after the expiration of the thirty (30) day notice
         period.

1.13     Disabled

         "Disabled" means a condition resulting from demonstrable injury or
         disease which will permanently, continuously and wholly prevent the
         Employee from engaging in any occupation or performing any work for
         remuneration or profit; provided that this term shall not include any
         injury or disease which:

         (a)      resulted from or consists of habitual drunkenness or addiction
                  to narcotics;

         (b)      was contracted, suffered or incurred while the Employee was
                  engaged in, or resulted from having engaged in, a criminal
                  enterprise;

         (c)      was intentionally self-inflicted;

         (d)      arose while the Employee was on Authorized Leave of Absence
                  without pay or was absent without authorization; or

         (e)      arose as a result of service in the armed forces of any
                  country.

1.14     Early Retirement Date

         "Early Retirement Date" means the first day of the first month
         following the later of:

         (a)      Termination; and

         (b)      the Participant's fifty-fifth (55th) birthday, provided that
                  Termination occurs prior to the participant's sixtieth (60th)
                  birthday.

         If the Participant has reached age sixty (60) on the date of
         Termination, Early Retirement Date shall not apply.

1.15     Effective Date

         "Effective Date" means August 8, 1995.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                               6

<PAGE>

1.16     Elected Officer

         "Elected Officer" means an officer of an Employer that is elected by
         the Board, pursuant to the bylaws of the Employer.

1.17     Elected Officer Service

         "Elected Officer Service" means the period(s) of time measured in
         completed whole years, during which an Employee is an Elected Officer
         of the Company or Alaska Airlines, Inc. and the period(s) during which
         an Employee is the Chief Executive Officer of Horizon Air Industries,
         Inc. Non-continuous periods of Elected Officer Service are aggregated
         to determine an Employee's total years of Elected Officer Service.
         Notwithstanding the foregoing, the Board may increase an individual's
         Elected Officer Service, in its absolute discretion provided that any
         affected Participant shall be notified of any such adjustment.

1.18     Employee

         "Employee" means any person who is:

         (a)      employed by an Employer as a common law employee;

         (b)      is customarily employed by the Employer for twenty (20) or
                  more hours per week and for at least five (5) months per
                  calendar year; and

         (c)      is compensated on a salary basis.

1.19     Employer

         "Employer" means the Company and any Affiliate that adopts this Plan in
         writing with the consent of the Board, and agrees to be bound by the
         terms and conditions of the Plan and any amendments or modifications
         thereto, and which is listed in Appendix II. In the event an Employer
         ceases participation in the Plan, the date participation ceases shall
         be indicated in the Appendix.

1.20     ERISA

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
         amended.

1.21     Final Average Monthly Compensation

         "Final Average Monthly Compensation" means a Participant's average
         Compensation for a period of sixty (60) consecutive months ending on
         the earlier of (a) the Participant's Termination or (b) the date of a
         Change of Control. If an active Participant has fewer than sixty (60)
         consecutive months in the period, Final Average Monthly Compensation
         means average Compensation for the lesser of:

         (a)      the most recent sixty (60) months (whether or not
                  consecutive); or

         (b)      the total Company Service.

1.22     Hour of Service

         "Hour of Service" means each hour for which an Employee is paid or
         entitled to payment for the performance of duties for the Employer or
         any Affiliated Company.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                               7
<PAGE>

1.23     Late Retirement Date

         "Late Retirement Date" means the first day of the month next following
         the date of the Participant's Termination, provided that Termination
         occurs after the Participant's sixtieth (60th) birthday.

1.24     Normal Retirement Age

         "Normal Retirement Age" means the first day of the month next following
         the Participant's sixtieth (60th) birthday.

1.25     Normal Retirement Date

         "Normal Retirement Date" means the first day of the month next
         following the Participant's sixtieth (60th) birthday provided the
         Participant Terminates on the Participant's sixtieth (60th) birthday.

1.26     Participant

         "Participant" means each Elected Officer who participates in this Plan
         pursuant to the provisions of Section 2.

1.27     Plan

         "Plan" means the Alaska Air Group, Inc. 1995 Elected Officers
         Supplementary Retirement Plan, as set forth herein.

1.28     Plan Administrator

         "Plan Administrator" means the Company.

1.29     Plan Year

         "Plan Year" means the period beginning on the Effective Date and ending
         on December 31, 1995, and thereafter each calendar year.

1.30     Qualified Plan

         "Qualified Plan" means any defined benefit retirement plan that is
         qualified or is intended to be qualified under Code Section 401 (a) and
         that is maintained by an Affiliated Company, as amended from time to
         time.

1.31     Qualified Plan Benefit

         "Qualified Plan Benefit" means the Actuarial Equivalent of the
         monthly benefit the Participant is entitled to receive under the
         Qualified Plan determined as though benefits under the Qualified Plan
         commence at the same time and are payable in the same form of payment
         as benefits under this Plan.

1.32     Retirement Date

         "Retirement Date" means a Participant's Early, Normal or Late
         Retirement Date, whichever applies.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

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<PAGE>

1.33     Social Security Benefit

         "Social Security Benefit" means the Primary Insurance Amount, as
         defined under the Social Security Act, that is actually received by a
         Participant or Beneficiary. Except as provided under Section 1.1(c)
         and (d) in determining Change of Control benefits under Section 5.3,
         the Administrative Committee shall deem the Participant or Beneficiary
         to actually receive the greatest amount of Social Security Benefit at
         the earliest date to which the Participant or Beneficiary is eligible
         unless the Participant provides evidence to the contrary that is
         satisfactory to the Administrative Committee.

1.34     Terminate

         "Terminate" and its derivatives as the context requires (such as
         "Termination") means no longer employed by an Employer or Affiliated
         Company as a common law employee. An Authorized Leave of Absence is not
         a Termination.

1.35     Termination For Cause

         "Termination For Cause" means Termination for reason of admission by
         the Employee or substantiation by the Employer of;

         (a)      embezzlement, dishonesty or other fraud, conviction of a
                  felony or conspiracy against an Employer; or

         (b)      if Termination occurred prior to a Change of Control, any
                  willful or intentional injury to either an Employer, its
                  property, or its employees in connection with the business
                  affairs of an Employer.

1.36     Wages

         "Wages" means a Participant's wages as defined under Code Section 3121,
         which are subject to Federal Insurance Contribution Act tax under Code
         Section 3101.

1.37     Additional Definitions in Plan

         The following terms are defined in the following Sections of the Plan:

<TABLE>
<S>                                                                         <C>
Benefit Percentage.......................................................   3.1(b)
Change of Control Benefit................................................   5.1
Joint and Survivor Annuity...............................................   4.1(b)
Review Panel.............................................................   8.8(c)
Target Aggregate Benefit.................................................   3.1(a)
Ten Year Certain and Life Annuity........................................   4.1(c)
Ten Year Certain Installments............................................   4.1(d)
Whole Life Annuity.......................................................   4.1(a)
</TABLE>

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                               9

<PAGE>

                                    SECTION 2

                          ELIGIBILITY AND PARTICIPATION

2.1      Eligibility and Participation

         An Elected Officer shall become a Participant upon the participation
         commencement date specified by the Administrative Committee. Each
         Participant, the Participant's participation commencement date, and the
         Participant's Company Service and Elected Officer Service, if any, on
         the Participant's participation commencement date shall be listed on
         Appendix I.

2.2      Termination of Participation

         A Participant's participation in the Plan will terminate when the
         Participant's benefits under this Plan have been paid in full.

2.3      Inactive Participation

         A Participant's active participation will cease when he or she
         Terminates or becomes Disabled. A Participant's active participation
         also will cease if the Board determines that the Participant ceases to
         be an Elected Officer or the Administrative Committee determines that
         the Participant failed to make tax payments under Section 10.9. The
         date a Participant's active participation ceases shall be listed on
         Appendix I, which shall be updated from time to time. An inactive
         Participant's benefits shall be determined as though the Participant
         Terminates on the date active participation ceases.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              10

<PAGE>

                                    SECTION 3

                               RETIREMENT BENEFITS

3.1      Target Aggregate Benefit

         (a)      Target Aggregate Benefit Definition

                  A Participant's "Target Aggregate Benefit" is determined in
                  the form of a Whole Life Annuity commencing at Normal
                  Retirement Age and is equal to:

                  (i)      the Participant's Final Average Monthly Compensation
                           multiplied by the Participant's Benefit Percentage;
                           or

                  (ii)     if greater than (i) above, the Participant's
                           Qualified Plan Benefit determined without application
                           of any Code Section the effect of which is to limit,
                           reduce or restrict the Participant's Qualified Plan
                           Benefit, including without limitation Code Sections
                           415 and 401(a)(17).

                  Notwithstanding the preceding sentence, a Participant's
                  benefit under this Plan is determined in accordance with
                  Sections 3.2, 3.3, 3.4 and 3.5, whichever apply to the
                  Participant.

         (b)      Benefit Percentage Definition

                  A Participant's "Benefit Percentage" is determined in
                  accordance with the following table:

<TABLE>
<CAPTION>
===================================================================================
                              ELECTED OFFICER SERVICE
-----------------------------------------------------------------------------------
                                                                            10 or
                  At Least   At Least   At Least   At Least   At Least       More
                  5 Years    6 Years    7 Years    8 Years     9 Years      Years
-----------------------------------------------------------------------------------
<S>               <C>        <C>        <C>        <C>        <C>           <C>
Company Service
-----------------------------------------------------------------------------------
0 to 10 Years       50%        50%         50%       55%        55%          55%
-----------------------------------------------------------------------------------
11 to 15 Years      50%        55%         55%       60%        60%          60%
-----------------------------------------------------------------------------------
16 to 20 Years      55%        60%         60%       65%        65%          65%
-----------------------------------------------------------------------------------
21 to 25 Years      60%        65%         65%       70%        70%          70%
-----------------------------------------------------------------------------------
26 or More          65%        70%         70%       70%        70%          75%
Years
===================================================================================
</TABLE>

Notwithstanding the above and without regard to the Participant's Company
Service, a Participant who has less than five (5) years of Elected Officer
Service on the date of a Change of Control shall have the following "Benefit
Percentage" for purposes of determining the Participant's Change of Control
benefit under Section 5.3(b) or 5.3(c):

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              11

<PAGE>

<TABLE>
<CAPTION>
=====================================================
ELECTED OFFICER SERVICE            BENEFIT PERCENTAGE
-----------------------------------------------------
<S>                                <C>
At least 1 year                          10%
-----------------------------------------------------
At least 2 years                         20%
-----------------------------------------------------
At least 3 years                         30%
-----------------------------------------------------
At least 4 years                         40%
=====================================================
</TABLE>

3.2      Normal Retirement Benefit

         A Participant's monthly Normal Retirement Benefit payable on his or her
         Normal Retirement Date is the Participant's Target Aggregate Benefit,
         if any, adjusted as follows:

         (a)      first, Actuarially adjusted for form of payment (if the form
                  of payment is other than a Whole Life Annuity);

         (b)      second, reduced by the Qualified Plan Benefit as defined in
                  Section 1.31;

         (c)      third, multiplied by the vesting percentage determined under
                  Section 7; and

         (d)      fourth, reduced by the amount of the Social Security Benefit
                  (if any) as defined in Section 1.33.

3.3      Early Retirement Benefit

         A Participant's monthly Early Retirement Benefit payable on his or her
         Early Retirement Date is the Participant's Target Aggregate Benefit, if
         any, adjusted as follows:

         (a)      first, reduced by one one-hundred-eightieth (1/180th) for each
                  of the first sixty (60) months that ,the Participant's Early
                  Retirement Date precedes the Participant's Normal Retirement
                  Age;

         (b)      second, Actuarially adjusted for form of payment (if the form
                  of payment is other than a Whole Life Annuity);

         (c)      third, reduced by the Qualified Plan Benefit as defined in
                  Section 1.31;

         (d)      fourth, multiplied by the vesting percentage determined under
                  Section 7; and

         (e)      fifth, reduced by the amount of the Social Security Benefit
                  (if any) as defined in Section 1.33.

3.4      Late Retirement Benefit

         A Participant's monthly Late Retirement Benefit payable on his or her
         Late Retirement Date is the Participant's Target Aggregate Benefit, if
         any, determined taking into account Elected Officer Service and Company
         Service and Final Average Monthly Compensation earned as of the date of
         Termination (including service and compensation earned after age sixty
         (60)), adjusted as follows:

         (a)      first, Actuarially adjusted for form of payment (if the form
                  of payment is other than a Whole Life Annuity);

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              12

<PAGE>

         (b)      second, reduced by the Qualified Plan Benefit as defined in
                  Section 1.31;

         (c)      third, multiplied by the vesting percentage determined under
                  Section 7; and

         (d)      fourth, reduced by the amount of the Social Security Benefit
                  as defined in Section 1.33.

3.5      Cost of Living Adjustment

         The Board may adjust the amount of benefits then being paid to any or
         all Participants and Beneficiaries to reflect increases in the cost of
         living The adjustment shall be made in the amount and at the times
         determined solely in the discretion of the Board.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              13

<PAGE>

                                    SECTION 4

                                 PAYMENT FORMS

4.1      Forms of Payment

         The following forms of benefit payment are options under the Plan,
         subject to the conditions of Sections 4.2 and 4.3.

         (a)      Whole Life Annuity

                  "Whole Life Annuity" means monthly payments beginning on the
                  Retirement Date and ending the first day of the month
                  preceding the Participant's date of death.

         (b)      Joint and Survivor Annuity

                  "Joint and Survivor Annuity" means reduced monthly payments to
                  a Participant from the Retirement Date to the first day of the
                  month preceding the Participant's date of death, and if the
                  Participant predeceases the Participant's Beneficiary, monthly
                  payments to the Participant's Beneficiary equal to fifty
                  percent (50%), sixty-six and two-thirds percent (66-2/3%),
                  seventy-five percent (75%), or one hundred percent (100%) of
                  the reduced amount payable to the Participant, beginning on
                  the Participant's date of death and ending the first day of
                  the month preceding the Beneficiary's date of death. The
                  Participant shall elect which percentage applies at the same
                  time that the Participant elects a Joint and Survivor Annuity.
                  A Joint and Survivor Annuity shall be Actuarially Equivalent
                  to the Participant's benefit payable in the form of a Whole
                  Life Annuity.

                  If the Participant's Beneficiary dies after the Participant's
                  benefit payments begin, the Participant's payments will be the
                  same reduced amount as otherwise payable under the Joint and
                  Survivor Annuity. If the Participant's Beneficiary dies before
                  the date as of which the Participant's benefit payments are to
                  begin, any election of a form of benefit under this Section
                  would be canceled automatically. If the Participant dies
                  before the date as of which the Participant's benefit payments
                  are to begin, the Beneficiary shall not be entitled to receive
                  any payments under this Section. However, a spouse may be
                  entitled to a death benefit under Section 6.

         (c)      Ten Year Certain and Life Annuity

                  "Ten Year Certain and Life Annuity" means reduced monthly
                  payments from the Retirement Date to the first of the month
                  preceding the Participant's death, but in no event will less
                  than one hundred and twenty (120) equal monthly payments be
                  made. If the Participant dies before receiving one hundred and
                  twenty (120) monthly payments, the remaining payments shall
                  continue to be made to the Participant's Beneficiary. A Ten
                  Year Certain and Life Annuity shall be Actuarially Equivalent
                  to the Participant's benefit payable in the form of a Whole
                  Life Annuity.

         (d)      Ten Year Certain Installments

                  "Ten Year Certain Installments" means one hundred and twenty
                  (120) equal monthly payments that are Actuarially Equivalent
                  to the Participant's benefits payable as a Whole Life Annuity.
                  If the Participant dies before receiving one hundred and
                  twenty (120) monthly payments, the remaining payments shall
                  continue to be made to the Participant's Beneficiary.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              14


<PAGE>

4.2      Automatic Form of Payment

         Unless a Participant elects otherwise in accordance with Section 4.3,
         the Participant's benefit shall be paid as provided below:

         (a)      Married Participant

                  A Participant who is married on the Participant's Retirement
                  Date shall receive his or her benefits in the form of a one
                  hundred percent (100%) Joint and Survivor Annuity.

         (b)      Unmarried Participant

                  A Participant who is not married on the Participant's
                  Retirement Date shall receive the Participant's benefits in
                  the form of a Ten Year Certain and Life Annuity.

4.3      Payment Form Election

         (a)      Advance Election

                  Subject to approval of the Administrative Committee, a
                  Participant may elect one of the forms of payment of benefits
                  under Section 4.1 in lieu of the automatic payment form under
                  Section 4.2 as long as the Participant's election is made at
                  least one (1) year before the Participant's Termination.
                  Subject to approval of the Administrative Committee, a
                  Participant may change a prior payment-form election, provided
                  that the change is made at least one (1) year before the
                  Participant's Termination. Once benefit payments commence,
                  the payment form cannot be changed by the Participant or
                  Beneficiary.

         (b)      Unanticipated Changes In Life Circumstances

                  Notwithstanding the preceding Section 4.3(a), subject to
                  approval of the Administrative Committee, Participant may
                  elect a payment form or change a prior payment-form election
                  less than one (1) year before Termination, provided that the
                  Participant demonstrates that the Participant has experienced
                  or will experience an unanticipated change in life
                  circumstances that is involuntary and with respect to which
                  the participant's request payment form is consistent. Examples
                  of an unanticipated change in life circumstances that satisfy
                  this Section 4.3 include (but are not limited to) involuntary
                  Termination and death of a spouse.

         (c)      Form and Manner of Election

                  All payment-form elections shall be made in the form and
                  manner prescribed by the Administrative Committee and shall be
                  subject to approval of the Administrative Committee.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              15

<PAGE>

                                    SECTION 5

                           CHANGE OF CONTROL BENEFITS

5.1      Change of Control Benefit

         Notwithstanding any other provision of the Plan, in the event of a
         Change of Control, each Participant (or his or her Beneficiary), except
         a Participant Terminated For Cause before the date of the Change of
         Control, shall receive a Change of Control benefit in accordance with
         this Section, in lieu of all other benefits payable under this Plan.

5.2      Form of Payment

         All Change of Control Benefits shall be paid in the form of a single
         lump sum payment determined under Section 5.3, within sixty (60) days
         after a Change of Control. After payment of all Change of Control
         Benefits, this Plan shall terminate automatically, and no Participant
         or Beneficiary will have any further rights under the Plan.

5.3      Amount of Change of Control Benefit

         (a)      After Commencement of Benefits

                  If benefit payments have commenced as of the date of the
                  Change of Control, any Participant, spouse, or Beneficiary
                  receiving benefits as of the date of the Change of Control
                  shall receive a single lump sum payment that is the Actuarial
                  Equivalent of the remaining benefits otherwise payable.

         (b)      Before Commencement of Benefits And After Termination

                  If the date of the Change of Control is after a Participant's
                  Termination, but before benefit payments have begun, the
                  Participant shall receive a single lump sum payment that is
                  Actuarially Equivalent to the Participant's Normal Retirement
                  Benefit (if any).

         (c)      Before Termination

                  If the date of the Change of Control is before a Participant's
                  Termination, the Participant shall receive a single lump sum
                  payment that is Actuarially Equivalent to the Participant's
                  Normal Retirement Benefit (if any) determined as though the
                  Participant Terminated on the date of the Change of Control.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              16

<PAGE>

                                    SECTION 6

                                 DEATH BENEFITS

6.1      Death Benefits Prior to Benefit Commencement

         In the event a married Participant dies before benefit payments begin,
         he or she shall become one hundred percent (100%) vested upon death
         pursuant to Section 7.1(c) and his or her spouse shall receive a death
         benefit as described below:

         (a)      Death Following Early Retirement Date

                  If the Participant dies after reaching age fifty-five (55) but
                  before benefit commencement, the spouse's benefit shall be
                  paid monthly from the first of the month coinciding with or
                  following the Participant's death through the first of the
                  month preceding the spouse's death. The benefit shall equal
                  the amount payable to the surviving spouse under a one hundred
                  percent (100%) Joint and Survivor Annuity form of payment as
                  if the Participant had commenced receiving Early Retirement
                  Benefit, Normal Retirement Benefit, or Late Retirement Benefit
                  payments (whichever applies) as of the date spouse death
                  benefits commence, based upon the Participant's vested Target
                  Aggregate Benefit, if any, at the date of death.

         (b)      Death Prior to Early Retirement Date

                  If the Participant dies prior to reaching age fifty-five (55),
                  the spouse's death benefit shall be paid monthly from the
                  Participant's earliest Retirement Date (determined as if the
                  Participant had survived but was not employed after the date
                  of death) through the first of the month preceding the
                  spouse's death. The benefit shall equal the amount payable to
                  the surviving spouse under a one hundred percent (100%) Joint
                  and Survivor Annuity form of payment as if the Participant had
                  Terminated on the date of death, survived to the date spouse
                  benefits commence and commenced receiving Early Retirement
                  Benefit or Normal Retirement Benefit payments (whichever
                  applies) on such date. If the surviving spouse dies before
                  benefit payments begin, no benefits shall be payable to the
                  spouse's estate or beneficiaries.

6.2      Death Benefits After Benefit Commencement

                  In the event a Participant dies after benefit payments have
                  commenced, his or her Beneficiary may be entitled to receive a
                  benefit depending on the form of payment elected by the
                  Participant. The benefit payable to a Beneficiary is described
                  in Section 4.1(b) Joint and Survivor Annuity, 4.1(c) Ten Year
                  Certain and Life Annuity or 4.1(d) Ten Year Certain
                  Installments, whichever applies according to the form elected
                  by the Participant.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              17

<PAGE>

                                    SECTION 7

                                     VESTING

7.1      Vesting

         Except as provided in Section 7.2, each Participant shall have at all
         times a vested, nonforfeitable right to his or her Target Aggregate
         Benefit as adjusted pursuant to Sections 3.2, 3.3 and 3.4, if any,
         multiplied by the appropriate vesting percentage determined in
         accordance with whichever of the following tables produces the greatest
         vesting percentage:

         (a)      Schedule A

                  A Participant who:

                  (i)      has reached age fifty (50) and has completed Company
                           Service of at least fifteen (15) years; or

                  (ii)     Terminates on or after age sixty (60)

                  shall have the following vesting percentage in his or her
                  benefit, if any:

<TABLE>
<CAPTION>
----------------------------------------------------
ELECTED OFFICER SERVICE           VESTING PERCENTAGE
----------------------------------------------------
<S>                               <C>
 5                                        50%
--------------------------------------------
 6                                        60%
--------------------------------------------
 7                                        70%
--------------------------------------------
 8                                        80%
--------------------------------------------
 9                                        90%
--------------------------------------------
 10                                      100%
--------------------------------------------
</TABLE>

         (b)      Schedule B

                  A Participant who has reached age fifty (50) and has completed
                  Elected Officer Service of at least ten (10) years shall be
                  one hundred percent (100%) vested in his or her benefit, if
                  any.

         (c)      Death or Disability

                  A Participant who dies prior to Termination or becomes
                  Disabled shall be one hundred percent (100%) vested in his or
                  her Target Aggregate Benefit as adjusted pursuant to Sections
                  3.2, 3.3 and 3.4, if any, on the date of death or Disability.

         (d)      Change of Control

                  Notwithstanding any other provision of the Plan to the
                  contrary, including without limitation Sections 1.10, 1.35,
                  7.2(a) and 7.2(b), all Participants who are Employees when a
                  Change of Control occurs shall be one hundred percent (100%)
                  vested in their Target Aggregate Benefit as adjusted pursuant
                  to Sections 3.2, 3.3 and 3.4, if any, (without regard to the
                  Participant's age) in the event of a Change of Control.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              18
<PAGE>

         (e)      Termination of Plan

                  In the event that the Plan is Terminated in whole or in part,
                  all affected Participants shall be one hundred percent (100%)
                  vested in his or her Target Aggregate Benefit as adjusted
                  pursuant to Sections 3.2, 3.3 and 3,4, if any.

7.2      Forfeiture

         (a)      Termination

                  In the event a Participant Terminates:

                  (i)      before reaching age fifty (50) and before a Change of
                           Control; or

                  (ii)     before becoming one hundred percent (100%) vested;

                  the Participant's nonvested portion of the Target Aggregate
                  Benefit shall be forfeited.

         (b)      Termination For Cause and Competing Activity

                  Notwithstanding any Plan provision to the contrary other than
                  Section 7.l(d), a Participant's vested and nonvested Target
                  Aggregate Benefit and any death benefit will be forfeited in
                  their entirety and will not be reinstated for any reason upon:

                  (i)      the Participant's Termination for Cause; or

                  (ii)     a determination that the Participant is engaged in a
                           Competing Activity.

                  This forfeiture clause has no effect on benefits payable under
                  the Qualified Plan.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              19

<PAGE>

                                    SECTION 8

                       POWERS AND DUTIES OF THE COMMITTEE

8.1      Appointment of Administrative Committee

         The Plan shall be administered by the Administrative Committee which
         shall be appointed by the Chairman of the Board. The Administrative
         Committee shall be composed of at least three (3) members, all of whom
         are Elected Officers. No bond or other security shall be required of
         any Administrative Committee member in such capacity.

         The Chairman of the Board shall be the Chairman of the Administrative
         Committee. Administrative Committee members may participate in the Plan
         if they are otherwise eligible to do so.

8.2      Powers and Duties

         The Administrative Committee shall have the power and the duty to take
         all action and to make all decisions necessary or proper to carry out
         the Plan, including the discretionary authority to interpret the
         provisions of the Plan and the facts and circumstances of claims for
         benefits. The Administrative Committee shall have the absolute
         discretion to decide all issues of fact or law. Any decision by the
         Administrative Committee that is not shown to be an abuse of discretion
         must be upheld by a court of law. Without limiting the foregoing, the
         Administrative Committee shall have the following administrative powers
         and duties:

         (a)      to require any Participant or Beneficiary to furnish
                  information as they may request for the purpose of the proper
                  administration of the Plan as a condition to receiving any
                  benefit under the Plan;

         (b)      to make and enforce rules and regulations and prescribe the
                  use of forms as, they shall deem necessary for the efficient
                  administration of the Plan;

         (c)      to interpret the Plan and to resolve ambiguities,
                  inconsistencies and omissions in a nondiscriminatory manner;

         (d)      to determine tax withholding;

         (e)      to compute the amount of benefits which shall be payable to
                  any person in accordance with the provisions of the Plan; and

         (f)      to delegate any of their administrative powers or duties
                  hereunder to any of their agents or employees,

8.3      Administrative Committee Procedures

         A majority of the Administrative Committee members in office may
         fulfill any act which the Plan authorizes or requires of the
         Administrative Committee, provided that no Administrative Committee
         member who participates in the Plan shall vote on any matter that
         pertains to the member or to the member's rights and/or benefits under
         the Plan unless such matter pertains to all Participants or all
         Participant's rights and/or benefits under the Plan. Each member of the
         Administrative Committee shall be recused from voting on any action
         pertaining solely to the member or members of the Administrative
         Committee or their rights and/or benefits under the Plan, and the
         action shall be taken by a majority of the remaining members of the
         Administrative Committee, or if the remaining members do not constitute
         a quorum, by the Compensation Committee of the Board.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              20

<PAGE>

         The action of such majority of the Administrative Committee expressed
         from time to time by a vote at a meeting, or in writing without a
         meeting, shall constitute the action of the Administrative Committee
         and shall have the same effect for all purposes as if assented to by
         all Administrative Committee members. The majority of Administrative
         Committee members may delegate in writing to any of them the authority
         to give certified notice in writing of any action taken by the
         Administrative Committee.

8.4      Appointment of Agents

         The Administrative Committee may appoint such actuaries, accountants,
         counsel, specialists, and other persons or organizations as they shall
         deem necessary for administration of the Plan and they shall be
         entitled to prudently rely upon any tables, valuations, certificates,
         opinions, or reports which shall be furnished to them by such persons
         or organizations.

8.5      Administrative Committee Expenses

         The Administrative Committee shall serve without compensation for
         services as such, but any reasonable expenses incurred by them in the
         performance of their duties as Administrative Committee members shall
         be paid by the Company.

8.6      Administrative Expenses

         All expenses incurred by the Administrative Committee in connection
         with the administration of the Plan, including but not limited to the
         compensation of any actuary, accountant, counsel, specialist, or other
         persons or organizations who shall be employed by the Administrative
         Committee in connection with the administration thereof, shall be paid
         by the Company.

8.7      Determinations

         All determinations hereunder made by the Board or the Administrative
         Committee shall be made in the sole and absolute discretion of the
         Board, the Compensation Committee of the Board or of the Administrative
         Committee, as the case may be.

         In the event that any disputed matter shall arise hereunder, including,
         without in any manner limiting the generality of the foregoing, any
         matter relating to the eligibility of any person to participate under
         the Plan, the participation of any person under the Plan, the amounts
         payable to any person under the Plan, and the applicability and the
         interpretation of the provisions of the Plan, the decision of the
         Administrative Committee, Board, or Compensation Committee of the Board
         upon such matter shall be binding and conclusive upon all persons,
         including, without in any manner limiting the generality of the
         foregoing, the Company, the Board, all persons at any time in the
         employ of the Company, the Participants and their Beneficiaries, and
         upon the respective successors, assigns, executors, administrators,
         heirs, next of kin, and distributees of all the foregoing.

8.8      Claim and Review Procedure

         (a)      Application for Benefits

                  Any application for benefits under the Plan shall be submitted
                  to the Company at its principal office. Such application shall
                  be in writing on the prescribed form and shall be signed by
                  the applicant.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              21

<PAGE>

         (b)      Denial of Applications

                  In the event that any application for benefits is denied in
                  whole or in part, the Company shall notify the applicant in
                  writing of the right to a review of the denial. Such written
                  notice shall set forth, in a manner calculated to
                  be understood by the applicant, specific reasons for the
                  denial, specific references to the Plan provisions on which
                  the denial was based, a description of any information or
                  material necessary to perfect the application, an explanation
                  of why such material is necessary, and an explanation of the
                  Plan's review procedure. Such written notice shall be given to
                  the applicant within 90 days after the Company receives the
                  application unless special circumstances require an extension
                  of time for processing the application. In no event shall such
                  an extension exceed a period of ninety (90) days after the end
                  of the initial 90-day period. If such an extension is
                  required, written notice thereof shall be furnished to the
                  applicant before the end of the initial 90-day period. Such
                  notice shall indicate the special circumstances requiring an
                  extension of time and the date by which the Company expects to
                  render a decision. If written notice is not given to the
                  applicant within the period prescribed by this Subsection (b),
                  the application shall be deemed to have been denied for
                  purposes of Subsection (d) upon the expiration of such period.

         (c)      Review Panel

                  The Company from time to time shall appoint a Review Panel.
                  The "Review Panel" shall consist of three or more individuals
                  who may (but need not) be Employees of the Company and shall
                  be the named fiduciary with the authority to act on any
                  Employee benefit appeal. Members of the Administrative
                  Committee may be appointed to the Review Panel. The Review
                  Panel has discretionary authority to decide all issues of fact
                  or law. Any decision by the Review Panel that is not
                  established to be an abuse of discretion must be upheld by a
                  court of law.

         (d)      Requests for Review

                  Any person whose application for benefits is denied in whole
                  or in part (or such person's duly authorized representative)
                  may appeal from the denial by submitting to the Review Panel a
                  request for a review of such application within six (6) months
                  after receiving written notice of the denial. The Review Panel
                  shall give the applicant or such representative an opportunity
                  to review pertinent documents in preparing such request for
                  review and to submit issues and comments in writing. The
                  request for review shall be in writing and shall be addressed
                  to the Company's principal office. The request for review
                  shall set forth all of the grounds on which it is based, all
                  facts in support of the request, and any other matters which
                  the applicant deems pertinent. The Review Panel may require
                  the applicant to submit such additional facts, documents or
                  other material as it may deem necessary or appropriate in
                  making its review.

         (e)      Decisions on Review

                  The Review Panel shall act upon each request for review within
                  sixty (60) days after receipt thereof, unless special
                  circumstances require an extension of time for processing, but
                  in no event shall the decision on review be rendered more than
                  one hundred twenty (120) days after the Review Panel receives
                  the request for review. If such an extension is required,
                  written notice thereof shall be furnished to the applicant
                  before the end of the initial sixty (60)-day period. The
                  Review Panel shall give prompt, written notice of its decision
                  to the applicant and to the Company. In the event that the
                  Review Panel confirms the denial of the application for
                  benefits in whole or in part, such notice shall set forth, in
                  a manner calculated to be understood by the applicant, the
                  specific reasons for such denial and specific references to
                  the

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              22

<PAGE>

                  Plan provisions on which the decision is based. To the extent
                  that the Review Panel overrules the denial of the application
                  for benefits, such benefits shall be paid to the applicant.

         (f)      Rules and Procedures

                  The Review Panel shall adopt such rules and procedures,
                  consistent with ERISA and the Plan, as it deems necessary or
                  appropriate in carrying out its responsibilities under this
                  Section 8.8

         (g)      Exhaustion of Administrative Remedies

                  No legal or equitable action for benefits under the Plan shall
                  be brought unless and until the claimant (1) has submitted a
                  written application for benefits in accordance with Subsection
                  (a); (2) has been notified that the application is denied; (3)
                  has filed a written request for a review of the application in
                  accordance with Subsection (d); and (4) has been notified in
                  writing that the Review Panel has affirmed the denial of the
                  application; provided, however, that an action may be brought
                  after the Company or the Review Panel has failed to act on the
                  claim within the time prescribed in Subsection (b) and
                  Subsection (e), respectively.

8.9      Exemption From Liability/Indemnification

                  The members of the Administrative Committee, collectively and
                  individually, shall be free from all liability, joint or
                  several, for their acts, omissions, and conduct, and for the
                  acts, omissions, and conduct of their duly-appointed agents,
                  in the administration of the Plan, except for those acts or
                  omissions and conduct resulting from willful misconduct or
                  lack of good faith.

                  The Company shall indemnify each member of the Administrative
                  Committee, and any other employee, officer, or director of the
                  Company against any claims, loss, damage, expense, or
                  liability, by insurance or otherwise (other than amounts paid
                  in settlement not approved by the Company), reasonably
                  incurred by the individual in connection with any action or
                  failure to act by reason of membership on the Administrative
                  Committee or performance of an authorized duty or
                  responsibility for or on behalf of the Company pursuant to the
                  Plan, unless the same is judicially determined to be the
                  result of the individual's gross negligence or willful
                  misconduct. Such indemnification by the Company shall be made
                  only to the extent such expense or liability is not payable to
                  or on behalf of such person under any liability insurance
                  coverage. The foregoing right to indemnification shall be in
                  addition to any other rights to which any such person may be
                  entitled as a matter of law.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              23

<PAGE>

                                    SECTION 9

                            AMENDMENT AND TERMINATION

9.1      Amendment or Termination

         (a)      Right to Amend or Terminate

                  Except as otherwise provided in this Section, the Company
                  reserves the right at any time and from time to time to amend
                  any or all provisions of the Plan or terminate the Plan, in
                  whole or in part, for any reason and without consent of any
                  person, and without liability to any person for such amendment
                  or termination. Notwithstanding the preceding sentence, no
                  amendment of the Plan shall:

                  (i)      adversely affect the benefits or rights of a
                           Participant or Beneficiary under the Plan (other than
                           election or availability of a form of benefit payment
                           under Section 4) earned and vested as of the
                           effective date of the amendment without the written
                           consent of each affected Participant and Beneficiary
                           unless such change is required by law or regulations
                           or is necessary to avoid unfavorable tax
                           consequences; or

                  (ii)     adversely affect the features of the Plan in effect
                           as of the effective date of the amendment without the
                           written consent of each affected Participant and
                           Beneficiary unless such change is required by law or
                           regulations or is necessary to avoid unfavorable tax
                           consequences; or

                  (iii)    be adopted or become effective after a Change of
                           Control without the written consent of all
                           Participants and Beneficiaries.

         (b)      Plan Termination

                  Nothing in this Plan shall be construed to require
                  continuation of benefit accruals under this Plan or
                  continuation of this Plan with respect to existing or future
                  Participants or Beneficiaries. Notwithstanding Section
                  9.l(a)(i), the Company may amend the Plan to cease all future
                  benefit accruals and shall pay benefits according to the then
                  existing or amended distribution provisions. Notwithstanding
                  Section 9.1(a)(i), the Company may terminate the Plan and
                  shall distribute all benefits as soon as administratively
                  feasible in the form of single lump sum payments calculated in
                  the same manner as lump sum benefits are calculated in the
                  event of a Change of Control pursuant to Section 5.3.

         (c)      Procedures

                  Any amendment or termination of the Plan shall be adopted by
                  the Board, made in writing, and executed on behalf of the
                  Company by an authorized officer of the Company.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              24

<PAGE>

                                   SECTION 10

                            MISCELLANEOUS PROVISIONS

10.1     Appendices

         Any Appendix to this Plan, as amended from time to time, is
         incorporated into the Plan and made a part of the terms and conditions
         of this Plan.

10.2     ERISA Status

         This Plan shall constitute a plan which is unfunded and which is
         maintained primarily for the purpose of providing deferred compensation
         benefits for a select group of management or highly compensated
         employees within the meaning of Sections 201(2), 301(a)(3), and
         401(a)(l) of ERISA.

10.3     Unfunded Nature of the Obligation

         The obligation to pay benefits under the Plan shall at all times be an
         unfunded, unsecured obligation of the Employer. The Employer is not
         obligated to purchase any annuity contracts to provide benefits under
         the Plan, to establish a trust for the purpose of receiving
         contributions and paying benefits under the Plan, or to otherwise set
         aside funds for the purpose of providing Plan benefits.

10.4     Facility of Payment

         In the event any benefit under this Plan shall be payable to a person
         who is under legal disability or is in any way incapacitated so as to
         be unable to manage his or her financial affairs, the Administrative
         Committee may direct payment of such benefit to a duly appointed
         guardian, committee or other legal representative of such person, or in
         the absence of a guardian or legal representative, to a custodian for
         such person under a Uniform Gifts to Minors Act or to any relative of
         such person by blood or marriage, for such person's benefit. Any
         payment made in good faith pursuant to this provision shall fully
         discharge the Company and the Plan of any liability to the extent of
         such payment.

10.5     Governing Law

         The Plan shall be construed in accordance with ERISA and the laws of
         the State of Washington, to the extent not preempted by ERISA.

10.6     Limitation on Assignment

         Benefits under this Plan may not be assigned, sold, transferred, or
         encumbered, and any attempt to do so shall be void. A Participant's or
         Beneficiary's interest in benefits under the Plan shall not be subject
         to debts or liabilities of any kind and shall not be subject to
         attachment, garnishment or other legal process.

10.7     No Additional Rights

         No person shall have any rights under the Plan, except as, and only to
         the extent, expressly provided for in the Plan. Neither the
         establishment or amendment of the Plan or the creation of any fund or
         account, or the payment of benefits, nor any action of an Employer or
         the Administrative Committee shall be held or construed to confer upon
         any person any right to be continued as an employee, or, upon
         dismissal, any right or interest in any account or fund

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              25

<PAGE>

         other than as herein provided. The Company and the other Employers
         expressly reserve the right to discharge any employee at any time with
         or without cause.

10.8     Notice

         All notices, statements, reports and other communications from the
         Company or Administrative Committee to any employee or other person
         required or permitted under the Plan shall be deemed to have been duly
         given when delivered to, or when mailed by first-class mail, postage
         prepaid and addressed to, such employee, or other person at his or her
         address last appearing on the Company's records.

10.9     Severability

         If any provision of this Plan is held unenforceable or invalid for any
         reason, such determination shall not affect the remaining provisions of
         this Plan which shall be construed as if the unenforceable or invalid
         provisions had never been included.

10.10    Tax Consequences and Withholding

         The Company does not represent or guarantee that any particular federal
         or state income, payroll, Social Security, or other tax consequences
         will result from participation in the Plan. A Participant should
         consult with professional tax advisors to determine the tax
         consequences of his or her participation in the Plan.

         All payments of federal or state income, Social Security, payroll, or
         other tax required with respect to contributions or benefits under the
         Plan shall be satisfied by withholding the required amount from the
         Participant's salary or Plan benefit payment, or if the Participant's
         salary or benefit payment is insufficient to satisfy any required tax
         payments, the Participant shall satisfy the payments in a manner
         approved by the Administrative Committee.

         Determinations by the Administrative Committee with respect to tax
         withholding shall be binding on the Participant and Beneficiaries.

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              26

<PAGE>

                            EXECUTION/SIGNATURE PAGE

         IN WITNESS WHEREOF, the Company has caused this Plan to be signed by
its duly authorized officer this 8th day of August, 1995.

                                                    ALASKA AIR GROUP, INC.

Witness:

/s/ Keith Loveless                                  By: /s/ John F. Kelly
------------------                                      -----------------
Keith Loveless                                          John F. Kelly
Assistant Secretary                                     Chairman, President and
                                                        Chief Executive Officer

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              27

<PAGE>

                                   APPENDIX I
                                     TO THE
                             ALASKA AIR GROUP, INC.
               1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN
                               (as of July 1,2000)

Pursuant to Section 2 of the Plan, the following Elected Officers shall be
Participants in the Plan beginning on the date listed below and shall cease to
be active Participants on the date listed below:

<TABLE>
<CAPTION>
                             Participation                                                              Active
                              Commencement                    Company        Elected Officer        Participation
          Name                 Date (PCD)                  Service on PCD    Service on PCD             Ceases
<S>                        <C>                             <C>               <C>                   <C>
1.  William S. Ayer        August 8, 1995                      13.02               0

2.  Michel A. Swanigan     October 23, 1995                    15.54               0               January 31,2000

3.  Keith Loveless         May 21, 1996                        10.06               0

4.  Dennis J. Hamel        July 29, 1997                       13.88               0

5.  William L. MacKay      July 29, 1997                       20.93               0

6.  Robert M. Reeder       July 29, 1997                        7.38               0

7.  Gregg A. Saretsky      March 15, 1998                          0               0

8.  Robin L. Krueger       January 26, 1 999                   15.06               0               July 1, 1999

9.  Bradley D. Tilden      January 26, 1999                     7.93               0

10. William F. Weaver      October 26, 1999                     2.90               0

11. David A. Prewitt       June 1, 2000                            0               0
</TABLE>

ACKNOWLEDGED AND ACCEPTED
ALASKA AIR GROUP, INC.

By:________________________
   John F. Kelly
   Chairman and Chief Executive Officer

Date:______________________

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995

                                                                              28

<PAGE>

                                   APPENDIX II
                                     TO THE
                             ALASKA AIR GROUP, INC.
               1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN

"Employer" as defined in Section 1.19 shall also include the following employers
during the following period of time.

<TABLE>
<CAPTION>
           Employer                Beginning Date        Ending Date
           --------                --------------        -----------
<S>                                <C>                   <C>
1. Alaska Airlines, Inc.           August 8, 1995

2. Horizon Air Industries, Inc.    August 8, 1995
</TABLE>

ACKNOWLEDGED AND ACCEPTED
ALASKA AIR GROUP, INC.

By: /s/ John F. Kelly
    -----------------
    John F. Kelly
    Chairman and Chief Executive Officer

Date: 12/31/97

Alaska Air Group, Inc.
1995 Elected Officers Supplementary Retirement Plan
Effective August 8, 1995                                                      29
<PAGE>

                                 FIRST AMENDMENT
                                     TO THE
                             ALASKA AIR GROUP, INC.
              1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN

         The Alaska Air Group, Inc. 1995 Elected Officers Supplementary
Retirement Plan, effective August 8, 1995 (the "Plan"), is amended as follows,
effective January 30, 2002 unless otherwise specified below:

I.       The first sentence of Section 1.1 Actuarial Equivalence is deleted in
         its entirety and replaced with the following:

         "Actuarial Equivalence" and its derivatives as the context requires
         (such as "Actuarially Equivalent") mean that the present value of two
         (2) single sum payments, two (2) series of payments, a single sum and a
         series of payments, or payments commencing at different times, are of
         equal value when computed as follows:

II.      Section 1.30 Qualified Plan is deleted in its entirety and replaced
         with the following;

         1.30     Qualified Defined Benefit Plan

         "Qualified Defined Benefit Plan" means the Alaska Air Group, Inc.
         Retirement Plan for Salaried Employees, as amended and restated
         effective January 1, 2000 and as subsequently amended.

III.     Section 1.31 Qualified Plan Benefit is deleted in its entirety and
         replaced with the following, and Section 1.32 Retirement Date is
         redesignated as Section 1.31:

         Section 1.32 Retirement Offset

         "Retirement Offset" means the sum of (a), (b) and (c) below:

         (a)      Qualified Plan Offset

                  The Actuarial Equivalent of the vested monthly benefit the
                  Participant is actually entitled to receive under the
                  Qualified Defined Benefit Plan determined as though benefits
                  under the Qualified Defined Benefit Plan commence at the same
                  time and are payable in the same form of payment as benefits
                  under this Plan, adjusted as follows:

                  (i)      Reduction of Offset for Non-Officer Service

                           The amount determined under (a) shall be reduced by
                           the Actuarial Equivalent of the vested monthly
                           benefit the Participant would be entitled

                                        1

<PAGE>

                           to receive under the Qualified Defined Benefit Plan
                           if the Participant's Credited Service (as defined in
                           the Qualified Defined Benefit Plan) earned after the
                           date the Participant became an Elected Officer were
                           disregarded in determining the benefit; and

                  (ii)     Increase for Enhanced Match Election

                           If the Participant elected the enhanced match
                           pursuant to Section 2.6 of the Qualified Defined
                           Benefit Plan, the amount determined under (a) shall
                           be increased by the Actuarial Equivalent of the
                           additional vested monthly benefit the Participant
                           would have been entitled to receive under the
                           Qualified Defined Benefit Plan if the Participant had
                           not elected the enhanced match; and

         (b)      Phantom Offset

                  If the Participant has never been a participant in the
                  Qualified Defined Benefit Plan, the Actuarial Equivalent of
                  the vested monthly benefit that would be determined under (a),
                  as adjusted by (a)(i) if the Participant had participated in
                  the Qualified Defined Benefit Plan; and

         (c)      Supplementary Plan Offset

                  The Actuarial Equivalent of the vested monthly benefit the
                  Participant is actually entitled to receive under a
                  Supplementary Plan, determined as though benefits under the
                  Supplementary Plan commence at the same time and are payable
                  in the same form of payment as benefits under this Plan,
                  reduced by the Actuarial Equivalent of the vested monthly
                  benefit the Participant would be entitled to receive under the
                  Supplementary Plan if the Participant's service after the date
                  the Participant became an Elected Officer were disregarded in
                  determining the benefit.

IV.      The following new Section 1.34 Supplementary Plan is inserted
         immediately after Section 1.33 Social Security Benefit and the
         subsequent Sections are renumbered 1.35 through 1.38:

         Section 1.34 Supplementary Plan

         "Supplementary Plan" means any unfunded deferred compensation plan
         maintained by an Employer:

         (a)      that is exempted (or is intended to be exempted) from Parts 2,
                  3 and 4 of Subtitle B of ERISA under ERISA Sections 201(2),
                  301(3) and 401(a)(l);

         (b)      that provides a defined benefit at retirement (rather than
                  defined contributions to the Participant's account); and

                                        2

<PAGE>

         (c)      that is intended by its stated terms to supplement or replace
                  benefits provided under the Qualified Defined Benefit Plan.

V.       Section 3.2 Normal Retirement Benefit, subsection (b) is deleted in its
         entirety and replaced with the following:

         (b)      second, reduced by the Retirement Offset, as defined in
                  Section 1.32;

VI.      Section 3.3 Early Retirement Benefit subsection (c) is deleted in its
         entirety and replaced with the following:

         (c)      third, reduced by the Retirement Offset, as defined in Section
                  1.32;

VII.     Section 3.4 Late Retirement Benefit, subsection (b) is deleted in its
         entirety and replaced with the following:

         (b)      second, reduced by the Retirement Offset, as defined in
                  Section 1.32;

VIII.    Effective January 1, 2002, Section 8.8 Claim and Review Procedure is
         deleted in its entirety and replaced with the following:

         8.8      Claim and Review Procedures

                  (a)      Application for Benefits

                           Any person or the person's authorized representative
                           (the "Claimant") may apply for, claim, or request
                           information about, Plan benefits by submitting a
                           signed, written application to the Administrative
                           Committee.

                  (b)      Denial of Application

                           If the Administrative Committee denies an application
                           in whole or in part, the Administrative Committee
                           shall notify the Claimant in writing or
                           electronically of the denial and the Claimant's right
                           to request a review of the denial. The notice of
                           denial shall set forth, in a manner calculated to be
                           understood by the Claimant:

                           (i)      specific reasons for the denial,

                           (ii)     specific references to the applicable Plan
                                    provisions on which the denial was based,

                                       3

<PAGE>

                           (iii)    a description of any information or material
                                    necessary to perfect the application and an
                                    explanation of why such material is
                                    necessary,

                           (iv)     an explanation of the Plan's review
                                    procedure and the time limits for review,
                                    and

                           (v)      a statement of the Claimant's right to bring
                                    a civil action under ERISA following an
                                    adverse determination on review.

                           The denial notice will be given to the Claimant
                           within ninety (90) days after the Administrative
                           Committee receives the application unless special
                           circumstances require an extension of time for
                           processing the application. In no event will an
                           extension exceed a period of ninety (90) days after
                           the end of the initial 90-day period. If an extension
                           is required, written notice of the extension shall be
                           furnished to the Claimant before the end of the
                           initial 90-day period. The extension notice will
                           indicate the special circumstances requiring an
                           extension of time and the date by which the
                           Administrative Committee expects to render a
                           decision. If a written denial notice is not given to
                           the Claimant within the period prescribed by this
                           Section 8.8(b), the application is deemed to have
                           been denied for purposes of section 8.8(d).

                  (c)      Review Panel

                           From time to time, the Company shall appoint a Review
                           Panel. The "Review Panel" will consist of three (3)
                           or more individuals who may be (but need not be)
                           Employees of the Company and shall be the named
                           fiduciary" with authority to act on any appeal of a
                           denied application. Members of the Administrative
                           Committee may be appointed to the Review Panel. The
                           Review Panel has discretionary authority to decide
                           all issues of fact or law. Any decision by the Review
                           Panel that is not established to be an abuse of
                           discretion must be upheld.

                  (d)      Request for Review

                           A Claimant whose application is denied, in whole or
                           in part, may appeal the denial by submitting to the
                           Review Panel a written request for a review of the
                           denial. The request for review must be submitted to
                           the Review Panel within sixty (60) days after the
                           Claimant receives written notice of the denial. Upon
                           request and free of charge, the Claimant shall be
                           permitted reasonable access to, and copies of,
                           relevant information and documents. The

                                        4

<PAGE>

                           Review Panel shall give the Claimant an opportunity
                           to submit written information, documents, records and
                           comments in support of the appeal. In making its
                           decision, the Review panel will take the Claimant's
                           submissions into account, regardless of whether this
                           information was available in considering the initial
                           request.

                  (e)      Decision on Review

                           The Review Panel will deliver to the Claimant an
                           electronic or written decision within a reasonable
                           time, but no later than sixty (60) days after receipt
                           of the Claimant's request for review. In special
                           circumstances, the period may be extended up to an
                           additional sixty (60) days. If an extension is
                           required, written notice of the extension will be
                           furnished to the Claimant before the end of the
                           initial 60-day period. The extension notice will
                           indicate the special circumstances requiring an
                           extension of time and the date by which the Review
                           Panel expects to render a decision. If a written
                           decision is not given to the Claimant within the
                           period prescribed by this Section 8.8(e), the
                           decision is deemed to be adverse. If the decision is
                           adverse, in whole or in part, the decision shall set
                           forth in a manner calculated to be understood by the
                           Claimant:

                           (i)      specific reasons for the adverse decision
                                    with specific references to the applicable
                                    Plan provisions on which the decision was
                                    based,

                           (ii)     a statement that, upon request and free of
                                    charge, the Claimant is entitled reasonable
                                    access to, and copies of, relevant
                                    information and documents,

                           (iii)    a description of any voluntary appeals
                                    procedures and a statement of the Claimant's
                                    right to obtain information about these
                                    procedures, and

                           (iv)     a statement of the Claimant's right to bring
                                    a civil action under ERISA.

                  (f)      Rules and Procedures

                           The Administrative Committee and the Review Panel
                           shall establish additional administrative procedures
                           in accordance with this Section 8.8 and ERISA as they
                           deem necessary or appropriate, including safeguards
                           to insure and verify that decisions under this
                           Section 8.8 are made in accordance with the Plan
                           document and are applied consistently to
                           similarly-situated Participants and

                                        5

<PAGE>

                           Beneficiaries. Additional administrative procedures
                           may include, but are not limited to, protocols,
                           guidelines, periodic review and audits.

                  (g)      Exhaustion of Administrative Remedies

                           No legal or equitable action for benefits under the
                           Plan shall be brought unless and until the Claimant
                           has satisfied the procedures in this Section 8.8.

IX.      The first sentence of Section 10.3 Unfunded Nature of the Obligation is
         deleted in its entirety and replaced with the following:

                  No Participant, spouse or Beneficiary shall have any rights
                  with respect to any benefits except as a general, unsecured
                  creditor of the Employer.

         IN WITNESS WHEREOF, the Compensation Committee of the Board of
Directors of Alaska Air Group, Inc. has caused this First Amendment to be signed
by its duly-authorized Chair as of January 30, 2002.

Witness:                                     COMPENSATION COMMITTEE OF THE
                                             BOARD OF DIRECTORS OF ALASKA
                                             AIR GROUP, INC.

/s/ Keith Loveless                           /s/ R. Marc Langland
----------------------------------           -----------------------------
Keith Loveless                               R. Marc Langland, Chair
Vice President of Legal &
Corporate Affairs, General Counsel

                                        6

<PAGE>

                                SECOND AMENDMENT
                                     TO THE
                             ALASKA AIR GROUP, INC.
               1995 ELECTED OFFICERS SUPPLEMENTARY RETIREMENT PLAN

         The Alaska Air Group, Inc. 1995 Elected Officers Supplementary
Retirement Plan, effective August 8, 1995 (the "Plan"), is amended as follows,
effective August 28, 2002 unless otherwise specified below:

I.       The first clause of Section 1.1(a) Actuarial Equivalence is replaced
         with the following:

         (a)      For purposes of Sections 3.2 Normal Retirement Benefit, 3.6
                  Post-Retirement, Lump-Sum Benefit, 4.1(c) Ten Year Certain and
                  Life Annuity, 4.1(d) Ten Year Certain Installments and 5.3
                  Amount of Change of Control Benefit, Actuarial Equivalence
                  shall be computed using the following:

II.      Section 1.1 Actuarial Equivalence is amended by inserting the following
         new Section 1.1(e):

         (e)      For purposes of Section 3.6 Post-Retirement, Lump-Sum Benefit,
                  the lump sum that is Actuarially Equivalent to the remaining
                  monthly benefits otherwise payable is determined as follows:

                  (i)      for a Participant whose benefit is reduced by the
                           Participant's Social Security Benefit, the Actuarial
                           Equivalent of the remaining benefits otherwise
                           payable is determined assuming that the Participant's
                           Social Security Benefit does not increase after the
                           first day of the most recent month for which a
                           payment was made.

                  (ii)     for a Participant whose benefit is not reduced by a
                           Social Security Benefit, the Actuarial Equivalent of
                           the remaining benefits otherwise payable is
                           determined assuming that the Participant begins
                           receiving monthly Social Security Benefits on the
                           later of the first day of the most recent month for
                           which a payment was made, or the earliest date on
                           which the Participant is eligible for a benefit from
                           Social Security. The amount of the monthly Social
                           Security Benefit assumed to be received by the
                           Participant is determined in accordance with the
                           Social Security Act in effect as of the first day of
                           the most recent month for which a payment was made
                           and is based on the following assumptions:

                           (1)      assuming the Participant's Wages exceed the
                                    taxable wage base provided under Section 230
                                    of the Social Security Act for each Plan
                                    Year beginning with the Plan Year in which
                                    the Participant attained age twenty one (21)
                                    and ending

                                        1

<PAGE>

                                    with the last Plan Year ending before the
                                    first day of the most recent month for which
                                    a payment was made;

                           (2)      assuming the Participant has no Wages during
                                    or after the Plan Year in which occurs the
                                    first day of the most recent month for which
                                    a payment was made; and

                           (3)      assuming the Social Security Benefits do not
                                    increase after the assumed Social Security
                                    Benefit beginning date.

III.     A new Section 3.6 Post-Retirement, Lump-Sum Benefit is inserted
         immediately after Section 3.5 Cost of Living Adjustment:

         Section 3.6       Post-Retirement, Lump-Sum Benefit

                  A Participant who has already begun receiving Normal, Early or
                  Late Retirement Benefits in one of the payment forms under
                  Section 4.1 may elect to receive a post-retirement lump sum.

                  (a)      Definition

                           A post-retirement, lump-sum benefit is one (1)
                           payment that is Actuarially Equivalent to the
                           remaining monthly benefit payments that otherwise
                           would be payable, reduced by ten percent (10%). A
                           post-retirement lump sum will be paid as soon as
                           administratively feasible after the Participant's
                           lump-sum election is approved. Once a lump sum is
                           paid, the Participant, the Participant's spouse and
                           the Participant's Beneficiary have no other benefits
                           or rights under the Plan.

                  (b)      Form and Manner of Election

                           A post-retirement lump sum can be elected only by a
                           Participant (not by a spouse or Beneficiary). A
                           Participant's lump-sum election must be made in the
                           form and manner prescribed by the Administrative
                           Committee, and the election is subject to approval of
                           the Administrative Committee. Once a Participant
                           elects and receives a lump sum, the election cannot
                           be changed.

                  (c)      Right to Amend or Eliminate

                           Notwithstanding Section 9.1(a), the Company may amend
                           or delete this Section 3.6 at any time, if the Board
                           determines in its sole discretion that such amendment
                           is required by law or regulations or is necessary or
                           advisable to avoid unfavorable tax consequences.

                                        2

<PAGE>

                           Any amendment of this Section 3.6 shall be made in
                           accordance with the procedures set forth in Section
                           9.1(c).

IV.      The last sentence of Section 4.3(a) Advance Election is deleted and
         replaced in its entirety with the following:

         Except as provided in Section 3.6, once benefit payments commence, the
         payment form cannot be changed by the Participant or Beneficiary.

         IN WITNESS WHEREOF, the Compensation Committee of the Board of
Directors of Alaska Air Group, Inc. has caused this Second Amendment to be
signed by its duly-authorized Chair as of August 28, 2002.

Witness:                                           COMPENSATION COMMITTEE OF THE
                                                   BOARD OF DIRECTORS OF ALASKA
                                                   AIR GROUP, INC.

/s/ Keith Loveless                                 /s/ R. Marc Langland
----------------------------------                 -----------------------------
Keith Loveless                                     R. Marc Langland, Chair
Vice President of Legal &
Corporate Affairs, General Counsel

                                        3