<PAGE>   1
                                                                  EXECUTION COPY

                                                                    EXHIBIT 4.15



                          AMBAC ASSURANCE CORPORATION,
                               as Policy Provider,



                           AMERICA WEST AIRLINES, INC.



                                       and
                            WILMINGTON TRUST COMPANY,
                       not in its individual capacity but solely as
                 Subordination Agent and trustee to the Trustee under the
                 America West Airlines Pass Through Trust 1999-1G





                        INSURANCE AND INDEMNITY AGREEMENT






                           AMERICA WEST AIRLINES, INC.

                           PASS THROUGH CERTIFICATES,
                                SERIES 1999-1G-O






                         Dated as of September 21, 1999
<PAGE>   2
                  (This Table of Contents is for convenience of reference only
and shall not be deemed to be part of this Agreement. All capitalized terms used
in this Agreement and not otherwise defined shall have the meanings set forth in
Article I of this Agreement.)

                                TABLE OF CONTENTS

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                                    ARTICLE I

                                   DEFINITIONS

Section 1.01        Defined Terms.....................................................     2
Section 1.02        Other Definitional Provisions.....................................     6


                                   ARTICLE II

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01        Representations and Warranties of America West....................     7
Section 2.02        Covenants of America West.........................................    10
Section 2.03        Covenants of WTC and Subordination Agent..........................    12
Section 2.04        Representations, Warranties and Covenants of the Policy Provider..    12


                                   ARTICLE III

                   THE POLICY; REIMBURSEMENT; iNDEMNIFICATION

Section 3.01        Issuance of the Policy............................................    14
Section 3.02        Payment of Fees and Premium.......................................    16
Section 3.03        Reimbursement Obligation..........................................    16
Section 3.04        Indemnification...................................................    17
Section 3.05        Procedure for Payment of Fees and Premiums........................    18


                                   ARTICLE IV

                               FURTHER AGREEMENTS

Section 4.01        Effective Date; Term of the Insurance Agreement...................    18
Section 4.02        Further Assurances and Corrective Instruments.....................    18
Section 4.03        Obligations Absolute..............................................    18
Section 4.04        Assignments; Reinsurance; Third-Party Rights......................    20
Section 4.05        Liability of the Policy Provider..................................    20
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                                    ARTICLE V

                                  MISCELLANEOUS

Section 5.01        Amendments, Etc...................................................    21
Section 5.02        Notices...........................................................    21
Section 5.03        Severability......................................................    22
Section 5.04        Governing Law.....................................................    22
Section 5.05        Consent to Jurisdiction...........................................    22
Section 5.06        Consent of the Policy Provider....................................    23
Section 5.07        Counterparts......................................................    23
Section 5.08        Headings..........................................................    23
Section 5.09        Trial by Jury Waived..............................................    23
Section 5.10        Limited Liability.................................................    24
Section 5.11        Entire Agreement..................................................    24
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                                      -ii-
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                  INSURANCE AND INDEMNITY AGREEMENT (as may be amended, modified
or supplemented from time to time, this "Insurance Agreement"), dated as of
September 21, 1999, by and among AMBAC ASSURANCE CORPORATION, as Policy
Provider, AMERICA WEST AIRLINES, INC. ("America West") and WILMINGTON TRUST
COMPANY, not in its individual capacity but solely as Subordination Agent and
trustee to the Class G Trustee (the "Subordination Agent").

                              W I T N E S S E T H :


                  WHEREAS, America West intends to finance (or refinance) the
acquisition of ten Aircraft either (i) through separate leveraged lease
Transactions in which America West will lease the Leased Aircraft or (ii)
through separate secured loan Transactions in which America West will own the
Owned Aircraft;


                  WHEREAS, in the case of each Leased Aircraft, the Owner
Trustee acting on behalf of a corresponding Owner Participant, will issue
pursuant to an Indenture, on a non-recourse basis, two or more series of
Equipment Notes in order to finance a portion of its purchase price of such
Leased Aircraft;


                  WHEREAS, in the case of each Owned Aircraft, America West will
issue pursuant to an Indenture, on a recourse basis, two or more series of
Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;


                  WHEREAS, WTC, not in its individual capacity but as Trustee
under each of the Trust Agreements, will create the Trusts, which will acquire
the Equipment Notes under the Note Purchase Agreement;


                  WHEREAS, (i) Morgan Stanley Capital Services, Inc., as
Liquidity Provider, has entered into two Liquidity Facilities, one for the
benefit of the Class G Certificateholders and one for the benefit of the Class C
Certificateholders, with WTC, as agent for each Trustee on behalf of each Trust
and (ii) the Trustee of each Trust, the Liquidity Provider, the Policy Provider
and the Subordination Agent have entered into the Intercreditor Agreement;


                  WHEREAS, pursuant to each Trust Agreement, a separate Trust
has been created to facilitate the sale of the Certificates;


                  WHEREAS, the Policy Provider has issued the Policy in respect
of the Class G Certificates, pursuant to which it has agreed to guarantee the
payment of interest to the Subordination Agent for the benefit of the Class G
Trustee and Class G Certificateholders, and the payment of principal of the
Class G Certificates on the Final Distribution Date for the Class G Certificates
and as otherwise provided herein;


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                  WHEREAS, the Policy Provider shall be paid the Premium as set
forth herein; and


                  WHEREAS, each of America West, WTC and the Subordination Agent
has agreed to undertake certain obligations in consideration for the Policy
Provider's issuance of the Policy;


                  NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the parties hereto agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  SECTION 1.01 Defined Terms. Unless the context clearly
requires otherwise, all capitalized terms used but not defined herein shall have
the respective meanings assigned to them in the Intercreditor Agreement or, if
not defined therein, in the Policy described below. For purposes of this
Insurance Agreement, the following terms shall have the following meanings:

                  "Act" means Part A of subtitle VII of title 49, United States
Code.

                  "Aircraft" means any aircraft which is or will be part of the
Collateral.

                  "Airframe" means any airframe which is or will be part of the
Collateral.

                  "Bankruptcy Code" means the United States Bankruptcy Code, 11
U.S.C. Section 101 et seq.

                  "Citizen of the United States" is defined in Section
40102(a)(15) of the Act and in the FAA Regulations.

                  "Collateral" means the "Collateral" as defined or to be
defined in any Indenture with respect to an Owned Aircraft, and the "Trust
Indenture Estate" as defined or to be defined in any Indenture with respect to a
Leased Aircraft.

                  "Delivery Date" means with respect to each Participation
Agreement, the "Closing Date" as defined or to be defined in each such
Participation Agreement.

                  "Engine" means any engine which is or will be part of the
Collateral.

                  "Exchange Offer Registration Statement" has the meaning given
such term in the Trust Agreement.

                  "Expenses" means any and all liabilities, obligations, losses,
damages, settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).


                                      -2-
<PAGE>   6
                  "Event of Loss" means any Event of Loss defined or to be
defined in any Participation Agreement.

                  "FAA" means the Federal Aviation Administration of the United
States of America or any Government Entity succeeding to the functions of such
Federal Aviation Administration.

                  "FAA Filed Documents" with respect to each Aircraft, has the
meaning given such term in the related Participation Agreement.

                  "Final Dissolution Date" means following the occurrence of a
Triggering Event, the Distribution Date next succeeding the date of receipt by
the Subordination Agent of the proceeds of the sale of the last Aircraft (or the
related Equipment Notes) then subject to the Lien of any Indenture.

                  "Final Distribution Date" means the date which is the earlier
of the (i) the Final Legal Distribution Date or (ii) the Final Dissolution Date.

                  "Final Legal Distribution Date" means the Regular Distribution
Date in July, 2020.

                  "Financing Statements" means collectively, UCC-1 (and, where
appropriate, UCC-3) financing statements covering (A) in respect of each Owned
Aircraft, the related Collateral, executed by Owner, as debtor, showing
Mortgagee as secured party, for filing in Arizona and each other jurisdiction in
which such filing is made on or before the related Delivery Date and (B) with
respect to each Leased Aircraft (a) the related Trust Indenture Estate, by the
related Owner Trustee as debtor, showing Mortgagee as secured party, for filing
in Trust Company Jurisdiction (as defined in Schedule 3 to the related
Participation Agreement) and each other jurisdiction that, in the opinion of
Mortgagee, is necessary to perfect its Lien on the related Trust Indenture
Estate and (b) the related Lease and the Aircraft, as a precautionary matter, by
Lessee, as lessee, showing Owner Trustee as lessor and Mortgagee as assignee of
Owner Trustee, for filing in Arizona.

                  "GAAP" means generally accepted accounting principles as set
forth in the statements of financial accounting standards issued by the
Financial Accounting Standards Board of the American Institute of Certified
Public Accountants, as such principles may at any time or from time to time be
varied by any applicable financial accounting rules or regulations issued by the
SEC and, with respect to any Person, shall mean such principles applied on a
basis consistent with prior periods except as may be disclosed in such Person's
financial statements.

                  "Government Entity" means (a) any federal, state, provincial
or similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.


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                  "Holder" has the meaning given such term in the Policy.

                  "Initial Purchasers" means Morgan Stanley & Co. Incorporated,
Donaldson, Lufkin & Jenrette Securities Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated, and Salomon Smith Barney Inc.

                  "Insurance Agreement" has the meaning given such term in the
initial paragraph hereof.

                  "Intercreditor Agreement" means the Intercreditor Agreement
(1999-1), dated as the date hereof by and among WTC, as Trustee under each of
the Class G Trust and Class C Trust, the Liquidity Provider, the Policy Provider
and the Subordination Agent.

                  "Investment Company Act" means the Investment Company Act of
1940, including, unless the context otherwise requires, the rules and
regulations thereunder, as amended from time to time.

                  "Lease Default" means, with respect to any Lease, any Event of
Default (as such term is defined in the Lease).

                  "Lien" means any mortgage, pledge, lien, charge, encumbrance
or security interest affecting the title to or any interest in property.

                  "Material Adverse Change" means, in respect of any Person as
at any date, a material adverse change in the ability of such Person to perform
its obligations under any of the Operative Agreements to which it is a party as
of such date, including any material adverse change in the business, financial
condition, results of operations or properties of such Person on a consolidated
basis with its subsidiaries which might have such effect.

                  "Moody's" means Moody's Investors Service, Inc., and any
successor thereto.

                  "Mortgagee" with respect to each Aircraft means WTC in its
capacity as Loan Trustee under the related Indentures.

                  "Offering Document" means the Offering Memorandum dated
September 14, 1999, any supplemental Offering Memorandum relating to the Class G
Certificates, the Exchange Offer Registration Statement and any amendment or
supplement to any of the foregoing.

                  "Operative Agreements" (i) means this Insurance Agreement, the
Intercreditor Agreement, each Participation Agreement, the Note Purchase
Agreement, each Indenture, the Series G Equipment Notes, the Class G
Certificates, the Liquidity Facilities, the Class G Trust Agreement, the
Purchase Agreement, the Leases and the Policy Fee Letter, together with all
exhibits and schedules included with any of the foregoing.

                  "Owner" means with respect to a Leased Aircraft, the related
Owner Trustee and with respect to an Owned Aircraft, America West.


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                  "Person" means an individual, joint stock company, trust,
unincorporated association, joint venture, corporation, business or owner trust,
partnership or other organization or entity (whether governmental or private).

                  "Policy" means the Certificate Guaranty Insurance Policy No.
AB0292BE, together with all endorsements thereto, issued by the Policy Provider
in favor of the Subordination Agent, for the benefit of the Class G
Certificateholders as the same may be amended from time to time in accordance
with the terms of the Intercreditor Agreement.

                  "Policy Fee Letter" means the fee letter, dated as of
September 21, 1999 from the Policy Provider to America West setting forth the
Premium and certain other amounts payable in respect of the Policy.

                  "Policy Provider" means Ambac Assurance Corporation, or any
successor thereto, as issuer of the Policy.

                  "Policy Provider Information" means the information set forth
under the caption "Description of the Policy Provider" in the Offering Document.

                  "Pool Balance" means with respect to the Class G Trust or the
Class G Certificates, as of any date, (i) the original aggregate face amount of
the Class G Certificates less (ii) the aggregate amount of all payments made in
respect of the Class G Certificates or in respect of Class G Deposits other than
payments made in respect of interest or premium thereon or reimbursement of any
costs and expenses in connection therewith. The Pool Balance for the Class G
Trust or the Class G Certificates as of any Distribution Date shall be computed
after giving effect to any special distribution with respect to unused Class G
Deposits, payment of principal of the Equipment Notes or payment with respect to
other Trust Property held in such Trust and the distribution thereof to be made
on that date.

                  "Premium" means the premium payable in respect of the Policy
on the Closing Date and on each Distribution Date thereafter in an amount equal
to 1/2 of the product of (i) the Premium Percentage and (ii) with respect to the
payment to be made on the Closing Date, the Pool Balance of the Class G
Certificates on the Closing Date, or with respect to the payments to be made on
each Distribution Date, the Pool Balance of the Class G Certificates on such
Distribution Date after giving effect to any distributions to be made on such
Distribution Date; provided, however, the fee payable on the Closing Date shall
be pro rated from the Closing Date to the first Distribution Date (based upon a
360 day year of twelve 30 day months).

                  "Premium Percentage" shall have the meaning set forth in the
Policy Fee Letter.

                  "Purchase Agreement" means the Purchase Agreement, dated
September 14, 1999, among Morgan Stanley & Co. Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation, Merrill Lynch, Pierce, Fenner & Smith
Incorporated, and Salomon Smith Barney Inc. with respect to the Certificates, as
may be amended, modified or supplemented from time to time.

                  "Registration Rights Agreement" has the meaning given such
term in the Purchase Agreement.


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<PAGE>   9
                  "S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies, Inc., and any successor thereto.

                  "SEC" means the Securities and Exchange Commission of the
United States of America, or any successor thereto.

                  "Section 1110" means 11 U.S.C. Section 1110 of the Bankruptcy
Code or any successor or analogous section of the federal bankruptcy law in
effect from time to time.

                  "Securities Act" means the Securities Act of 1933, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.

                  "Security" means a "Security" as defined in Section 2(1) of
the Securities Act.

                  "Series G Equipment Notes" means the 7.93% Series G Equipment
Notes issued pursuant to any Indenture by the related Owner Trustee or America
West, as the case may be, and authenticated by the Loan Trustee thereunder, and
any Equipment Notes issued in exchange therefor or replacement thereof pursuant
to the terms of such Indenture.

                  "Transactions" means the Transactions contemplated by the
Operative Agreements, including the Transactions described in the Offering
Document.

                  "UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.

                  "U.S. Air Carrier" means any United States air carrier that is
a Citizen of the United States holding an air carrier operating certificate
issued by the Secretary of Transportation pursuant to the Act for aircraft
capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and
as to which there is in force an air carrier operating certificate issued
pursuant to Part 121 of the FAA Regulations, or which may operate as an air
carrier by certification or otherwise under any successor or substitute
provisions therefor or in the absence thereof.

                  "WTC" means Wilmington Trust Company, a Delaware banking
corporation.

                  SECTION 1.02 Other Definitional Provisions. The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Insurance Agreement shall refer to this Insurance Agreement as a whole and not
to any particular provision of this Insurance Agreement, and Section,
subsection, Schedule and Exhibit references are to this Insurance Agreement
unless otherwise specified. The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such terms. The
words "include" and "including" shall be deemed to be followed by the phrase
"without limitation."


                                      -6-
<PAGE>   10
                                   ARTICLE II

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

                  SECTION 2.01 Representations and Warranties of America West.
America West represents and warrants as of the Closing Date and as of each
Delivery Date as follows:

                  (a) Organization; Qualification. America West is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to conduct its
business in which it is currently engaged and to own or hold under lease its
properties and to enter into and perform its obligations under the Operative
Agreements to which it is a party as of such date. America West is duly
qualified to do business as a foreign corporation in good standing in each
jurisdiction in which the nature and extent of the business conducted by it, or
the ownership of its properties, requires such qualification, except where the
failure to be so qualified would not give rise to a Material Adverse Change to
America West.

                  (b) Corporate Authorization. America West has taken, or caused
to be taken, all necessary corporate action (including, without limitation, the
obtaining of any consent or approval of stockholders required by its certificate
of incorporation or by-laws) to authorize the execution and delivery of each of
the Operative Agreements to which it is a party as of such date, and the
performance of its obligations thereunder.

                  (c) No Violation. The execution and delivery by America West
of the Operative Agreements to which it is a party as of such date, the
performance by America West of its obligations thereunder and the consummation
by America West of the Transactions contemplated thereby, do not and will not
(a) violate any provision of the certificate of incorporation or by-laws of
America West, (b) violate any law, regulation, rule or order applicable to or
binding on America West or (c) violate or constitute any default under (other
than any violation or default that would not result in a Material Adverse Change
to America West), or result in the creation of any Lien (other than as permitted
under the related Lease or as created by the related Indenture) upon the
Aircraft under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other material agreement, instrument
or document to which America West is a party or by which it or any of its
properties is bound.

                  (d) Approvals. The execution and delivery by America West of
the Operative Agreements to which it is a party as of such date, the performance
by America West of its obligations thereunder and the consummation by America
West of the Transactions contemplated thereby do not and will not require the
consent or approval of, or the giving of notice to, or the registration with, or
the recording or filing of any documents with, or the taking of any other action
in respect of, (a) any trustee or other creditor of America West and (b) any
Government Entity, other than the filing of (w) the FAA Filed Documents and the
Financing Statements (and continuation statements periodically), (x) filings,
recordings, notices or other ministerial actions pursuant to any routine
recording, contractual or regulatory requirements applicable to it, (y) filings,
recordings, notices or other actions contemplated by the Operative Agreements in
connection with the subleasing or reregistration of the Aircraft and (z)
filings,


                                      -7-
<PAGE>   11
recordings, notices or other actions relating to the Securities Act as
contemplated by the Registration Rights Agreement.

                  (e) Valid and Binding Agreements. The Operative Agreements
executed and delivered by America West on or prior to such date have been duly
executed and delivered by America West and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, constitute
the legal, valid and binding obligations of America West and are enforceable
against America West in accordance with the respective terms thereof, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity and subject to principles of public policy
limiting the right to enforce the indemnification provisions contained herein,
insofar as such provisions relate to indemnification for liabilities arising
under federal securities laws.

                  (f) Litigation. Except as set forth in America West's most
recent Annual Report on form 10-K, as amended, filed by America West with the
SEC on or prior to the Closing Date or such Delivery Date, as the case may be,
or in any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by
America West with the SEC subsequent to such Form 10-K, no action, claim or
proceeding is now pending or, to the actual knowledge of America West,
threatened, against America West, before any court, governmental body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to America West and if determined adversely to
America West is reasonably likely to result in a Material Adverse Change.

                  (g) Financial Condition. The audited consolidated balance
sheet of America West with respect to America West's most recent fiscal year
included in America West's most recent Annual Report on Form 10-K, as amended,
filed by America West with the SEC, and the related consolidated statements of
operations and cash flows for the period then ended have been prepared in
conformity with GAAP and present fairly in all material respects the financial
condition of America West and its consolidated subsidiaries as of such date and
the results of its operations and cash flows for such period, and since the date
of such balance sheet, there has been no material adverse change in such
financial condition or operations of America West, except for matters disclosed
in (a) the financial statements referred to above or (b) any subsequent
Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by America
West with the SEC on or prior to the Closing Date or such Delivery Date, as the
case may be.

                  (h) Registration and Recordation. Except for (a) the
registration of the Aircraft with the FAA pursuant to the Act in the name of
Owner Trustee in respect of a Leased Aircraft and America West in respect of a
Owned Aircraft, (b) the filing for recordation (and recordation) of the FAA
Filed Documents, (c) the filing of the Financing Statements (and continuation
statements relating thereto at periodic intervals), (d) the taking of possession
and retention by Mortgagee of the original counterparts of the related Lease
with respect to the Leased Aircraft (e) the affixation of the nameplates
referred to in Section 7.1.3 of the Lease in respect of a Leased Aircraft, and
Section 4.02(f) of the related Indenture, with respect to Owned Aircraft, at the
Delivery Date with respect to each Aircraft no further action, including any
filing or recording of any document (including any financing statement in
respect thereof under Article 9


                                      -8-
<PAGE>   12
of the UCC) is necessary in order to establish and perfect (i) in respect of a
Leased Aircraft, the right, title or interest of Owner Trustee, and the
Mortgagee's first priority perfected security interest in such Aircraft and in
the related Lease (subject only to Permitted Liens as defined in the related
Indenture), and (ii) in respect of an Owned Aircraft, the Mortgagee's first
priority perfected security interest in such Aircraft (subject only to Permitted
Liens as defined in the related Indenture), as against America West and any
other Person, in each case, in any applicable jurisdictions in the United
States.

                  (i) Chief Executive Office. The chief executive office (as
such term is defined in Article 9 of the UCC) of America West is located at 4000
E. Sky Harbour Boulevard, Phoenix, Arizona 85034.

                  (j) No Default. On such Delivery Date, no event which in
respect of a Leased Aircraft delivered on such date, constitutes a Lease Default
or Lease Event of Default (as defined in the Lease for such Aircraft) and with
respect to an Owned Aircraft delivered on such date, no event which would
constitute an Event of Default (as defined in the Indenture for such Aircraft)
and no event or condition that with the giving of notice or the lapse of time or
both would become such a Lease Event of Default or Event of Default has occurred
and is continuing.

                  (k) No Event of Loss. With respect to such Delivery Date no
Event of Loss has occurred with respect to the Airframe or any Engine which is
Collateral under the Indenture executed as of such Delivery Date, and to the
actual knowledge of America West, no circumstance, condition, act or event has
occurred that, with the giving of notice or lapse of time or both gives rise to
or constitutes an Event of Loss with respect to such Airframe or any such
Engine.

                  (l) Compliance with Laws.

                           (a) America West is a Citizen of the United States
                  and a U.S. Air Carrier.

                           (b) America West holds all licenses, permits and
                  franchises from the appropriate Government Entities necessary
                  to authorize America West to lawfully engage in air
                  transportation and to carry on scheduled commercial passenger
                  service as currently conducted, except where the failure to so
                  hold any such license, permit or franchise would not give rise
                  to a Material Adverse Change to America West.

                           (c) America West is not an "investment company" or a
                  company controlled by an "investment company" within the
                  meaning of the Investment Company Act of 1940, as amended.

                  (m) Securities Laws. Neither America West nor any person
authorized to act on its behalf has directly or indirectly offered any
beneficial interest or Security relating to the ownership of the Aircraft or any
Lease or any interest in any Trust Property and Trust Agreement, or any of the
Equipment Notes or any other interest in or security under any Indenture, for
sale, to, or solicited any offer to acquire any such interest or security from,
or has sold any such interest or security to, any Person in violation of the
Securities Act.


                                      -9-
<PAGE>   13
                  (n) Section 1110. With respect to each Leased Aircraft
delivered on such Delivery Date, the Owner Trustee, as lessor under the related
Lease and the Mortgagee, as assignee under the related Indenture, and with
respect to each Owned Aircraft delivered on such Delivery Date, the related
Mortgagee, is entitled to the benefits of Section 1110 (as in effect on such
date) in the event of a case under Chapter 11 of the Bankruptcy Code in which
America West is a debtor.

                  (o) Accuracy of Information. Neither the Operative Agreements
to which it is a party as of such date nor other material information relating
to the Aircraft or the operations or financial condition of America West
furnished to the Policy Provider contain any statement of a material fact which
was untrue or misleading in any material respect when made. America West has no
knowledge of any circumstances that could reasonably be expected to cause a
Material Adverse Change with respect to America West.

                  SECTION 2.02 Covenants of America West. America West covenants
and agrees with the Policy Provider as follows:

                  (a) Without the prior written consent of the Policy Provider
(which may be granted or withheld in its sole discretion), each Participation
Agreement and the other Financing Agreements (as defined in the Note Purchase
Agreement) to be entered into pursuant to such Participation Agreement, will not
vary the Mandatory Economic Terms and will contain the Mandatory Document Terms
in the form attached to the Note Purchase Agreement without modification in any
adverse respect (without regard to the materiality thereof) as regards the
interests, rights and remedies of the Policy Provider, notwithstanding the
provisions in the Note Purchase Agreement permitting such modifications to be
made if the effect thereof is not materially adverse to certain parties.

                  (b) With respect to the Mandatory Document Terms referred to
in the Note Purchase Agreement that relate to certain maintenance standards but
which are not required to be included in the Leases related to Participation
Agreements to which General Electric Capital Corporation (or any Affiliate
thereof) is the owner participant, America West shall adhere to such standards
as if they were contained in such Leases.

                  (c) It shall not, and shall not suffer any of its Affiliates
to, purchase or otherwise acquire any of the Class G Certificates. The Policy
Provider hereby appoints and designates the Subordination Agent as collateral
agent for the Policy Provider hereunder and hereby authorizes and instructs the
Subordination Agent to perform such acts required of the collateral agent, on
its behalf as set forth herein. The Subordination Agent hereby accepts such
appointment and designation. America West hereby acknowledges the Policy
Provider's appointment of the Subordination Agent as collateral agent and the
powers granted thereto under this Insurance Agreement. America West pledges,
assigns and grants a continuing security interest in all of its right, title and
interest in and to the following property (collectively, the "Certificate
Collateral") to the Subordination Agent for the benefit of the Policy Provider:

                  (i) all Certificates in which America West or any of its
                  Affiliates has a legal or beneficial interest;

                  (ii) all payments of principal and interest and other amounts
                  payable on, and all rights with respect to, such Certificates;


                                      -10-
<PAGE>   14
                  (iii) all proceeds of any of the foregoing.

This Section 2.02(d) of this Insurance Agreement shall constitute a pledge
agreement and shall secure the payment in full of all obligations of America
West under this Insurance Agreement or under any of the Operative Agreements.
The security interest granted hereby shall be perfected by (A) delivery to the
Subordination Agent accompanied by duly executed instruments of transfer or
assignment in blank or, (B) if delivery is not possible, by a written
entitlement order, delivered by America West to the applicable securities
intermediaries on whose records ownership of such Certificates is reflected,
directing such securities intermediaries to (x) credit all such Certificates to
an account in the name of the Subordination Agent maintained with such
securities intermediaries, and (y) to deliver to the Subordination Agent a
written confirmation of each such credit simultaneously with each acquisition of
a legal or beneficial interest in Certificates by America West or any of its
Affiliates. With respect to any Certificates described in clause (A) above,
America West shall hold in trust for the benefit of the Subordination Agent,
segregated from the other property or funds of America West, any interest, Pool
Balance reduction, premium, redemption price or other payment thereon and shall
immediately deliver to the Subordination Agent all such amounts received. The
Subordination Agent shall promptly notify the Policy Provider of the amounts
received in respect of Certificates described in clause (B) above and amounts
delivered to the Subordination Agent pursuant to the preceding sentence. The
Policy Provider shall promptly notify the Subordination Agent of the amount, if
any, due to the Policy Provider in respect of this Insurance Agreement or the
Operative Agreements. If any amounts are so due, the Subordination Agent will
pay to the Policy Provider the amounts received up to the amounts due. If no
amounts are due, the Subordination Agent shall pay amounts received to America
West.

                  (d) Anything in the Note Purchase Agreement to the contrary
notwithstanding, without the consent of the Policy Provider, America West agrees
not to utilize lease economics or debt for the Aircraft to be financed under the
Note Purchase Agreement that exceed the maximum unpaid principal amount of Class
G Equipment Notes as of the last day of each semi-annual period expressed as a
percentage of Closing Date Aircraft Value set forth in the following schedule:

<TABLE>
<CAPTION>
              SEMI-ANNUAL PERIOD          SCHEDULE A            SCHEDULE B
<S>                                       <C>                   <C>
                 Closing Date                57.0%                 57.0%
                            1                56.0%                 57.0%
                            2                55.7%                 57.0%
                            3                54.0%                 55.3%
                            4                54.0%                 55.3%
                            5                52.3%                 53.6%
                            6                52.3%                 53.6%
                            7                50.5%                 51.9%
                            8                50.5%                 51.9%
                            9                48.3%                 50.2%
                           10                48.2%                 50.2%
                           11                45.2%                 48.5%
                           12                45.2%                 48.5%
</TABLE>


                                      -11-
<PAGE>   15
<TABLE>
<S>                                       <C>                   <C>
                           13                42.1%                 46.5%
                           14                42.1%                 46.5%
                           15                38.7%                 44.0%
                           16                38.7%                 44.0%
                           17                37.3%                 42.0%
                           18                36.2%                 42.0%
                           19                34.9%                 40.0%
                           20                34.1%                 40.0%
                           21                33.8%                 38.0%
                           22                32.3%                 38.0%
                           23                32.0%                 35.0%
                           24                30.0%                 35.0%
                           25                30.0%                 33.0%
                           26                28.0%                 33.0%
                           27                27.0%                 30.0%
                           28                24.7%                 30.0%
                           29                22.0%                 27.0%
                           30                20.1%                 27.0%
                           31                18.7%                 23.0%
                           32                17.4%                 23.0%
                           33                13.9%                 19.0%
                           34                13.1%                 19.0%
                           35                11.8%                 18.0%
                           36                10.0%                 13.7%
                           37                4.9%                   7.0%
                           38                4.6%                   7.6%
</TABLE>

Schedule A applies in the case of (i) each Leased Aircraft owned by an owner
participant other than General Electric Capital Corporation or its Affiliates in
excess of two such Aircraft, (ii) each Owned Aircraft and (iii) the aggregate of
all Aircraft, after not less than 8 Aircraft are funded under the Operative
Documents.

Schedule B applies to each Leased Aircraft owned by an owner participant other
than General Electric Capital Corporation or its Affiliates but in no event
shall Schedule B apply to more than two Aircraft.

                  SECTION 2.03 Covenants of WTC and Subordination Agent. WTC and
Subordination Agent shall perform and observe, in all material respects, all of
its covenants, obligations and agreements in any Operative Agreement to which it
is a party to be observed or performed by it.

                  SECTION 2.04 Representations, Warranties and Covenants of the
Policy Provider. The Policy Provider represents, warrants and covenants to
America West and the Subordination Agent as follows:


                                      -12-
<PAGE>   16
                  (a) Organization and Licensing. The Policy Provider is duly
organized, validly existing and in good standing as a Wisconsin-domiciled stock
insurance company duly qualified to conduct an insurance business in every
jurisdiction where qualification may be necessary to accomplish the
Transactions.

                  (b) Corporate Power. The Policy Provider has the corporate
power and authority to issue the Policy, to execute and deliver this Insurance
Agreement and the other Operative Agreements to which it is a party and to
perform all of its obligations hereunder and thereunder.

                  (c) Authorization; Approvals. Proceedings legally required for
the issuance and execution of the Policy and the execution, delivery and
performance of this Insurance Agreement have been taken and licenses, orders,
consents or other authorizations or approvals of any governmental boards or
bodies legally required for the enforceability of the Policy have been obtained;
any proceedings not taken and any licenses, authorizations or approvals not
obtained are not material to the enforceability of the Policy.

                  (d) Enforceability. This Insurance Agreement constitutes, and
the Policy, when issued, will constitute, a legal, valid and binding obligation
of the Policy Provider, enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium, receivership and other
similar laws affecting creditors' rights generally and to general principles of
equity and subject to principles of public policy limiting the right to enforce
the indemnification provisions contained herein, insofar as such provisions
relate to indemnification for liabilities arising under federal securities laws.


                  (e) Financial Information. The balance sheet of the Policy
Provider as of December 31, 1998 and the related statements of income,
stockholder's equity and cash flows for the three fiscal years ended December
31, 1998, and the accompanying footnotes, together with an opinion thereon dated
January 27, 1999 of KPMG LLP, independent certified public accountants, a copy
of which is incorporated by reference into the Offering Document, fairly present
in all material respects the financial condition of the Policy Provider as of
such dates and for the periods covered by such statements in accordance with
generally accepted accounting principles consistently applied. The balance sheet
of the Policy Provider as of March 31, 1999 and the related statements of
operations, stockholder's equity and cash flows for the three-month period ended
March 31, 1999 and the accompanying footnotes, a copy of which is incorporated
by reference into the Offering Document, present fairly in all material respects
the financial condition of the Policy Provider as of such date and for such
three-month period in accordance with generally accepted accounting principles
consistently applied. Since March 31, 1999, there has been no material change in
such financial condition of the Policy Provider that would materially and
adversely affect its ability to perform its obligations under the Policy.

                  (f) Policy Provider Information. The Policy Provider
Information is true and correct in all material respects and does not contain
any untrue statement of a material fact.

                  (g) No Litigation. There are no actions, suits, proceedings or
investigations pending or, to the best of the Policy Provider's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator


                                      -13-
<PAGE>   17
which, if decided adversely, would materially and adversely affect its ability
to perform its obligations under the Policy or this Insurance Agreement.

                  (h) Compliance with Law, Etc. No practice, procedure or policy
employed, or proposed to be employed, by the Policy Provider in the conduct of
its business violates any law, regulation, judgment, agreement, order or decree
applicable to the Policy Provider that, if enforced, could result in a Material
Adverse Change with respect to the Policy Provider.

                                  ARTICLE III

                   THE POLICY; REIMBURSEMENT; INDEMNIFICATION

                  SECTION 3.01 Issuance of the Policy. The Policy Provider
agrees to issue the Policy on the Closing Date subject to satisfaction of the
conditions precedent set forth below on or prior to the Closing Date:

                  (a) Operative Agreements. The Policy Provider shall have
received a copy of (i) each of the Operative Agreements to be executed and
delivered on or prior to the Closing Date, in form and substance reasonably
satisfactory to the Policy Provider, duly authorized, executed and delivered by
each party thereto and (ii) a copy of the Offering Memorandum;

                  (b) Certified Documents and Resolutions. The Policy Provider
shall have received (i) a copy of the applicable organizational documents of
America West and (ii) a certificate of the Secretary or Assistant Secretary of
America West dated the Closing Date stating that attached thereto is a true,
complete and correct copy of resolutions duly adopted by the Board of Directors
of America West authorizing the execution, delivery and performance by America
West of the Operative Agreements to which it is a party and the consummation of
the Transactions and that such applicable organizational documents and
resolutions are in full force and effect without amendment or modification on
the Closing Date;

                  (c) Incumbency Certificate. The Policy Provider shall have
received a certificate of the Secretary or an Assistant Secretary of each of
America West and the Subordination Agent certifying the names and signatures of
the officers of America West and the Subordination Agent authorized to execute
and deliver the Operative Agreements to which it is a party on or prior to
Closing Date and that, with respect to America West, shareholder consent to the
execution and delivery of such documents by America West, is not necessary or
has been obtained;

                  (d) Representations and Warranties. The representations and
warranties of America West and the Subordination Agent dated the Closing Date
set forth or incorporated by reference in this Insurance Agreement shall be true
and correct on and as of the Closing Date;

                  (e) Documentation. The Policy Provider shall have received a
copy of each document, instrument, certificate and opinion delivered on or
before the Closing Date pursuant to the Operative Agreement, including each
opinion of counsel addressed to any of Moody's, S&P, the Trustee, America West,
the Subordination Agent and the Initial Purchasers (except for the opinion of
counsel to the Initial Purchasers addressed to only to the Initial Purchasers),
in respect of America West and the Subordination Agent or any of the other
parties to the Operative


                                      -14-
<PAGE>   18
Agreements and the Transactions dated the Closing Date in form and substance
reasonably satisfactory to the Policy Provider, addressed to the Policy Provider
(or accompanied by a letter from the counsel rendering such opinion to the
effect that the Policy Provider is entitled to rely on such opinion as of its
date as if it were addressed to the Policy Provider) and addressing such matters
as the Policy Provider may reasonably request, and the counsel providing each
such opinion shall have been instructed by its client to deliver such opinion to
the addressees thereof;

                  (f) Approvals, Etc. The Policy Provider shall have received
true and correct copies of all approvals, licenses and consents, if any,
including any required approval of the shareholders of America West, required in
connection with the Transactions;

                  (g) No Litigation, Etc. No suit, action or other proceeding,
investigation or injunction, or final judgment relating thereto, shall be
pending or threatened before any court, governmental or administrative agency or
arbitrator in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with any of the Operative Agreements or the
consummation of the Transactions;

                  (h) Legality. No statute, rule, regulation or order shall have
been enacted, entered or deemed applicable by any government or governmental or
administrative agency or court that would make the Transactions illegal or
otherwise prevent the consummation thereof;

                  (i) Issuance of Ratings. The Policy Provider shall have
received confirmation that the risk secured by the Policy is rated no lower than
"A-" by S&P and "Baa2" by Moody's, the Class G Certificates, when issued, will
be rated "AAA" by S&P and "Aaa" by Moody's and that the Class C Certificates,
when issued, will be rated "BBB" by S&P and "Baa3" by Moody's, and shall have
received the confirmation from S&P of a capital charge acceptable to the Policy
Provider;

                  (j) Satisfactory Documentation. The Policy Provider and its
counsel shall have reasonably determined that all documents, certificates and
opinions to be delivered in connection with the Certificates conform to the
terms of the related Trust Agreement, the Offering Document, this Insurance
Agreement and the Intercreditor Agreement.

                  (k) Filings. The Policy Provider shall have received evidence
that there shall have been made and shall be in full force and effect, all
filings, recordings and registrations, and there shall have been given or taken
any notice or similar action as is necessary in order to establish, perfect,
protect and preserve the right, title and interest of the Policy Provider
created by the Operative Agreements executed and delivered on or prior to the
Closing Date;

                  (l) Conditions Precedent. All conditions precedent to the
issuance of the Certificates under the Trust Agreements shall have been
satisfied or waived (with the consent of the Policy Provider). All conditions
precedent to the effectiveness of the Liquidity Facilities shall have been
satisfied or waived and all conditions precedent to the purchases of the
Certificates by the Initial Purchasers under the Purchase Agreement shall have
been satisfied or waived by the Initial Purchasers; and


                                      -15-
<PAGE>   19
                  (m) Expenses. The Policy Provider shall have received payment
in full of all amounts required to be paid to or for account of the Policy
Provider on or prior to the Closing Date.

                  SECTION 3.02 Payment of Fees and Premium.

                  (a) Legal Fees. On the Closing Date, America West shall pay or
cause to be paid to, or as directed by, the Policy Provider, legal fees,
disbursements and charges incurred by the Policy Provider in connection with the
issuance of the Policy and this Agreement in accordance with the Policy Fee
Letter. Any additional fees of the Policy Provider's counsel or auditors payable
in respect of any amendment or supplement to the Offering Document or the
preparation of the Exchange Offering Registration Statement requested by America
West and incurred after the Closing Date shall be paid by America West promptly
following receipt of documentation thereof.

                  (b) Rating Agency Fees. America West shall promptly pay the
initial fees of S&P and Moody's with respect to the Certificates and the
Transactions following receipt of a statement with respect thereto. All periodic
and subsequent fees of S&P or Moody's with respect to, and directly allocable
to, the Certificates shall be for the account of, and shall be billed to,
America West. The fees for any other rating agency shall be paid by the party
requesting such other agency's rating unless such other agency is a substitute
for S&P or Moody's in the event that S&P or Moody's is no longer rating the
Certificates, in which case the fees for such agency shall be paid by America
West.

                  (c) Appraisal Fees. America West shall pay to, or as directed
by the Policy Provider on the Closing Date the cost of appraisals of the
Aircraft performed by Morten Beyer and Agnew, Inc. for the Policy Provider, not
to exceed $3,500.

                  (d) Premium.

                  (i) In consideration of the issuance by the Policy Provider of
         the Policy, America West shall pay or cause to be paid to the Policy
         Provider, the Premium, provided, however, such requirement shall not be
         duplicative of any payments in respect of Premiums made in accordance
         with Section 6(b) of the Note Purchase Agreement and the provisions of
         each Lease and each Owned Aircraft Indenture. America West shall also
         pay such additional amounts, as and when due, in accordance with the
         Policy Fee Letter.

                  (ii) No portion of the Premium paid shall be refundable
         without regard to whether the Policy Provider makes any payment under
         the Policy or any other circumstances relating to the Class G
         Certificates or provision being made for payment of the Class G
         Certificates prior to maturity.

                  SECTION 3.03 Reimbursement Obligation.

                  (a) As and when due in accordance with and from the funds
specified in Sections 2.4(b), 3.2 and 3.3 of the Intercreditor Agreement, the
Policy Provider shall be entitled to reimbursement for any payment made by the
Policy Provider under the Policy or to the Liquidity


                                      -16-
<PAGE>   20
Provider under Section 2.6(c) of the Intercreditor Agreement, which
reimbursement shall be due and payable on the date provided in such Sections, in
an amount equal to the amount to be so paid and all amounts previously paid that
remain unreimbursed. In addition, to the extent that any such payment by the
Policy Provider shall have been made as a result of a default by a Liquidity
Provider in its obligation to make an Advance, as provided in the Intercreditor
Agreement, the Policy Provider shall be entitled to the payment of interest on
such amounts to the extent, at the time and in the priority that the Liquidity
Provider would have been paid pursuant to the Intercreditor Agreement had the
Liquidity Provider made such Advance.

                  (b) After the distribution to the Policy Provider of all
amounts distributable to it under the Intercreditor Agreement, America West
agrees to reimburse the Policy Provider immediately, upon demand, to the extent
of any payment made under the Policy or to the Liquidity Provider under Section
2.6(c) of the Intercreditor Agreement, less any amount in respect of such
payment paid to and received by the Policy Provider pursuant to the Operative
Agreements.

                  (c) America West agrees to pay to the Policy Provider any and
all charges, fees, costs and expenses that the Policy Provider may reasonably
pay or incur, including reasonable attorneys' and accountants' fees and expenses
(without duplication of amounts paid to the Policy Provider in respect of the
Operative Agreements), in connection with (i) the enforcement, defense or
preservation of any rights in respect of any of this Insurance Agreement,
including defending, monitoring or participating in any litigation or proceeding
and (ii) any amendment, waiver or other action requested by America West with
respect to, or related to, any Operative Agreements or to any form document
attached to any Operative Agreement as exhibit, schedule or annex thereto,
whether or not executed or completed. Provided that three Business Days written
notice of the intended payment or incurrence shall have been given to America
West by the Policy Provider, such reimbursement shall be due on the dates on
which such charges, fees, costs or expenses are paid or incurred by the Policy
Provider.

                  SECTION 3.04 Indemnification. America West agrees (i) that the
Policy Provider is hereby entitled to the full benefit of the General Indemnity
contained in, and the General Tax Indemnity contained in Annex A to, the forms
of Participation Agreement attached to the Note Purchase Agreement as if such
provisions were set forth in full herein, the Policy Provider were an Indemnitee
thereunder and the Operative Agreements referred to therein include this
Insurance Agreement and the Note Purchase Agreement and (ii) that it shall name
the Policy Provider as an Indemnitee in each Participation Agreement and that
the Policy Provider shall be entitled to the full benefit of the General
Indemnity and the General Tax Indemnity provisions set forth in or incorporated
by reference in each Participation Agreement; provided, however, any exclusion
contained in any Participation Agreement or form thereof related to any
representation or warranty by any Indemnitee other than the Policy Provider, the
failure by any Indemnitee other than the Policy Provider to perform or observe
any agreement, covenant or condition in any of the Operative Documents, the acts
or omissions involving the willful misconduct or gross negligence of any
Indemnitee other than the Policy Provider or any other action or omission of any
other Person other than the Policy Provider shall not apply to the
indemnification obligations of America West to the Policy Provider.


                                      -17-
<PAGE>   21
                  SECTION 3.05 Procedure for Payment of Fees and Premiums. All
payments to be made to the Policy Provider under this Insurance Agreement shall
be made to the Policy Provider in lawful currency of the United States of
America in immediately available funds at the notice address for the Policy
Provider as specified in the Intercreditor Agreement on the date when due or as
the Policy Provider shall otherwise direct by written notice to the other
parties hereto. In the event that the date of any payment to the Policy Provider
or the expiration of any time period hereunder occurs on a day that is not a
Business Day, then such payment or expiration of time period shall be made or
occur on the next succeeding Business Day with the same force and effect as if
such payment was made or time period expired on the scheduled date of payment or
expiration date.


                                   ARTICLE IV

                               FURTHER AGREEMENTS

                  SECTION 4.01 Effective Date; Term of the Insurance Agreement.
This Insurance Agreement shall take effect on the Closing Date and shall remain
in effect until the later of (a) such time as the Policy Provider is no longer
subject to a claim under the Policy and the Policy shall have been surrendered
to the Policy Provider for cancellation and (b) all amounts payable to the
Policy Provider by America West or the Subordination Agent hereunder or from any
other source hereunder or under the Operative Agreements and all amounts payable
under the Class G Certificates have been paid in full; provided, however, that
the provisions of Section 3.04 hereof shall survive any termination of this
Insurance Agreement.

                  SECTION 4.02 Further Assurances and Corrective Instruments.

                  (a) Neither America West nor the Subordination Agent shall
grant any waiver of rights or agree to any amendment or modification to any of
the Operative Agreements to which either of them is a party which waiver,
amendment, or modification would have an adverse effect on the rights or
remedies of the Policy Provider without the prior written consent of the Policy
Provider so long as the Policy Provider shall be the Controlling Party, and any
such waiver without prior written consent of the Policy Provider shall be null
and void and of no force or effect.

                  (b) To the extent permitted by law, each of America West and
the Subordination Agent agrees that it will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as the Policy Provider may
reasonably request and as may be required in the Policy Provider's reasonable
judgment to effectuate the intention of or facilitate the performance of this
Insurance Agreement.

                  SECTION 4.03 Obligations Absolute.

                  (a) So long as no Policy Provider Default shall have occurred
and be continuing beyond any grace period applicable thereto, the obligations of
America West hereunder shall be absolute and unconditional and shall be paid or
performed strictly in accordance with this Insurance Agreement under all
circumstances irrespective of:


                                      -18-
<PAGE>   22
                  (i) any lack of validity or enforceability of, or any
         amendment or other modifications of, or waiver, with respect to any of
         the Operative Agreements or the Certificates;

                  (ii) any exchange or release of any other obligations
         hereunder;

                  (iii) the existence of any claim, setoff, defense, reduction,
         abatement or other right that America West may have at any time against
         the Policy Provider or any other Person;

                  (iv) any document presented in connection with the Policy
         proving to be forged, fraudulent, invalid or insufficient in any
         respect or any statement therein being untrue or inaccurate in any
         respect;

                  (v) any payment by the Policy Provider under the Policy
         against presentation of a certificate or other document that does not
         strictly comply with terms of the Policy;

                  (vi) any failure of America West to receive the proceeds from
         the sale of the Certificates; and

                  (vii) any other circumstances, other than payment in full,
         that might otherwise constitute a defense available to, or discharge
         of, America West in respect of any Operative Agreements.

                  (b) So long as no Policy Provider Default shall have occurred
and be continuing beyond any period of cure applicable thereto and except as
expressly provided herein or in any Operative Agreement, America West renounces
the right to assert as a defense to the performance of their respective
obligations each of the following: (i) to the extent permitted by law, any and
all redemption and exemption rights and the benefit of all valuation and
appraisement privileges against the indebtedness and obligations evidenced by
any Operative Agreements or by any extension or renewal thereof; (ii)
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) all notices in connection with
the delivery and acceptance hereof and all other notices in connection with the
performance, default or enforcement of any payment hereunder, except as required
by the Operative Agreements; and (iv) all rights of abatement, diminution,
postponement or deduction, or to any defense other than payment, or to any right
of setoff or recoupment arising out of any breach under any of the Operative
Agreements, by any party thereto or any beneficiary thereof, or out of any
obligation at any time owing to America West.

                  (c) America West (i) agrees that any consent, waiver or
forbearance hereunder with respect to an event shall operate only for such event
and not for any subsequent event; (ii) consents to any and all extensions of
time that may be granted by the Policy Provider with respect to any payment
hereunder or other provisions hereof and to the release of any security at any
time given for any payment hereunder, or any part thereof, with or without
substitution, and to the release of any Person or entity liable for any such
payment; and (iii) consents to the addition of any and all other makers,
endorsers, guarantors and other obligors for any payment hereunder, and to the
acceptance of any and all other security for any payment hereunder, and


                                      -19-
<PAGE>   23
agree that the addition of any such obligors or security shall not affect the
liability of America West for any payment hereunder.

                  (d) No failure by the Policy Provider to exercise, and no
delay by the Policy Provider in exercising, any right hereunder shall operate as
a waiver thereof. The exercise by the Policy Provider of any right hereunder
shall not preclude the exercise of any other right, and the remedies provided
herein to the Policy Provider are declared in every case to be cumulative and
not exclusive of any remedies provided by law or equity.

                  (e) Nothing herein shall be construed as prohibiting America
West from pursuing any rights or remedies it may have against any Person in a
separate legal proceeding.

                  SECTION 4.04 Assignments; Reinsurance; Third-Party Rights.

                  (a) This Insurance Agreement shall be a continuing obligation
of the parties hereto and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The
Subordination Agent, and except for any transaction expressly permitted by
Section 5.02 of the Class G Trust Agreement, America West, may not assign their
respective rights under this Insurance Agreement, or delegate any of their
duties hereunder, without the prior written consent of the other parties hereto.
Any assignments made in violation of this Insurance Agreement shall be null and
void.

                  (b) The Policy Provider shall have the right to grant
participations in its rights under this Insurance Agreement and to enter into
contracts of reinsurance with respect to the Policy upon such terms and
conditions as the Policy Provider may in its discretion determine; provided,
however, that no such participation or reinsurance agreement or arrangement
shall relieve the Policy Provider of any of its obligations hereunder or under
the Policy or grant to any participant or reinsurer any rights hereunder or
under any Operative Agreement.

                  (c) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right, remedy
or claim, express or implied, upon any Person, including, particularly, any
Holder, other than the Policy Provider against America West, or America West
against the Policy Provider, and all the terms, covenants, conditions, promises
and agreements contained herein shall be for the sole and exclusive benefit of
the parties hereto and their successors and permitted assigns. Neither the
Trustee nor any Holder shall have any right to payment from the Premium paid or
payable hereunder or from any amounts paid by America West pursuant to Sections
3.02 or 3.03.

                  SECTION 4.05 Liability of the Policy Provider. Neither the
Policy Provider nor any of its officers, directors or employees shall be liable
or responsible for: (a) the use that may be made of the Policy by the Trustee or
for any acts or omissions of the Trustee in connection therewith; or (b) the
validity, sufficiency, accuracy or genuineness of documents delivered to the
Policy Provider in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
the Policy Provider shall have actual knowledge thereof). In furtherance and not
in limitation of the foregoing, the Policy Provider may accept


                                      -20-
<PAGE>   24
documents that appear on their face to be in order, without responsibility for
further investigation.

                                   ARTICLE V

                                  MISCELLANEOUS

                  SECTION 5.01 Amendments, Etc. This Insurance Agreement may be
amended, modified, supplemented or terminated only by written instrument or
written instruments signed by the parties hereto; provided that if such
amendment, modification, supplement or termination would have a material adverse
affect on the interests of the Subordination Agent, a Pass Through Trustee or
any Certificateholder, Ratings Confirmation shall also be obtained prior to such
amendment, modification, supplement or termination being effective. America West
agrees to provide a copy of any amendment to this Insurance Agreement promptly
to the Subordination Agent and the rating agencies maintaining a rating on the
Class G Certificates. No act or course of dealing shall be deemed to constitute
an amendment, modification, supplement or termination hereof.

                  SECTION 5.02 Notices. All demands, notices and other
communications to be given hereunder shall be in writing (except as otherwise
specifically provided herein) and shall be mailed by registered mail or
personally delivered and telecopied to the recipient as follows:

                  (a) To the Policy Provider:

                           Ambac Assurance Corporation
                           One State Street Plaza
                           New York, New York 10004
                           Attention:   Surveillance Department
                           Facsimile:  (212) 363-1459
                           Confirmation:  (212) 668-0340

         (in each case in which notice or other communication to the Policy
                           Provider refers to an event of default under any
                           Operative Agreement, a claim on the Policy or with
                           respect to which failure on the part of the Policy
                           Provider to respond shall be deemed to constitute
                           consent or acceptance, then a copy of such notice or
                           other communication should also be sent to the
                           attention of the general counsel of each of America
                           West and the Trustee and, in all cases, both any
                           original and all copies shall be marked to indicate
                           "URGENT MATERIAL ENCLOSED.")

                  (b) To America West:


                                      -21-
<PAGE>   25
                           America West Airlines, Inc.
                           4000 E. Sky Harbour Blvd.
                           Phoenix, AZ 85034
                           Attention:  Vice President and Treasurer
                           Facsimile:  (602) 693-5886
                           Confirmation:

                  (c) To the Subordination Agent:

                           Wilmington Trust Company
                           Rodney Square North
                           1100 North Market Street
                           Wilmington, DE 19890-0001
                           Attention:  Corporate Trust Department
                           Facsimile:  302-651-8882.

         A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon receipt unless received after
business hours on any day, in which case on the opening of business on the next
Business Day.

                  SECTION 5.03 Severability. In the event that any provision of
this Insurance Agreement shall be held invalid or unenforceable by any court of
competent jurisdiction, the parties hereto agree that such holding shall not
invalidate or render unenforceable any other provision hereof. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.

                  SECTION 5.04 Governing Law. This Insurance Agreement shall be
governed by and construed in accordance with the laws of the State of New York,
including all matters of construction, validity and performance. This Agreement
is being delivered in New York.

                  SECTION 5.05 Consent to Jurisdiction.

                  (a) The parties hereto hereby irrevocably submit to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and any court in the State of New York located in the City
and County of New York, and any appellate court from any thereof, in any action,
suit or proceeding brought against it and to or in connection with any of the
Operative Agreements or the Transactions or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York state court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final unappealable
judgment in any such action, suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. To the extent permitted by applicable law, the parties hereto
hereby waive and agree not to assert by way of motion, as a defense or otherwise
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such courts, that the suit, action or


                                      -22-
<PAGE>   26
proceeding is brought in an inconvenient forum, that the venue of the suit,
action or proceeding is improper or that the related documents or the subject
matter thereof may not be litigated in or by such courts.

                  (b) To the extent permitted by applicable law, the parties
hereto shall not seek and hereby waive the right to any review of the judgment
of any such court by any court of any other nation or jurisdiction which may be
called upon to grant an enforcement of such judgment.

                  (c) Service on America West may be made by mailing or
delivering copies of the summons and complaint and other process which may be
served in any suit, action or proceeding to the America West addressed as
follows: c/o Vedder, Price, Kaufman, Kammholz & Day, 805 Third Avenue, New York,
NY 10022, attention: Ron Scheinberg. Such address may be changed by the
applicable party or parties by written notice to the other parties hereto. The
provision of notice to change the address set forth in Section 6.02 shall
constitute notice for purposes of the preceding sentence, unless such notice
shall expressly state to the contrary.

                  (d) Nothing contained in this Insurance Agreement shall limit
or affect any party's right to serve process in any other manner permitted by
law or to start legal proceedings relating to any of the Operative Agreements
against any other party or its properties in the courts of any jurisdiction.


                  SECTION 5.06 Consent of the Policy Provider. No disclosure
relating to the Policy or the Policy Provider contained in the Exchange Offer
Registration Statement, which disclosure modifies, alters, changes, amends or
supplements the disclosure relating to the Policy or the Policy Provider
contained in the Offering Memorandum, shall be made without the Policy
Provider's prior written consent. In the event that the consent of the Policy
Provider is required under any of the Operative Agreements, the determination
whether to grant or withhold such consent shall be made by the Policy Provider
in its sole discretion without any implied duty towards any other Person, except
as otherwise expressly provided therein.

                  SECTION 5.07 Counterparts. This Insurance Agreement may be
executed in counterparts by the parties hereto, and all such counterparts shall
constitute one and the same instrument.

                  SECTION 5.08 Headings. The headings of Articles and Sections
and the Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation.

                  SECTION 5.09 Trial by Jury Waived. Each party hereby waives,
to the fullest extent permitted by law, any right to a trial by jury in respect
of any litigation arising directly or indirectly out of, under or in connection
with this Insurance Agreement or any of the other Operative Agreements or any of
the Transactions contemplated hereunder or thereunder. Each party hereto (A)
certifies that no representative, agent or attorney of any party hereto has
represented, expressly or otherwise, that it would not, in the event of
litigation, seek to enforce the foregoing waiver and (B) acknowledges that it
has been induced to enter into the Operative Agreements to which it is a party
by, among other things, this waiver.


                                      -23-
<PAGE>   27
                  SECTION 5.10 Limited Liability. No recourse under any
Operative Agreement shall be had against, and no personal liability shall attach
to, any officer, employee, director, affiliate or shareholder of any party
hereto, as such, by the enforcement of any assessment or by any legal or
equitable proceeding, by virtue of any statute or otherwise in respect of any of
the Operative Agreements, the Certificates or the Policy, it being expressly
agreed and understood that each Operative Agreement is solely a corporate
obligation of each party hereto, and that any and all personal liability, either
at common law or in equity, or by statute or constitution, of every such
officer, employee, director, affiliate or shareholder for breaches of any party
hereto of any obligations under any Operative Agreement is hereby expressly
waived as a condition of and in consideration for the execution and delivery of
this Insurance Agreement.

                  SECTION 5.11 Entire Agreement. This Insurance Agreement, the
Policy, the Policy Fee letter and the other Operative Agreements set forth the
entire agreement between the parties with respect to the subject matter hereof
and thereof, and supersede and replace any agreement or understanding that may
have existed between the parties prior to the date hereof in respect of such
subject matter.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -24-
<PAGE>   28
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all as of
the day and year first above mentioned.


                                AMBAC ASSURANCE CORPORATION,
                                    as Policy Provider



                                By: /s/ David B. Nemschoff
                                    ----------------------------------------
                                    Name:  David B. Nemschoff
                                    Title:  First Vice President


                                WILMINGTON TRUST COMPANY,
                                    not in its individual capacity but solely as
                                    Subordination Agent



                                By: /s/ James P. Lawler
                                    ----------------------------------------
                                    Name: James P. Lawler
                                    Title: Vice President


                                AMERICA WEST AIRLINES, INC.



                                By: /s/ W. Douglas Parker
                                    ----------------------------------------
                                    Name: W. Douglas Parker
                                    Title: Executive Vice President