<PAGE>

                                                                   Exhibit 10.71

                                                               EXECUTION VERSION


TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER
(AS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AIRCRAFT LEASE AGREEMENT MAY BE
CREATED THROUGH TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE
ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART DESIGNATED
AS THE ORIGINAL ON THE SIGNATURE PAGE OF THIS AGREEMENT BY GE CAPITAL
AVIATION SERVICES, INC.

                            AIRCRAFT LEASE AGREEMENT

                            DATED AS OF MAY 12, 2000

                                     BETWEEN

                        AVIATION FINANCIAL SERVICES INC.

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE

                  IN RESPECT OF AIRCRAFT: BOEING MODEL 737-700
                                SERIAL NO: 30830
                          U.S. REGISTRATION NO.: N742AL

                        ---------------------------------
                        INCORPORATING THE PROVISIONS OF A

                             COMMON TERMS AGREEMENT

                             DATED AS OF MAY 12,2000


<PAGE>


                        AIRCRAFT LEASE AGREEMENT

THIS AIRCRAFT LEASE AGREEMENT is made as of May 12,2000 and is

BETWEEN:

(1) AVIATION FINANCIAL SERVICES INC., a corporation incorporated under the
    Laws of the State of Delaware having its principal place of business and
    chief executive office at 201 High Ridge Road, Stamford, Connecticut
    06927 ("LESSOR"); and

    ALOHA AIRLINES, INC., a corporation incorporated under the Laws of the
    State of Delaware with its principal place of business and chief
    executive office at 371 Aokea Street, Honolulu, Hawaii 96819 ("LESSEE").

WHEREAS:

(A) Lessee wishes to lease the Aircraft (as defined below) from Lessor, and
    Lessor wishes to lease the Aircraft to Lessee, on the terms and subject
    to the conditions provided herein;

(B) General Electric Capital Corporation ("GECC"), an Affiliate of Lessor,
    and Lessee have entered into the Common Terms Agreement (as defined
    below) in respect of aircraft that may be leased from time to time by
    Lessee or one of its Affiliates from GECC or one of its Affiliates; and

(C) Lessor and Lessee wish to incorporate by reference such Common Terms
    Agreement, as well as Schedules A and B attached hereto, into this
    Aircraft Lease Agreement for the Aircraft and a true and complete copy
    of such Common Terms Agreement is attached hereto as Schedule C;

NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:

1.  INTERPRETATION

1.1 DEFINITIONS: In this Aircraft Lease Agreement, the following capitalized
    words and expressions have the respective meanings set forth below:

    AIRCRAFT means the Airframe and Engines described on Schedule A hereto.

    AIRFRAME STRUCTURAL CHECK, AIRFRAME SUPPLEMENTAL RENT, ANNUAL
    SUPPLEMENTAL RENT ADJUSTMENT, APU SUPPLEMENTAL RENT AND ASSUMED RATIO
    are not applicable.

    COMMON TERMS AGREEMENT means the "Aircraft Lease Common Terms Agreement"
    dated as of May 12, 2000 executed by GECC and Lessee (as in effect on
    the date hereof


                                  -1-


<PAGE>


   without, unless Lessor and Lessee otherwise expressly agree, giving
   any effect to any subsequent amendment, supplement, waiver or other
   modification thereto), and which forms part of this Aircraft Lease
   Agreement.

   DELIVERY CONDITION REQUIREMENTS means the requirements specified in Part
   II of Schedule A.

   DELIVERY LOCATION means Seattle, Washington or such other location
   as Lessor and Lessee mutually agree in order to minimize any Taxes
   that may be applicable to the Delivery.

   DEPOSIT means all amounts payable pursuant to Section 3.1 hereof

   ENGINE SUPPLEMENTAL RENT AND ENGINE LLP SUPPLEMENTAL RENT are not
   applicable.

   FINAL DELIVERY DATE means the date that is 90 days after the last
   day of the Scheduled Delivery Month.

   FINANCING DOCUMENTS means the documents, if any, relating to any
   indebtedness of Lessor secured, in whole or in part, by Lessor's
   interest in the Aircraft and this Aircraft Lease Agreement.

   FINANCING DOCUMENTS CONTEST RIGHTS, FINANCING DOCUMENTS INDEMNITY
   AMOUNTS AND FINANCING DOCUMENTS TAX AMOUNTS are all inapplicable.


   FINANCING PARTIES means the Persons, if any, that hold the
   indebtedness of Lessor evidenced by the Financing Documents, and
   shall include the Financing Parties Representative.

   FINANCING PARTIES' REPRESENTATIVE the Person, if any, identified by
   Lessor to Lessee in writing as the representative of the Financing
   Parties and the beneficiary of the Security Interest in the Aircraft
   and this Aircraft Lease Agreement created by the Financing
   Documents, and its successors and assigns.

   GUARANTOR is inapplicable.

   INDEMNITEE means each of Lessor, Owner, GECC, GECAS, the Financing
   Parties and their respective successors and permitted assigns, and
   each of their respective shareholders, subsidiaries, affiliates,
   partners, contractors, directors, officers, representatives, agents
   and employees.

   LANDING GEAR SUPPLEMENTAL RENT is not applicable.


                                 -2-

<PAGE>


   MANUFACTURER means the manufacturer of the Airframe or an Engine, as
   the case may be, as set forth on Schedule A hereto.

   OWNER means Lessor.

   PRE-APPROVED BANK means (i) First Hawaiian Bank for so long as its
   long-term unsecured Dollar denominated debt carries a rating from
   S&P of A- or better, and (ii) any bank organized under the laws of
   the United States or any State thereof, or the New York branch of a
   major international bank for only so long as its long-term Dollar
   denominated unsecured debt (or if it does not have long-term
   unsecured Dollar denominated debt, its parent corporation's
   long-term unsecured Dollar denominated debt) carries a rating from
   S&P of A or better.

   REDELIVERY LOCATION means any location in the State of Washington,
   Oregon or California as Lessor may designate to Lessee or such other
   location as may be agreed in writing by Lessor and Lessee.

   RENT COMMENCEMENT DATE means the date on which Lessor tenders the
   Aircraft under Clause 4.3.(a) of the Common Terms Agreement and the
   Lessee Conditions Precedent are met or could reasonably be expected
   to be met if the Delivery of the Aircraft had occurred.

   SCHEDULED DELIVERY DATE means the date that Aircraft is scheduled to
   be delivered by Lessor to Lessee under the Lease, as notified by
   Lessor to Lessee pursuant to Section 4.1 of the Common Terms
   Agreement, and, notwithstanding any subsequent delays in delivery,
   the "Scheduled Delivery Date" shall remain the first such date
   notified by Lessor to Lessee pursuant to Section 4.1 of the Common
   Terms Agreement.

   SCHEDULED DELIVERY MONTH means May 2001.

   SCHEDULED DELIVERY WEEK means the week during which the Scheduled
   Delivery Date is anticipated to fall, as the same is notified by
   Lessor to Lessee pursuant to Section 4.1 of the Common Terms
   Agreement.

   SCHEDULED EXPIRY DATE means the day immediately preceding the
   fifteenth (15th) anniversary of the Rent Commencement Date (or in
   the event that such date is a day that is not a Business Day, the
   immediately preceding Business Day), which date shall be
   specifically set forth in Lease Supplement No. 1; provided, however,
   that Lessee shall receive a credit for Rent actually paid by Lessee
   to Lessor, on a per them basis, against other obligations owed by
   Lessee to Lessor at the Return Occasion in respect of any
   non-Business Days which are truncated from the Term based on this
   provision.

   STATE OF DESIGN means the United States.


                                 -3-

<PAGE>


    TAX INDEMNITEE means each of Owner, Lessor, and each member of the
    consolidated group of which Lessor or Owner is a member for United
    States Federal Income Tax purposes, and their successors and
    permitted assigns.

1.2 INTERPRETATION: Unless otherwise defined herein, words and expressions
    defined in the Common Terms Agreement have the same respective meanings
    for the purposes of this Aircraft Lease Agreement. The construction
    provisions of Section 1.2 of the Common Terms Agreement shall apply to
    this Aircraft Lease Agreement.

2.  LEASING

2.1 AGREEMENT TO LEASE: Subject to the terms and conditions of the Lease,
    Lessor will lease the Aircraft to Lessee and Lessee will take delivery
    of and lease the Aircraft from Lessor in accordance with the Lease for
    the duration of the Term.

2.2 TERM: Subject to Sections 4.1 through 4.4 of the Common Terms Agreement,
    Delivery of the Aircraft will occur at the Delivery Location, whereupon
    Lessee shall accept the Aircraft hereunder and evidence such Delivery
    and acceptance by executing and delivering Lease Supplement No. 1 as
    provided in Section 4.3 of the Common Terms Agreement. The Term will
    commence on the Delivery Date, which Delivery Date is scheduled to occur
    in the Scheduled Delivery Month, and will expire on the Scheduled Expiry
    Date unless terminated earlier in accordance with the provisions of the
    Lease.

2.3 [Not applicable].

3.  PAYMENTS

3.1 DEPOSIT AND LETTER OF CREDIT: Lessee shall pay to Lessor the Deposit in
    cash (to which Deposit Section 5.13 of the Common Terms Agreement shall
    apply) in the amount and at the times provided in Schedule B hereto.
    Lessee shall be permitted to deliver to Lessor an irrevocable Letter of
    Credit in lieu of a portion of the Deposit in an amount up to the amount
    provided in Schedule B as the LC Amount, which Letter of Credit shall
    comply with the provisions of Section 5.14 of the Common Terms Agreement

3.2 RENT: Lessee shall pay Rent to Lessor on each Rent Date during the Term
    in the amount provided in Schedule B hereto and as provided in Sections
    5.2 and 5.3 of the Common Terms Agreement. The first installment of Rent
    shall be due and payable on the Rent Commencement Date as defined
    herein.

3.3 SUPPLEMENTAL RENT: Lessee shall have no obligation to pay Supplemental
    Rent.


                                  -4-

<PAGE>


3.4 LESSOR'S MAINTENANCE CONTRIBUTION: Lessor shall have no obligation to
    make Maintenance Contribution payments.

3.5 LESSOR'S BANK ACCOUNT: For the purposes of Section 5.5 of the Common
    Terms Agreement, Lessor's bank account and wire transfer particulars, to
    which all payments to Lessor shall be made, are at the date hereof:
    Bankers Trust Company, New York, ABA 021 001033, For the account of:
    Aviation Financial Services Inc., Account Number: 50-259-862.

3.6 MACRS: Lessor has assumed that MACRS Deductions shall be available in
    respect of the leasing of the Aircraft and accordingly the provisions of
    Section 5.7(d) of the Common Terms Agreement and the related provisions
    of Schedule B shall apply under this Agreement.

4.  CONDITION OF THE AIRCRAFT AT DELIVERY

4.1 On the Delivery Date, as a condition to Lessee's obligation to accept
    delivery thereof, the Aircraft shall be in the condition provided in
    Part III of Schedule A hereto.

5.  CONDITION OF THE AIRCRAFT AT REDELIVERY

5.1 On the Return Occasion, Lessee shall redeliver the Aircraft to Lessor at
    the Redelivery Location and at such redelivery the Aircraft shall be in
    the condition provided in Part II of Schedule A hereto and in the Common
    Terms Agreement, including Schedule 6 of the Common Terms Agreement.

6.  ADDRESSES FOR NOTICES

    The addresses and facsimile and telephone numbers of Lessor and Lessee
    are as follows:

    Lessor:           Aviation Financial Services Inc.
    Address:          c/o GE Capital Aviation Services
                      201 High Ridge Road
                      Stamford, CT 06927
    Attention:        Executive Vice President Risk and Portfolio Management
    Facsimile:        (203) 357-4585
    Telephone:        (203) 357-3776

    Lessee:           Aloha Airlines, Inc.
    Address:          371 Aokea Street
                      Honolulu, Hawaii 96819
    Attention:        Executive Vice President and Chief Financial Officer
    Facsimile:        (808) 833-3100
    Telephone:        (808) 836-4245


                                  -5-


<PAGE>


7.  THE SCHEDULES AND COMMON TERMS AGREEMENT

    ALL THE PROVISIONS OF SCHEDULE A HERETO, SCHEDULE B HERETO, AND THE
    COMMON TERMS AGREEMENT, ARE INCORPORATED BY REFERENCE HEREIN AND ARE
    PART OF THIS AIRCRAFT LEASE AGREEMENT AS IF THEY WERE SET OUT IN FULL
    HEREIN. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BY ITS
    SIGNATURE BELOW, THE LESSEE ACKNOWLEDGES AND AGREES THAT THE LEASE OF
    THE AIRCRAFT HEREUNDER IS ON AN "AS IS, WHERE IS" BASIS AND THAT THE
    DISCLAIMERS, EXCULPATIONS AND LIMITATIONS OF LIABILITY, INDEMNITEES, THE
    CHOICE OF NEW YORK LAW AS THE GOVERNING LAW, THE LESSEE'S SUBMISSION TO
    PERSONAL JURISDICTION IN NEW YORK, AND THE WAIVER OF ANY RIGHT TO A
    TRIAL BY JURY PROVIDED FOR IN THE COMMON TERMS AGREEMENT ARE
    INCORPORATED HEREIN BY SUCH REFERENCE AND ARE PART OF THIS AIRCRAFT
    LEASE AGREEMENT AS IF THE SAME WERE SET OUT IN FULL HEREIN.

8.  NO AMENDMENT EXCEPT IN WRITING

    No provision of this Lease, including any provision of Schedule A,
    Schedule B or the Common Terms Agreement, may be amended, rescinded,
    changed, waived, discharged, terminated or otherwise modified in any way
    whatsoever, except by a writing signed by the party to be charged.
    Lessor and Lessee acknowledge their agreement to the provisions of this
    Section 8 by their signatures below.

      [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK. THE
                         SIGNATURE PAGE FOLLOWS]


                                  -6-


<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.

LESSOR:                                  LESSEE:

AVIATION FINANCIAL SERVICES INC.         ALOHA AIRLINES, INC.


By: /s/  [Illegible]                     By:
   ----------------------------------       ----------------------------------
Name:    Norm Liu                        Name:
   ----------------------------------       ----------------------------------
Title: VICE PRESIDENT                    Title:
   ----------------------------------       ----------------------------------


                                         By:
                                            ----------------------------------
                                         Name:
                                            ----------------------------------
                                         Title:
                                            ----------------------------------


<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by their duly authorized representative(s), as of the date
shown at the beginning of this Aircraft Lease Agreement.

LESSOR:                                  LESSEE:

AVIATION FINANCIAL SERVICES INC.         ALOHA AIRLINES, INC.


By:                                      By: /s/ Brenda F. Cutwright
   ----------------------------------       ----------------------------------
Name:                                    Name: Brenda F. Cutwright
   ----------------------------------       ----------------------------------
Title:                                   Title: Exec. Vice President & CFO
   ----------------------------------       ----------------------------------


                                         By: /s/ James M. King
                                            ----------------------------------
                                         Name: James M. King
                                            ----------------------------------
                                         Title: VP Planning & Development
                                            ----------------------------------


<PAGE>


                                 SCHEDULE A

                  PART I-AIRFRAME AND ENGINES DESCRIPTION

AIRCRAFT
--------
     Manufacturer:              Boeing

     Model:                     737-700 ETOPS

     Serial Number:             30830

     U.S. Registration No.      To be advised at Delivery and included in Lease
                                Supplement No. 1

ENGINES (each of which has 750 or more rated takeoff horsepower or the
-------
equivalent of such horsepower)

     Engine Type:               CFM56-7B24
     Serial Nos:                To be advised at Delivery and included in Lease
                                Supplement No. 1


                               A-1


<PAGE>


                                 SCHEDULE A

                   PART II - DELIVERY CONDITION REQUIREMENTS

Set forth below is a description of the condition in which the Aircraft must
be in order for Lessee to be obligated to accept the Aircraft under the Lease.
It is solely a description of such condition precedent and shall not be
construed as a representation, warranty or agreement of any kind whatsoever,
express or implied, by Lessor with respect to the Aircraft or its condition,
all of which have been disclaimed by Lessor and waived by Lessee as set forth
in the Lease, including in the Common Terms Agreement.

DELIVERY CONDITION REQUIREMENTS:.

This "DELIVERY CONDITION REQUIREMENTS" are as follows:

     Airframe,           New from Manufacturer, configured in
     Engines,            accordance with GECAS Detail Specification
     Components:         D6-38808-34 (Revision D), except as
                         modified in accordance with the
                         specification changes noted on the Appendix
                         to this Schedule A-Part II

     Livery Painting:    Lessee's current livery as in effect on the date of
                         this Aircraft Lease Agreement, or such other
                         livery as Lessee may specify in writing to
                         Lessor so long as Lessee provides to Lessor,
                         reasonably in advance of the Scheduled
                         Delivery Month so as to permit Lessor to make
                         all necessary arrangements for such painting, all
                         technical specifications necessary in order to
                         complete the painting of the Aircraft in such
                         livery


                                   A-2


<PAGE>


                                                                   APPENDIX TO
                                                           SCHEDULE A, PART II

                            SPECIFICATION CHANGES

The following table outlines those specification items which the Lessee has
identified as requiring modification to make the GEF specification compatible
with those aircraft currently in operation by Lessee. Each of the items
listed under the column marked GECAS (left) shall be' modified during
production to reflect the configuration listed in the Aloha column (right).
All such modifications shall be accomplished at Lessor's expense.

Notwithstanding the above, it is furthered agreed that Lessee will afford
Lessor or its designated representative the opportunity to discuss alternate
proposals with regard to those modifications below which cause BFE vendor
changes to Lessor's baseline specification (ref D6-38808-34);


<Table>
<Caption>


<S>     <C>                                                       <C>                       <C>
01      GENERAL AIRPLANE DESCRIPTION                              GECAS                     ALOHA
        Manuals/Instrumentation Units                             Metric                    English

03      GENERAL AIRPLANE CRITERIA
        Operational Capabilities
         Max Taxi Weight                                          133,500 lbs               155,000 lbs
         Max Takeoff Weight                                       133,000 lbs               154,500 lbs

11      PLACARDS and MARKINGS
        Exterior Registry Markings                                No                        Yes

21      AIR CONDITIONING
        Cabin Ascent Rate (ft/min)                                600                       750
        Cabin Descent Rate (ft/min)                               350                       500

22      AUTOMATIC FLIGHT CONTROL
        DFCS Features
        Control Wheel Steering Reversion in Approach Mode         Yes                       No
        Altitude Alert (ft)                                       300/900                   200/900

23      COMMUNICATION
        Voice Recorder                                            (1) Allied Signal 980-    (1) Loral Fairchild
                                                                  6022-001 ARINC            2100-1020-00
                                                                  557
        Man ON/Auto OFF Switch                                    YA607-YA670               Yes
        Audio Entertainment                                       None                      Matsushita (MPES)
                                                                                            RDAX1302-11
        Video Entertainment                                       None                      SONY/PSU
                                                                                            mounted

</Table>


                                     A-3


<PAGE>


<Table>
<Caption>

<S>     <C>                                                       <C>                       <C>
        Monitors                                                 Structural Provs 5         VCC same as GEF
                                                                 Centerline Ovhd
        Video Control Center (VCC)                               Structural Provs Aft
                                                                 RH Stow Bin
        HF System                                                Single/Complete            Dual
                                                                 Provs for second
        Transceiver                                              (1) Rockwell 822-          (2) Rockwell 822
                                                                 0990-001 ARINC             0330-001
                                                                 719753

        VHF System                                               Dual/Complete Provs        Triple
                                                                 for Third

        Transceiver                                              (2) Allied Signal 064-     (3) Rockwell 822
                                                                 50000-0110 ARINC           1047-002
                                                                 716
        8.33 KHZ Spacing
           Capable                                               YA601-YA606                Yes
           Activated                                             YA607-YA670                No
        ACARS                                                    Part- Provisions for       Rockwell 822-0666
                                                                 ARINC 724B                 003
        ELT No                                                                              Artex. 453-0004.

24      ELECTRICAL POWER
        Standby Power Load Additions
         Captain's Pilot Heat                                    YA607-YA670                No
         ATC No. I                                               No                         Yes
25     EQUIPMENT FURNISHINGS                                                                See NOTE 1
       Interior Layout (See Attached)                            LOPS-377-0201              LOPS-377-0203
                                                                                            12F@38"/112Y@
                                                                                            31" with fixed class
                                                                                            divider.
       Overwater Equipped                                        No, Lifevests Only         Yes, 3 x 46 man
        Lifeline                                                 Yes                        Liferafts
       Installed Positions                                       G1, G4B                    Gl, G2, G4B
       Provisions                                                G2 (Seat Track-3/          G2 half galley
                                                                 Power/Water/ Drain/        underbin (Jamco)
                                                                 Ovhd Ties)

       Windscreen(s)                                             Fwd RH Sta 336.75          Fwd Left Hand with
                                                                                            emerg. Equip.
                                                                                            stowage and closet
                                                                                            at BS350
       Class Divider(s)                                                                     Fixed
        Rails                                                    Yes (Basic)                Yes (Basic)
        Stow Bin Cutout                                          YA610-YA670 Yes            No
       Center Overhead Stowage Bmis                              No                         Yes (3)
                                                                                            (1) Forward
                                                                                            (2) Center

</Table>


                                    A-4


<PAGE>


<Table>
<Caption>

<S>    <C>                                                       <C>                        <C>
28     FUEL
       Measuring Sticks
         Conversion Tables                                       NDU to Kilograms           NDU to Pounds

29     HYDRAULIC POWER
       Engine Driven Pump                                        Abex                       Vickers
                                                                 10-62167-2
       AC Electric Pump                                          Abex
                                                                 10-60556-30
31     INDICATING/RECORDING SYSTEMS
       Flight Data Recorder                                      AlliedSignal 980-          L-3
                                                                 4700-042 ARINC             Communications
                                                                 747                        2100-4043-00
       Digital Flight Data Acquisition Unit                      Teledyne 2233000-85        AlliedSignal 967-
                                                                 ARINC 717                  0212-002
       Printer                                                   Part Provs Half            Full Format
                                                                 Format
       Data Loader                                               Connector                  AlliedSignal 964-
                                                                                            0401-016
       Display Format                                            EFIS/MAP                   PFD/ND
       Engine Instrument Display                                 Side-by-Side               Over/Under
       Engine Fuel Flow                                          N/A                        Full Time Display
       Radio Altitude Display                                    Below ADI                  Above ADI
       Round Dial & Digital Radio Altitude                       N/A                        Yes
       Ground Speed - Below Airspeed Tape                        N/A                        Yes
       Landing Altitude Reference Bar                            N/A                        Yes
       Baro Mins Pointer                                         N/A                        Yes
       Radio Altitude Height Alert Display                       No                         2500 Feet
       ADF Pointers in NAV Mode Display                          Suppressed
       TCAS 3 NM Range Ring - Nav Display                        No                         Yes
       FMC/ADIRU Position Difference Display                     Exceedence
       Weather Radar Range Area                                  Yes                        Yes
       TCAS Resolution Advisory                                  ADI                        ADI
       ILS Failure Flags                                         Inhibited
       ILS Localizer Deviation Expanded Scale                    Autopilot & Flt Dir        Autopilot & Flt Dir
       Oil Quantity Display                                      % Full Quantity            Quarts
       Approach Minimums                                         Radio Based
       Airspeed Bug #5                                           Disabled                   80 Knots
       Control Surface Position - System Display                 N/A                        Yes
32     NOSE GEAR TAXI LIGHT                                      250 Watt                   450 Watt
33     LIGHTING
       Passenger Cabin Lighting (Zone)                           Single                     Two

</Table>

                                    A-5


<PAGE>


<Table>
<Caption>

<S>    <C>                                                        <C>                        <C>
       Escape Path Lighting                                                                  Seat Mounted

34     NAVIGATION
       Standby Altitude Indicator                                 (1) BF Goodrich 501-       Sextent
                                                                  1657-02
       Ground Proximity Warning Computer                          AlliedSignal 965-        AlliedSignal 965-
                                                                  0976-003-204-204          0976-003-204-204
                                                                  (Enhanced)                (Enhanced)
         Callouts                                                 Bank Angle (Basic)        Bank Angle (Basic)
                                                                                            "Plus 100
                                                                                            Minimums"
       VHF Nav (VOR)/Marker Beacon Receiver                       (2) AlliedSignal 066-     Rockwell 822-0297-
                                                                  50012-0101 ARINC          001
                                                                  711
       Multi-Mode Receiver (MMR)(ILS/GPS)                         (2) AlliedSignal 066-     Rockwell 822-1152-
                                                                  50029-1101                002
       ATC Transponder                                            (2) AlliedSignal 066-     Rockwell 822-0336-
                                                                  01127-1301 ARINC          001
                                                                  718
       TCAS Change 7                                              AlliedSignal 066-         No
                                                                  0 1127-1601 YA609-
                                                                  YA670
       DME Interrogator                                           (2) AlliedSignal 066-     Rockwell 822-0329-
                                                                  50013-0101 ARINC          001
                                                                  709
       ADF Receiver                                               (1) AlliedSignal 066-     (2) Rockwell 822-
                                                                  50014-0101 ARINC          0299-001
                                                                  712
         Dual                                                     Provisions
       TCAS Computer                                              (1) AlliedSignal 066-     Rockwell 622-8971-
                                                                  50000-1508 ARINC          020
                                                                  735
       TCAS Change 7                                              AlliedSignal 066-         No
                                                                  50000-2220 YA609-
                                                                  YA670
       Flight Management Computer System
         Computer                                                 (1) Smiths Indust 10-     (2) Smiths Indust
                                                                  62225-003                 10-62225-003
         2nd Computer                                             Partial Provisions        Installed
       CDU/MCDU                                                   CDU                       MCDU
       Date Base Size
         1 MEG                                                    YA601
         2 MEG                                                    YA602-YA670               Yes
       Built-In Test Equip Printer Receptacles                    No                        No
       FMCS Definition
         Runaway Offset Position                                  Feet                      Feet
         Alternate Destinations Predictions                       Inhibit                   Yes

</Table>

                                     A-6


<PAGE>


<Table>
<Caption>

<S>    <C>                                                        <C>                        <C>

         Retention of Original Waypoints                          Inhibit                    Yes
         Message Recall                                           Inhibit                    Yes
       LRRA Transceiver                                           (2) AlliedSignal 066-      Rockwell 822-0334-
                                                                  50007-0101                 002
       Weather Radar Transceiver                                  (1) AlliedSignal 066-      Rockwell 622-5132-
                                                                  50008-0405                 633
         Predictive Windshear                                     Activated                  Activated

35     OXYGEN
       Flight Crew System - Press Breathing                       Yes                       No

38     WATER/WASTE
       Potable Water: CapNol (US Gallons)                         40/40                     60/50

39     E6PANEL                                                                              Yes

52      DOORS
        Airstairs, Forward                                        Part Provisions +         Installed
                                                                  Install Data Kit

</Table>


                                       A-7



<PAGE>


                                   SCHEDULE A

           PART III- PROCEDURES AND OPERATING CONDITION AT REDELIVERY

            On the Return Occasion the Aircraft, subject to ordinary wear and
            tear of a kind and to an extent consistent with similar aircraft
            engaged in commercial airline operations, will be redelivered to
            Lessor by Lessee in accordance with the procedures and in any event
            in the condition set out below. For the avoidance of doubt, any
            damage assessment and/or rectification criteria used in assessing
            the redelivery condition shall be as prescribed in the
            Manufacturer's structural repair manual ("SRM") and/or the
            Manufacturer's Maintenance Planning Document, as appropriate. Any
            damage outside the scope of the SRM shall require FAA 8110-3
            certification.

   1.1      FINAL INSPECTION

            Immediately prior to the Return Occasion, Lessee will make the
            Aircraft available to Lessor and Owner for inspection ("FINAL
            INSPECTION") in order to verify that the condition of the Aircraft
            complies with the Lease. The Final Inspection will include, and be
            long enough to permit Lessor to:

            (a)     inspect the Aircraft Documents and Records;

            (b)     inspect the Aircraft (with Lessee to open or remove panels
                    as reasonably requested by Lessor or Owner based on Lessor's
                    or Owner's visual observation of the Aircraft and/or their
                    respective review of the Aircraft Documents and Records),
                    uninstalled Parts and the APU (including a complete video
                    borescope inspection of the APU);

            (c)     inspect the Engines, including (i) a complete video
                    borescope inspection of (A) the low pressure and high
                    pressure compressors and (B) turbine area and (ii) power
                    assurance runs (including full take-off power engine run-up
                    performed in accordance with the performance test in the
                    Engine Manufacturer's test specifications, and the Engines
                    shall not exceed corrected limits for all parameters using
                    temperature corrected charts); and

            (d)     observe a two hour demonstration flight at Lessee's cost
                    (with up to three (to the extent permitted by FARS) of
                    Lessor's and Owner's representatives as on-board
                    observers).

            Furthermore, Lessee acknowledges that a purchaser or the next
            operator of the Aircraft may need to inspect the Aircraft, the
            Engines and the Aircraft Documents and Records prior to redelivery
            and Lessee hereby agrees to cooperate reasonably at all times
            during the Term

                                       A-8


<PAGE>


            with Lessor, Owner and/or such purchaser or such next operator in
            order to coordinate, assist and grant access for the above
            inspections and/or sale or subsequent lease as applicable.

            Lessor or Owner, as the case may be, is responsible for and will
            indemnify Lessee against all Losses arising from the death or injury
            to any observer or any employee of Lessor or Owner, as the case may
            be, in connection with the inspection of the Aircraft under this
            Section 1.1.

   1.2    GENERAL CONDITION

          The Aircraft will:

          (a)       be in the same configuration as at Delivery after giving
                    effect to any post-Delivery modifications to the Aircraft
                    paid for or otherwise provided by or on behalf of Lessor (or
                    as permitted by the Lease or as otherwise mutually agreed),
                    be in as good operating condition and appearance as when
                    delivered to Lessee (after giving effect to any such
                    post-Delivery modifications), except for ordinary wear and
                    tear and alterations and modifications authorized or
                    required under the Lease and paid for by Lessee or a
                    Sub-Lessee, and be clean by major passenger airline
                    standards;

          (b)       have installed the full complement of equipment, parts,
                    accessories, furnishings and loose equipment as when
                    originally delivered to Lessee (subject to Lessee's rights
                    under Section 8.12 to reverse certain Equipment Changes,
                    after giving effect to all modifications, repairs or
                    maintenance performed during the Term, regardless of whether
                    paid for by Lessee or Lessor) and the Aircraft (including
                    the Aircraft Documents and Records) shall be in a condition
                    suitable for immediate registration with the FAA (assuming
                    that the Owner qualifies for such registration) and
                    immediate operations under FAR Part 121 with a new operator,
                    without waiver, unless the benefit of such waiver is
                    applicable to the next operator of the Aircraft; and if any
                    of the engines or parts tendered for redelivery with the
                    Aircraft is not one of the Engines or Parts referred to in
                    the Certificate of Technical Acceptance or a Replacement
                    Engine installed pursuant to Section 8.11(b) following an
                    Engine Event of Loss, Lessor shall have no obligation to
                    accept such engine or part unless Lessee furnishes to Lessor
                    all the documents and evidence in respect of such engine or
                    part in accordance with Section 8.11(b), as if such engine
                    were a Replacement Engine or replacement Part, and otherwise
                    complies with such Section 8.11(b) with respect thereto;

          (c)       have in existence a valid and effective certificate of
                    airworthiness (and if required by Lessor, a valid and
                    effective export certificate of airworthiness) with
                    respect to


                                       A-9


<PAGE>


                    the Aircraft issued by the Air Authority (in the case of an
                    export certificate of airworthiness no earlier than 30 days
                    prior to the redelivery);

          (d)       comply with the Manufacturer's original specifications as at
                    the Delivery, except as modified during the Term in
                    accordance with the Manufacturer's service bulletins or
                    letters, Airworthiness Directives, Air Authority approved
                    data or otherwise as permitted by the Lease;

          (e)       be fresh out of a "C" Check (or higher check if applicable)
                    in block format (which shall be the next sequential "C"
                    Check under Lessee's Maintenance Program following the last
                    regularly scheduled "C" Check performed by Lessee prior to
                    the Return Occasion if Lessee's Maintenance Program is based
                    on the then current Manufacturer's Maintenance Planning
                    Document in block format. If Lessee's Maintenance Program is
                    not based on the Manufacturer's Maintenance Planning
                    Document in block format, then Lessee shall integrate the
                    Aircraft Maintenance Program onto the then current
                    Manufacturer's Maintenance Planning Document Block
                    Maintenance Program such that all airframe inspections
                    falling due within the "C" check interval (which shall not
                    be less than 4,000 Flight Hours) as defined in and in
                    accordance with the Manufacturer's Maintenance Planning
                    Document have been accomplished;

          (f)       have had accomplished all outstanding Airworthiness
                    Directives affecting that model of Aircraft issued by the
                    FAA requiring action during the Term or within 180 days
                    after the Return Occasion or the Scheduled Expiry Date,
                    whichever is later; for this purpose, compliance shall be by
                    terminating action if

                    (i)       Lessee has complied by terminating action for
                              sixty-five percent (65%) of the aircraft of the
                              same model and series then operated by Lessee; or

                    (ii)      the latest date permitted by such Airworthiness
                              Directive for required compliance by terminating
                              action falls within 180 days after the Return
                              Occasion or the Scheduled Expiry Date, whichever
                              is later.

                    (iii)     In no event shall there be any non-transferable
                              time extensions, waivers, deviations or
                              alternative means of compliance with any
                              Airworthiness Directions or other Regulations.

          (g)       have installed all applicable vendor's and Manufacturer's
                    service bulletin kits received free of charge by Lessee
                    during the Term that are appropriate for the Aircraft and to
                    the extent not installed, those kits will be furnished free
                    of charge to Lessor;


                                      A-10


<PAGE>


          (h)       have the fuselage, empennage, wings and pylons stripped (or
                    sanded if only three or less coats of paint) and painted in
                    such livery as Lessor may designate in accordance with
                    standard industry practice;

          (i)       have all signs and decals clean, secure and legible;

          (j)       [NOT APPLICABLE];

          (k)       have no open, deferred, continued, carry over or placarded
                    maintenance items or watch items or placarded log book
                    items, and all other log book discrepancies shall be
                    cleared;

          (l)       all discrepancies discovered during the inspections
                    described above which exceed the Manufacturer's maintenance
                    manual allowable limits for in-service aircraft shall have
                    been repaired in accordance with FAA-approved procedures;

          (m)       all repairs of a temporary or interim nature, requiring
                    repetitive inspections or future upgrading, including
                    external doublers with blind fasteners, shall be upgraded to
                    permanent repair in accordance with the Manufacturer's
                    Maintenance Planning Document or structural repair manual;
                    and

          (n)       all systems shall be fully operational for their intended
                    functions in accordance with the Manufacturer's Maintenance
                    Planning Document specifications.

1.3       COMPONENTS

          (a)       If the Aircraft Lease Agreement specifies Minimum Component
                    Flight Hours and/or Minimum Component Cycles, each Airframe
                    Flight Hour and Cycle controlled Hard Time Component (other
                    than the APU) shall have not less than the Minimum Component
                    Flight Hours and the Minimum Component Cycles of life
                    remaining to the next scheduled removal, in accordance with
                    the Lessee's Maintenance Program and shall be supported by
                    appropriate certification documentation indicating TSN, CSN,
                    TSO and CSO such as FAA form 8130-1; for this purpose "Hard
                    Time Component" means any component which has a limited
                    on-wing life in accordance with the Manufacturer's
                    Maintenance Planning Document and which can have life fully
                    restored through appropriate maintenance;

          (b)       If the Aircraft Lease Agreement specifies a Minimum
                    Component Calendar Life, each calendar-limited component
                    including safety equipment will have not less than its
                    Minimum Component Calendar Life remaining to the next
                    scheduled removal in accordance with the Lessee's
                    Maintenance Program;

          (c)       Each "on-condition" and "condition-monitored" component will
                    be serviceable;



                                      A-11


<PAGE>


          (d)       The installed components as a group will have an average of
                    total flight time since new of not more than that of the
                    Airframe;

          (e)       If the Aircraft Lease Agreement specifies Minimum Component
                    Flight Hours and/or Minimum Component Cycles, each Airframe
                    Life-Limited Component will have not less than the Minimum
                    Component Flight Hours and the Minimum Component Cycles
                    remaining to next scheduled removal and will be supported by
                    certification documentation necessary to demonstrate
                    back-to-birth traceability; for this purpose "Airframe
                    Life-Limited Component" means a component with an ultimate
                    life which cannot be restored through appropriate
                    maintenance.

1.4       ENGINES

          Each Engine (or a Replacement Engine as and to the extent permitted by
          Section 1.2(b)) will be installed on the Aircraft and comply with the
          following:

          (a)       If the Aircraft Lease Agreement specifies a Minimum Engine
                    Flight Hours and/or Minimum Engine Cycles, each Engine will
                    have not less than the Minimum Engine Flight Hours and
                    Minimum Engine Cycles expected life remaining to the next
                    scheduled removal. The expected life remaining will be
                    determined by third party mutually acceptable to both Lessor
                    and Lessee (at Lessor's cost) or by the Engine Manufacturer,
                    in each case based on the inspection and checks to be
                    performed at the Return Occasion in accordance with the
                    Lease;

          (b)       Each Engine shall have just completed at the location for
                    Lessor's acceptance on the Return Occasion a hot (including
                    combustion chamber) and cold section video borescope
                    inspection, which inspection shall be performed at Lessor's
                    expense, and a power assurance run performed at Lessee's
                    expense in accordance with the Lessee's Maintenance Program
                    or Manufacturer's Maintenance Planning Document and any
                    defects discovered in such inspections which exceed the
                    Engine manufacturer's in-service limits shall be corrected
                    at Lessee's expense. Lessee shall cause such borescope
                    inspections to be performed and to be recorded on videotape
                    by an agency selected by Lessor and shall provide Lessor
                    with a copy of such videotape on the Return Occasion. No
                    Engine shall be on "watch" for any reason requiring any
                    special or out of sequence inspection. Each Engine shall
                    comply with the operations specification of Lessee without
                    waiver or exceptions. All items beyond the Engine
                    manufacturer's in-service limits shall be repaired;

          (c)       If the Aircraft Lease Agreement specifies Minimum Component
                    Cycles, each Engine Life-Limited Component will have not
                    less than the Minimum Component Cycles remaining per the
                    manufacturer's then current limitations for the part



                                      A-12


<PAGE>


                    number in question, and will be supported by certification
                    documentation necessary to demonstrate back-to-birth
                    traceability; for this purpose "Engine Life-Limited
                    Component" means a component with an ultimate life which
                    cannot be restored through appropriate maintenance; and

1.5       FUSELAGE, WINDOWS AND DOORS

          (a)       The fuselage will be free of major dents and abrasions in
                    excess of the limits specified in Manufacturer's Maintenance
                    Planning Document or structural repair manual; loose or
                    pulled or missing rivets shall be replaced;

          (b)       Windows will be free of delamination, blemishes and crazing,
                    in excess of the limits specified in the Manufacturer's
                    Maintenance Planning Document or structural repair manual
                    and will be properly sealed; and

          (c)       Doors will be free moving, correctly rigged and be fitted
                    with serviceable seals.

1.6       WINGS AND EMPENNAGE

          (a)       Leading edges will be free from damage in excess of the
                    limits specified in the Manufacturer's Maintenance Planning
                    Document or structural repair manual; and

          (b)       Unpainted surfaces of the wings and empennage will be
                    polished.

1.7       INTERIOR AND COCKPIT

          All soft furnishings, including but not limited to carpets, seat
          covers and curtains, will be in good condition, clean and free of
          stains and meet FAR fire resistance regulations.

1.8       LANDING GEAR; WHEELS AND BRAKES

          (a)       The Landing Gear and wheel wells will be clean, free of
                    leaks and repaired as necessary;

          (b)       Each installed Landing Gear shall have no more Cycles
                    accumulated than the Airframe and, if the Aircraft Lease
                    Agreement specifies Minimum Landing Gear Flight Hours and/or
                    Minimum Landing Gear Cycles and Minimum Landing Gear
                    Calendar Time, not less than the Minimum Landing Gear Flight
                    Hours and the Minimum Landing Gear Cycles and the Minimum
                    Landing Gear Calendar Time shall be remaining to the next
                    scheduled overhaul or removal, as the case may be, of each
                    installed Landing Gear in accordance with the then current
                    Manufacturer's Maintenance Planning Document and Lessee's
                    Maintenance Program; and

          (c)       The wheels and brakes will have not less than half of their
                    useful life remaining.



                                      A-13


<PAGE>


1.9       RETURN OF AUXILIARY POWER UNIT (APU)

          The APU shall have just completed a borescope inspection and shall
          meet all air outputs and temperature limitations under load in
          accordance with the Lessee's Maintenance Program and the APU
          manufacturer's maintenance manual, and any defects discovered in such
          inspection, which exceed the APU manufacturer's in-service limits,
          shall be corrected at Lessee's expense. If the Aircraft Lease
          Agreement specifies a Minimum APU Limit, the APU shall have not more
          than the Minimum APU Limit since the last gas path refurbishment. If
          the Aircraft Lease Agreement specifies a Minimum APU LLP Limit, APU
          Life Limited Parts shall have not less than the Minimum APU LLP Limit
          of useful life remaining on average.

1.10      CORROSION

          (a)       The Aircraft shall be in compliance with the Manufacturer's
                    corrosion prevention and control program (CPCP)
                    requirements. All CPCP inspections which would normally be
                    accomplished while access is provided during structural
                    inspection in accordance with the Lessee's Maintenance
                    Program during the Term shall have been accomplished;

          (b)       The entire fuselage will be substantially free from
                    corrosion and will be adequately treated in accordance with
                    Lessee's corrosion prevention program and the Manufacturer's
                    Maintenance Planning Document; and

          (c)       Fuel tanks will be free from contamination and corrosion and
                    a tank treatment program will be in operation.

1.11      FUEL

          If the Aircraft Lease Agreement specifies a Minimum Measurable Fuel
          Requirement, at redelivery, the Aircraft fuel tanks shall contain at
          least enough fuel to meet the Minimum Measurable Fuel Requirement.

1.12      MAINTENANCE PROGRAM

          (a)       Prior to the Return Occasion and upon Lessor's or Owner's
                    request, Lessee will provide Lessor or Owner or its agent
                    reasonable access to the Lessee's Maintenance Program and
                    the Aircraft Documents and Records in order to facilitate
                    the Aircraft's integration into any subsequent operator's
                    fleet; and

          (b)       Lessee will, if requested by Lessor or Owner to do so,
                    provide sufficient access to Lessee's Maintenance Program in
                    order to integrate the Aircraft to the next operator's
                    maintenance program. Lessor and any Person to whom Lessor
                    grants



                                      A-14


<PAGE>


                    access to Lessee's Maintenance Program shall agree that it
                    will not disclose the contents of the Lessee's Maintenance
                    Program to any Person except to the extent necessary to
                    monitor Lessee's compliance with the Lease and/or to bridge
                    the maintenance program for the Aircraft from the Lessee's
                    Maintenance Program to another program after the Return
                    Occasion.

1.13      AIRCRAFT DOCUMENTS

          At redelivery Lessee will deliver to Lessor and Owner all current and
          complete historical records required to be maintained relevant to the
          Aircraft, including documents, manuals, data, overhaul records, life
          limited part traceability to "zero time since new", log books,
          original delivery documents serviceable parts tags, FAA forms,
          modification records and inspection records, and including each of the
          Aircraft Documents and Records.

1.13.     ETOPS:

          The Aircraft shall be certified by the FAA for 180 minutes ETOPS
          operation or shall be in such condition as to be eligible for
          certification by the FAA for 180 minutes ETOPS operation.



                                      A-15


<PAGE>


                                   SCHEDULE B
                                COMMERCIAL TERMS

             Lessor and Lessee hereby agree that the definitions and other
    commercial and financial terms set forth in this Schedule B shall apply to
    the leasing of the Aircraft under the Lease.

             In addition, Lessor and Lessee understand and agree that the
    commercial and financial information contained in this Schedule B are
    considered by Lessor and Lessee as proprietary and confidential. Lessor and
    Lessee each hereby agree, and any of their assignees, upon becoming such
    shall agree that it will treat this Schedule B as proprietary and
    confidential and will not, without the prior written consent of the other,
    disclose or cause to be disclosed, the terms hereof or thereof to any
    Person, except to its agents, representatives, advisors, employees, counsel,
    underwriters, auditors, investors, financing parties, head lessors
    and sub-lessees as necessary or appropriate for the leasing transaction
    which is the subject hereof, or except (a) as may be required by applicable
    Law or pursuant to an order, or a valid and binding request, issued by any
    court or other Government Entity having jurisdiction over Lessor, Lessee or
    the assignee of either of them, as the case may be, or (b) as necessary to
    enable Lessor or its assignee to make transfers, assignments or other
    dispositions to potential transferees, assignees or participants of its
    interest in and to the Lease.

             In connection with any such disclosure or any filing of the
    information contained herein or therein pursuant to any such applicable Law,
    Lessor, Lessee or the assignee of either of them, as the case may be, shall
    request and use its best reasonable efforts to obtain confidential treatment
    of this Schedule B and the other party will cooperate in making and
    supporting any such request for confidential treatment.


    PART I            CASUALTY OCCURRENCE DEFINITIONS

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]



                                       B-1


<PAGE>


    PART II         DEPOSIT; DISCOUNT RATE; LC AMOUNT; INTEREST RATE

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]



    PART III        RENT

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]



                                       B-2


<PAGE>




     PART IV          TAX DEFINITIONS; SPECIAL TAX INDEMNITY

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]



                                       B-3


<PAGE>


      PART V            SUPPLEMENTAL RENT - NOT APPLICABLE

      PART VI           MAINTENANCE AND RETURN CONDITION DEFINITIONS;
                        AIRWORTHINESS DIRECTIVE SHARING PAYMENTS

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]



                                       B-4




<PAGE>



     PART VII SUBLEASE FEE

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]

     PART VIII UTILIZATION RATIO

          [This provision has been omitted as confidential information, and is
          separately filed with the Commission.]



                                       B-6





<PAGE>

                                                               EXECUTION VERSION
                                                               -----------------

                     -------------------------------------
                                 AIRCRAFT LEASE

                             COMMON TERMS AGREEMENT
                     -------------------------------------

                             DATED AS OF MAY 12,2000

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                       And

                              ALOHA AIRLINES, INC.


<PAGE>

                                    CONTENTS
<TABLE>
<CAPTION>

  SECTION                                                                   PAGE
<S>       <C>                                                                <C>
  1.      INTERPRETATION ...................................................  1

  2.      REPRESENTATIONS AND WARRANTIES ...................................  2

  3.      CONDITIONS PRECEDENT .............................................  2

  4.      COMMENCEMENT .....................................................  3

  5.      PAYMENTS .........................................................  5

  6.      MANUFACTURER'S WARRANTIES ........................................ 19

  7.      LESSOR'S COVENANTS ............................................... 20

  8.      LESSEE'S COVENANTS ............................................... 20

  9.      INSURANCE ........................................................ 38

  10.     INDEMNITY ........................................................ 39

  11.     EVENTS OF LOSS ................................................... 41

  12.     RETURN OF AIRCRAFT ............................................... 42

  13.     DEFAULT .......................................................... 45

  14.     TRANSFER ......................................................... 52

  15.     MISCELLANEOUS .................................................... 54

  16.     DISCLAIMERS AND WAIVERS .......................................... 58

  17.     BROKERS AND OTHER THIRD PARTIES .................................. 61
</TABLE>


<PAGE>


<TABLE>
<CAPTION>
<S>                <C>
 Schedule 1        Definitions
 Schedule 2        Representations and Warranties
 Schedule 3        Conditions Precedent
 Schedule 4        Pre-Delivery Procedures and Delivery Condition
 Schedule 5        Certificate of Technical Acceptance
 Schedule 6        [NOT APPLICABLE]
 Schedule 7        Insurance Requirements
 Schedule 8        Form of Lessee's Legal Opinion
 Schedule 9        Events of Default
 Schedule 10       [NOT APPLICABLE]
 Schedule 11       Form of Lease Termination Certificate
 Schedule 12       Form of Lease Supplement No. 1
 Schedule 13       Form of Letter of Credit
 Schedule 14       Maintenance Performers
 Schedule 15       Technical Report
</TABLE>


<PAGE>

                             COMMON TERMS AGREEMENT

THIS COMMON TERMS AGREEMENT (this "CTA") is made as of May 12,2000 BETWEEN:

(1)  GENERAL ELECTRIC CAPITAL CORPORATION ("GE CAPITAL") and

(2)  ALOHA AIRLINES, INC. ("ALOHA")

 WHEREAS:

     (A)  From time to time, Aloha or one of its Affiliates may wish to lease
          commercial aircraft from GE Capital or one of its Affiliates, and GE
          Capital or one of its Affiliates may wish to lease commercial
          aircraft to Aloha or one of its Affiliates;

     (B)  Each party hereto wishes to provide in one document for certain common
          terms and conditions, as hereinafter provided in this CTA, that will
          be applicable, unless otherwise stated, to each such lease referred to
          in Recital (A); and

     (C)  Each such lease transaction will be concluded only on the terms of an
          agreement entitled "Aircraft Lease Agreement," which together with
          this CTA (which will be incorporated into and become part of such
          Aircraft Lease Agreement), will constitute the lease for the
          applicable aircraft as identified therein;

NOW, THEREFORE, for good and valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto hereby agree as follows:

1.   INTERPRETATION

1.1  Definitions

     All references herein to "Lease" mean the integrated agreement consisting
     of the various documents comprising the Lease as defined in Schedule 1. In
     the Lease, capitalized words and expressions have the meanings set out for
     them in Schedule 1 and in the Aircraft Lease Agreement.

1.2  Construction

     (a)  In the Lease, unless otherwise stated, a reference to:

          (i)  "Lessor," "Lessee," "GECAS," "Owner" or any other Person includes
               any of their successors and assignees;

          (ii) plural concepts shall include the singular and vice versa;


<PAGE>


          (iii) any document (except this CTA unless Lessor and Lessee otherwise
               expressly agree) shall include any changes to that document and
               any replacement for it;

          (iv) a Section or a Schedule is a reference to a clause of or a
               schedule to this CTA;

          (v)  any Regulation shall include any changes to that Regulation and
               any replacement for it;

          (vi) an obligation of a Person refers to any obligation that Person
               has under or in relation to the Lease; and

          (vii) "includes", "including", "include" or similar terms shall not be
               construed as limiting and shall mean "including, without
               limitation."

     (b)  Headings to Sections and Schedules in the Lease are not intended to
          affect their meaning.

2.   REPRESENTATIONS AND WARRANTIES

2.1  Lessee's Representations and Warranties

     Lessee hereby makes the representations and warranties set out in Section
     1.1 of Schedule 2 as of the date of execution of the Aircraft Lease
     Agreement and as of the Delivery Date, and Lessee understands that these
     statements must be true, both when the Aircraft Lease Agreement is executed
     and on the Delivery Date.

2.2  Lessor's Representations and Warranties

     Lessor hereby makes the representations and warranties set out in Section
     1.2 of Schedule 2 as of the date of execution of the Aircraft Lease
     Agreement and as of the Delivery Date, and Lessor understands that these
     statements must be true, both when the Aircraft Lease Agreement is executed
     and on the Delivery Date.

3.   CONDITIONS PRECEDENT

3.1  Conditions Precedent

     Lessor need not deliver and start the leasing of the Aircraft under the
     Lease unless each of the Lessor Conditions Precedent is satisfied or waived
     in writing by Lessor. Lessee need not accept and start the leasing of the
     Aircraft under the Lease unless each of the Lessee Conditions Precedent is
     satisfied or waived in writing by Lessee; provided, however, in the event
     that Lessee fails to accept and start the leasing of the Aircraft under the
     Lease, any Lessee Condition Precedent which reasonably could be expected to
     be met if the Delivery of the Aircraft had


                                      - 2 -
<PAGE>

     occurred shall be deemed to have been satisfied or waived for purposes of
     determining Lessee's liability for Rent in respect of the Aircraft in
     accordance with Section 4.1(b) below.

3.2  Waiver

     If any Lessor Condition Precedent is not satisfied, or waived in writing by
     Lessor, on or before the Delivery Date and Lessor (in its absolute
     discretion) nonetheless agrees to deliver the Aircraft to Lessee and to
     start the leasing of the Aircraft, Lessee will ensure that such Lessor
     Condition Precedent is fulfilled within 15 days after the Delivery Date,
     and Lessor may treat as an Event of Default the failure of Lessee to do so.

4.   COMMENCEMENT

4.1  Leasing

     (a)  Lessor shall notify Lessee of the Scheduled Delivery Week as soon as
          possible, but no later than at least thirty (30) days prior to the
          Scheduled Delivery Month, and Lessor shall notify Lessee of the
          Scheduled Delivery Date as soon as possible, but no later than at
          least one (1) week prior to the Scheduled Delivery Week. Subject to
          Sections 3.1 and 4.4, Lessor will lease the Aircraft to Lessee and
          Lessee will take the Aircraft on lease for the Term, which shall
          commence on the Delivery Date, and which shall be evidenced by
          Lessee's execution of Lease Supplement No. 1.

     (b)  If (i) Lessee is unwilling or unable to accept delivery of the
          Aircraft on the date on which Lessor tenders the Aircraft for Delivery
          to Lessee under and in accordance with Section 4.3(a), or Lessee fails
          to fulfil any Lessor Condition Precedent on or before such date, and
          (ii) the Lessee Conditions Precedent are met (or could reasonably be
          expected to be met if Delivery had occurred), then the Rent
          Commencement Date for the Aircraft shall be deemed to have occurred on
          the date on which it is tendered by Lessor for Delivery in accordance
          with subclause (ii) of this Section 4.1(b), and Lessee shall be
          obligated to pay Rent for the Aircraft on and from such date
          regardless of whether the Delivery Date occurs or whether Lessee
          executes Lease Supplement No. 1, but Lessor shall have no obligation
          to deliver, and Lessee shall have no lease interest in the Aircraft or
          other right to possession of the Aircraft, unless and until Lessee
          fulfils all Lessor Conditions Precedent as and when provided in the
          Lease and Lessee accepts delivery of the Aircraft as evidenced by its
          execution of Lease Supplement No. 1, and so long as no Default has
          occurred and is continuing.

     (c)  Lessee will be responsible for all risks associated with any loss of
          or damage to the Aircraft from the Rent Commencement Date until
          possession of the Aircraft is returned


                                      - 3 -
<PAGE>

          to Lessor on the Return Occasion and Lessor executes and delivers to
          Lessee the acknowledgement contemplated by Section 12.4.

4.2  Procedure before Delivery

     Lessor and Lessee will follow the Pre-Delivery Procedure.

4.3  Delivery and Acceptance

     (a)  After the Pre-Delivery Procedure has been carried out:

          (i)  Subject to Section 3.1, Lessor will tender delivery of the
               Aircraft to Lessee at the Delivery Location.

          (ii) Subject to Section 3.1, Lessee will accept the Aircraft. Upon
               such acceptance, Lessee must also provide evidence of its
               acceptance by signing Lease Supplement No. 1 and delivering it to
               Lessor.

     (b)  Lessee's acceptance of the Aircraft shall be regarded as absolute,
          unconditional and irrevocable.

4.4  Delayed Delivery

     If Delivery takes place after the Scheduled Delivery Date or does not
     happen due to an Unforeseen Event or for any other reason (other than
     Lessor's willful misconduct in the performance of its obligation to deliver
     the Aircraft under and subject to the conditions in the Lease):

     (a)  Lessor will not be responsible for any Losses that Lessee suffers
          resulting from the delay or from the non-delivery of the Aircraft;

     (b)  Lessee will not, except in the circumstances described in Section
          4.4(c), be entitled to terminate the Lease or to reject the Aircraft
          when it is offered for Delivery because of the delay.

     (c)  If the Aircraft has not been tendered for Delivery, in accordance with
          Section 4.3, by the Final Delivery Date, either party may terminate
          the Lease by delivering notice to the other party within 10 days of
          such Final Delivery Date (and if such notice is not delivered within
          such 10-day period the Final Delivery Date will be deemed extended for
          one additional period of 90 days). Upon the delivery of any such
          notice or automatically on the expiration of such 90-day period if no
          such notice has been delivered, all obligations of each party under
          the Lease will end on the date of such notice or the date of the


                                      - 4 -
<PAGE>

          expiration of such period, as the case may be, except that Lessor will
          repay to Lessee the Deposit (if any) or return to Lessee or cancel any
          Letter of Credit and Lessee will remain obligated under its indemnity
          set forth in Section 3 of Schedule 4.

     (d)  Lessee hereby agrees that its only right or remedy for a delay in or
          failure of delivery of the Aircraft due to an Unforeseen Event or for
          any other reason (other than Lessor's willful misconduct in the
          performance of its obligation to deliver the Aircraft under and
          subject to the conditions in the Lease) is the remedy set forth in
          Section 4.4(c) above and Lessee hereby waives any rights it may have
          under Section 2A-406 of the UCC or otherwise for any delay in or
          failure of delivery.

5.   PAYMENTS

5.1  Deposit

     Lessee shall pay Lessor any Deposit that is specified in Section 3 of the
     Aircraft Lease Agreement.

5.2  Rental Periods

     The first Rental Period will start on the Rent Commencement Date and each
     subsequent Rental Period will start on the date immediately following the
     last day of the previous Rental Period. Each Rental Period will end on the
     date immediately before the numerically corresponding day in the next
     month, except that:

     (a)  if there is no numerically corresponding day in that month, it will
          end on the last day of that month; and

     (b)  if a Rental Period would otherwise overrun the Expiry Date, it will
          end on the Expiry Date.

5.3  Rent

     (a)  TIME OF PAYMENT: Lessee will pay to Lessor or its order Rent in
          advance on each Rent Date. Lessor must receive value for the payment
          on each Rent Date. If a Rental Period begins on a day which is not a
          Business Day, the Rent payable in respect of that Rental Period shall
          be paid on the Business Day immediately following that day.

     (b)  AMOUNT: The Rent payable during the Term shall be calculated in
          accordance with Schedule B of the Aircraft Lease Agreement.

                                      - 5 -
<PAGE>

5.4  Supplemental Rent

     (a)  AMOUNT: If, under the Aircraft Lease Agreement, Lessee is required to
          pay Supplemental Rent, Lessee will pay that Supplemental Rent, at the
          rates referred to in Section 3 of the Aircraft Lease Agreement, to
          Lessor in relation to each calendar month (or part of a month) of the
          Term, on the fifteenth day following the end of that calendar month
          (except that the last payment of Supplemental Rent during the Term
          shall be paid on the Expiry Date).

     (b)  ADJUSTMENT: If, under the Aircraft Lease Agreement, Lessee is required
          to pay Supplemental Rent, the Supplemental Rent rates shall be
          adjusted after the Delivery Date in the manner provided in the
          Aircraft Lease Agreement.

     (c)  LESSOR'S PROPERTY: Lessee acknowledges and agrees that Supplemental
          Rent is additional rent for the leasing of the Aircraft and not cash
          collateral or other collateral security for Lessee's maintenance
          obligations under the Lease. Once paid all Supplemental Rent is the
          property of Lessor, it is not refundable to Lessee under any
          circumstances whatsoever and Lessee has no interest therein
          whatsoever.

5.5  Payments

     All payments by Lessee to Lessor under the Lease will be made for value on
     the due date in Dollars and in immediately available funds by wire transfer
     to the Lessor's Account as specified in the Aircraft Lease Agreement.

5.6  Withholding and Tax Credit

     (a)  WITHHOLDING: Lessee must not deduct any amount from any of its
          payments under the Lease, for or on account of any Taxes, unless it is
          required by law to do so, in which case Lessee must:

          (i)  deduct the minimum amount necessary to comply with the Law;

          (ii) pay Lessor an extra amount so that Lessor receives a net amount
               on the relevant payment date, that is equal to the amount that it
               would have received if the reduction had not been made (provided
               that Lessee shall have no obligation to pay Lessor an extra
               amount on account of withholding in relation to any Taxes with
               respect to which Lessee is not required to indemnify Lessor under
               Section 5.7). The amount of any such payment to Lessor must take
               into account the tax treatment of that payment to Lessor applying
               the principles of Section 5.10 such that Lessor shall be in no
               worse position than it would have been if the deduction had not
               applied in the first place;


                                     - 6 -
<PAGE>

          (iii) pay the Tax to the relevant taxing authority according to the
                relevant Law; and

           (iv) obtain a receipt (if one is available) from the relevant taxing
                authority and give it to Lessor.

     (b)  TAX CREDIT: If Lessor, in good faith, determines that it has realized
          a tax benefit (by way of deduction, credit or otherwise) as a result
          of any payment for which Lessee is liable under Section 5.6(a),
          Section 5.7, Section 5.10, Section 5.21 or Section 10, Lessor shall
          pay to Lessee as soon as practicable after the tax benefit has been
          realized (but not before Lessee has made all payments and indemnities
          to Lessor required under this Section or Section 5.7), an amount which
          will ensure that (after taking account of the payment itself) Lessor
          is in no better and no worse position than it would have been if the
          Tax giving rise to the payment hereunder had not been incurred.

          Nothing in this Section 5.6(b) shall:

          (i)  interfere with the right of Lessor to arrange its tax affairs in
               whatever manner it thinks fit; or

          (ii) oblige Lessor to disclose any information relating to its Tax
               affairs or any Tax computations (other than information
               reasonably necessary for Lessee to verify Lessor's determination,
               which information may be supplied on a confidential basis to an
               independent third party reasonably acceptable to Lessor and
               Lessee).

5.7  Tax Indemnity

     (a)  General:

          (i)  Except as provided in Section 53(c), Lessee will on demand pay
               and indemnify each Tax Indemnitee against any and all Taxes
               levied or imposed against or upon or payable by such Tax
               Indemnitee or Lessee and arising from, with respect to or in
               connection with the transactions pursuant to the Lease, including
               all Taxes relating or attributable to Lessee, the Lease or the
               Aircraft, directly or indirectly, in connection with the
               importation, exportation, registration, ownership (but only to
               the extent relating to or attributable to or arising as a result
               of the possession, operation, use or maintenance of the Aircraft
               by Lessee), leasing, sub-leasing, purchase, delivery, possession,
               use, operation, repair, maintenance, overhaul, transportation,
               landing, storage, presence or redelivery of the Aircraft or any
               part thereof or any rent, receipts, insurance proceeds, income,
               indemnification payment or other amounts arising therefrom, or
               the making of any Equipment Change or the permanent replacement
               of any Engine.


                                     - 7 -
<PAGE>

          (ii) All Taxes indemnified pursuant to this Section 5.7(a) shall be
               paid by Lessee directly to the appropriate taxing authority (to
               the extent permitted by applicable Law) at or before the time
               prescribed by applicable Law. After any payment by Lessee of any
               Tax directly to a taxing authority, Lessee shall furnish to
               Lessor, on request, a certified copy of a receipt for Lessee's
               payment of such Tax or such other evidence of payment of such Tax
               as is reasonably obtainable by Lessee and reasonably acceptable
               to Lessor.

          (iii) Any amount payable by Lessee to a Tax Indemnitee pursuant to
               Section 5.7(a) shall be paid within ten days after receipt of a
               written demand therefor from the relevant Tax Indemnitee
               accompanied by a written statement describing in reasonable
               detail the basis for such indemnity and the computation of the
               amount so payable, provided that if an amount of any indemnified
               Tax is being contested in accordance with Section 5.9 and Lessee
               shall have duly performed (and shall continue to perform) all its
               obligations under Section 5.9 with respect to such contest, then
               payment of the indemnity with respect to such Tax under Section
               5.7(a) shall, at Lessee's election, be deferred until the date
               the contest has been completed.

     (b)  Sales and Use Taxes:

          (i)  Without limiting Section 5.7(a) above, Lessee shall pay to Lessor
               (or, if permitted by applicable Law and if requested by Lessor,
               Lessee shall pay to the relevant tax authority for the account of
               Lessor):

               (y)  all sales, use, excise, rental, value added, goods and
                    services and similar taxes ("SALES TAXES") required to be
                    paid to the tax authority of the jurisdiction in which the
                    Delivery Location is situated or to the jurisdiction of the
                    Habitual Base or the State of Incorporation with respect to
                    the lease of the Aircraft to Lessee pursuant to the Lease
                    unless Lessee delivers to Lessor on or prior to the Delivery
                    Date such exemption certificate or other document as may be
                    required by applicable law to evidence Lessor's entitlement
                    to exemption from all Sales Taxes imposed by each such
                    jurisdiction with respect to the lease of the Aircraft
                    pursuant to the Lease; and

               (z)  all Sales Taxes required to be paid to the tax authority of
                    any jurisdiction in which the Aircraft may be used, operated
                    or otherwise located from time to time unless Lessee deliver
                    to Lessor such exemption certificates or other documents as
                    may be required by applicable law to evidence Lessee's
                    entitlement to exemption from all Sales Taxes imposed by
                    each


                                      - 8 -
<PAGE>

                    such jurisdiction with respect to the lease of the Aircraft
                    pursuant to the Lease.

          (ii) Lessee and Lessor will cooperate with each other in connection
               with the preparation and filing of any exemption application or
               similar document that is reasonably necessary or desirable under
               applicable Law to avoid the imposition of any Sales Taxes with
               respect to the transactions contemplated by the Lease.

          (iii) The specific obligations with respect to sales and use taxes set
               forth in this Section 5.7(b) are in addition to, and are not in
               substitution for, Lessee's obligation to indemnify for sales and
               use taxes pursuant to Section 5.7(a).

     (c)  Lessee is not required to indemnify a Tax Indemnitee under Section
          5.7(a) or Section 5.7(b) to the extent that the Tax arises because of:

          (i)  the willful misconduct or gross negligence of the Tax Indemnitee
               seeking indemnity under Section 5.7;

          (ii) a Tax liability a Tax Indemnitee has which would have arisen even
               if the Lease had not been entered into;

         (iii) a Tax liability charged on or measured by a Tax Indemnitee's net
               income, profits or gains by any Government Entity in the United
               States; but excluding any Tax (A) that is a Sales Tax (other than
               a Sales Tax that is enacted by a Government Entity as a
               substitute for or replacement of a Tax charged on or measured by
               net income, profits, or gains as a revenue source for that
               Government Entity (a "Replacement Sales Tax")) or (B) that is
               imposed by any government or taxing authority of any jurisdiction
               (other than the United States federal government) if and to the
               extent that such Tax (including a Replacement Sales Tax) results
               from (x) the use, operation, presence, registration or location
               of the Aircraft, the Airframe, any Engine or any Part in the
               jurisdiction imposing the Tax, or (y) the situs of organization,
               any place of business or any activity of Lessee or any other
               Person having use, possession or custody of the Aircraft, the
               Airframe, any Engine or any Part in the jurisdiction imposing the
               Tax;

          (iv) a Tax liability charged with respect to the period, or an event
               occurring, (x) prior to the Delivery Date or (y) after the Expiry
               Date and, in either case, unrelated to Lessor's dealings with
               Lessee or to the transactions contemplated by the Lease;

          (v)  a Tax liability arising out of any voluntary transfer or
               disposition by a Tax Indemnitee of any equitable or legal
               interest in the Aircraft or any part thereof or


                                     - 9 -
<PAGE>


               this Agreement to any Person (including a transfer or disposition
               by way of security but excluding a transfer or disposition
               pursuant to the exercise of remedies in connection with an Event
               Default), provided, however, that Lessor shall in connection with
               an Event of Default comply with any request as Lessee shall make
               concerning the appropriate jurisdiction in which such disposition
               shall be made unless Lessor reasonably determines (and advises
               Lessee) that compliance with such request by Lessee would
               generate an adverse consequence or prejudice Lessor; or

          (vi) a Tax liability with respect to a Tax based on or measured by the
               value or principal amount of any loan or promissory note (or
               security therefor) entered into by a Tax Indemnitee or anyone
               claiming an interest in the Aircraft or any portion thereof
               through a Tax Indemnitee; or

          (vii) a Tax liability arising out of a Replacement Sales Tax as
               described in Section 5.7(c)(iii), but excluding a Replacement
               Sales Tax described in Section 5.7(c)(iii)(B).

     (d)  Lessee will also indemnify each Tax Indemnitee, on an After-Tax Basis,
          as set forth in the Section entitled "Special Tax Indemnity" in
          Schedule B of the Aircraft Lease Agreement, and the provisions of
          Section 5.9 (TAX CONTEST AND INFORMATION) shall apply thereto.

5.8  [NOT APPLICABLE]

5.9  Tax Contest and Information

     (a)  If a Tax Indemnitee receives a notice of an audit or a written claim
          for any Tax for which Lessee would be required to pay an indemnity
          pursuant to Section 5.6 or Section 5.7, Lessor or such Tax Indemnitee
          shall notify Lessee promptly of such audit or claim, provided that any
          failure to provide such notice will not relieve Lessee of any
          indemnification obligation pursuant to Section 5.6 or 5.7 except to
          the extent that such failure precludes the right to contest such
          Taxes. If requested by Lessee in writing promptly after receipt of
          notice hereunder, Lessor shall or Lessor shall cause, to the extent
          that it has the ability to do so through relationship or contractual
          privity, such Tax Indemnitee to, upon receipt of indemnity
          satisfactory to it and at the expense of Lessee (including all costs,
          expenses, legal and accountants' fees and disbursements, and
          penalties, interest and additions to tax incurred in contesting such
          claim) permit Lessee to contest such audit or claim, or, if such
          contest (w) relates to an income tax, (x) involves Taxes in addition
          to those for which Lessee is responsible hereunder, (y) may not, under
          applicable law be conducted by Lessee, or (z) is one for which Lessee
          requests in writing


                                     - 10 -
<PAGE>

          that Lessor or the Tax Indemnitee conduct such contest, Lessor shall,
          or Lessor shall cause, to the extent that it has the ability to do so
          through relationship or contractual privity, the appropriate Tax
          Indemnitee to in good faith contest such audit or claim, by (i)
          resisting payment thereof if practicable and appropriate, (ii) not
          paying the same except under protest if protest is necessary and
          proper, or (iii) if payment is made, using reasonable efforts to
          obtain a refund of such Taxes in appropriate administrative and
          judicial proceedings. Lessor or the Tax Indemnitee shall determine the
          method of any contest conducted by Lessor or the Tax Indemnitee and
          (in good faith consultation with Lessee) control the conduct thereof,
          except that with respect to matters described in clause (y) or in
          clause (z) above which are not also described in clause (w) or clause
          (x) above Lessor shall and Lessor shall cause, to the extent that it
          has the ability to do so through relationship or contractual privity,
          the Tax Indemnitee to comply with the reasonable instructions of
          Lessee regarding the method of any contest conducted by Lessor or the
          Tax Indemnitee and Lessee shall (in good faith consultation with
          Lessor) control the conduct thereof. Lessee shall determine the method
          of any contest conducted by Lessee and (in good faith consultation
          with Lessor or the Tax Indemnitee) control the conduct thereof. Lessee
          shall pay in full all payments of Rent and other amounts payable
          pursuant to the Lease, without reduction for or on account of any Tax
          (except as provided in Section 5.6), while such contest is continuing.
          Lessor shall not be required to contest, or to continue to contest, a
          claim for Taxes under this Section 5.9 if (x) such contest would
          result in a risk of criminal penalties or risk of a sale, forfeiture
          or loss of, or the imposition of a Security Interest (other than a
          Permitted Lien) on, the Aircraft, or (y) Lessee shall not have
          furnished, at Lessee's expense, an opinion of independent tax counsel
          selected by Lessor and reasonably satisfactory to Lessee, that a
          reasonable basis exists for such contest, or (z) a Default shall be
          continuing (unless Lessee shall have provided security reasonably
          satisfactory to Lessor securing Lessee's performance of its
          obligations under this Section 5.9). If Lessor or any Tax Indemnitee
          contests any claim for Taxes by making a payment and seeking a refund
          thereof, then Lessee shall advance to Lessor or such Tax Indemnitee,
          on an interest-free basis, an amount equal to the Taxes to be paid by
          Lessor or such Tax Indemnitee in connection with the contest and shall
          indemnify Lessor or such Tax Indemnitee on an After-Tax Basis for any
          adverse tax consequences to Lessor or such Tax Indemnitee of such
          interest-free advance. Upon the final determination of any contest
          pursuant to this Section 5.9 in respect of any Taxes for which Lessee
          shall have made an advance to Lessor or a Tax Indemnitee in accordance
          with the immediately preceding sentence, the amount of Lessee's
          obligation shall be determined as if such advance had not been made;
          any indemnity obligation of Lessee to Lessor or a Tax Indemnitee under
          this Section 5.9 and Lessor's or such Tax Indemnitee's obligation to
          repay the advance will be satisfied first by setoff against each
          other, and any difference owing by either party shall be paid within
          ten days after such final determination.


                                     - 11 -
<PAGE>

     (b)  If Lessor or any Tax Indemnitee obtains a refund or reimbursement of
          all or any part of any Taxes for which a full indemnity was paid by
          Lessee, Lessor shall and Lessor shall cause such Tax Indemnitee to pay
          Lessee the amount of such refund or reimbursement, reduced by any
          Taxes imposed on Lessor or such Tax Indemnitee on receipt or accrual
          of such refund or reimbursement and increased by any Taxes saved by
          Lessor or such Tax Indemnitee by reason of the deductibility of such
          payment by Lessor or such Tax Indemnitee. If, in addition to such
          refund or reimbursement, Lessor or such Tax Indemnitee receives an
          amount of interest on such refund or reimbursement or a recovery of
          costs or attorney's fees with respect thereto that were paid by
          Lessee, Lessor or such Tax Indemnitee shall pay to Lessee the portion
          of such interest or recovered costs or attorney's fees which is fairly
          attributable to such refund, reduced by any Taxes imposed by Lessor or
          such Tax Indemnitee on receipt or accrual of such interest and
          increased by any Taxes saved by reason of the deductibility of such
          payment by Lessor or such Tax Indemnitee. Neither Lessor nor the Tax
          Indemnitee shall be required to make any payment to Lessee pursuant to
          this Section 5.9 if, and for so long as, a Default shall have occurred
          and be continuing.

     (c)  Lessor or a Tax Indemnitee in its sole discretion (by written notice
          to Lessee) may waive its rights to indemnification pursuant to Section
          5.7 with respect to any claim for any Tax and may refrain from
          contesting or continuing the contest of such claim, in which event
          Lessee shall have no obligation to indemnify Lessor for the Taxes that
          are the subject of such claim. If Lessor agrees to a settlement of any
          contest conducted pursuant to this Section 5.9 without the prior
          written consent of Lessee, which consent shall not be unreasonably
          withheld, then Lessor shall be deemed to have waived its rights to the
          indemnification provided for in Section 5.7 with respect to the Tax
          liability accepted in such settlement or with respect to which
          Lessee's ability to avoid or minimize, directly or by instruction to
          the Lessor or such Tax Indemnitee regarding how to avoid or minimize,
          Taxes has been materially impaired as a result of failure of the
          Lessor or such Tax Indemnitee to so contest or continue to contest.

     (d)  Information:

          (i)  If Lessee is required by any applicable Law, or by any third
               party, to deliver any report or return in connection with any
               Taxes for which Lessee would be obligated to indemnify Lessor or
               any other Tax Indemnitee under the Lease, Lessee will complete
               the same and, on request, supply a copy of the report or return
               to Lessor.

          (ii) If any report, return or statement is required to be made by
               Lessor or any other Tax Indemnitee with respect to any Tax for
               which there is an indemnity obligation of Lessee under the Lease,
               and Lessee knows of, or reasonably should

                                     - 12 -
<PAGE>

               have known of, such return, report or statement, Lessee will
               promptly notify Lessor of the requirement and:

               (y)  if permitted by applicable Law, make and timely file such
                    report, return or statement (except for any report, return
                    or statement that Lessor has notified Lessee that Lessor or
                    any other Tax Indemnitee intends to prepare and file),
                    prepare such return in such manner as will show Lessor as
                    lessor of the Aircraft and the ownership of the Aircraft in
                    Lessor if required or appropriate, and provide Lessor upon
                    request a copy of each such report, return or statement
                    filed by Lessee, or

               (z)  if Lessee is not permitted by applicable Law to file any
                    such report, return or statement, Lessee will prepare and
                    deliver to Lessor a proposed form of such report, return or
                    statement within a reasonable time prior to the time such
                    report, return or statement is to be filed.

          (iii) Lessee will provide such information and documents as Lessor may
               reasonably request to enable Lessor or any other Tax Indemnitee
               to comply with its tax filing, audit and litigation obligations.
               Lessor or any other Tax Indemnitee will provide such information
               or documents, at Lessee's expense, that Lessee does not otherwise
               have as Lessee may reasonably request and which are necessary to
               enable Lessee to comply with its obligations under the Lease
               (including Sections 5.6 and 5.7 of the CTA and Schedule B of the
               Aircraft Lease Agreement) or to minimize Taxes that are the
               subject of any filing, audit, or contest under this Section 5.9.

5.10 Indemnity Payments - After-Tax Basis

     The amount of any payment made under Section 5.7 (TAX INDEMNITY) (including
     Section 5.7(d)), Section 5.21 (EXPENSES) or Section 10 (INDEMNITY) to or
     for the benefit of any Indemnitee, shall include such amount as may be
     necessary to hold such Indemnitee harmless on an After-Tax Basis from all
     Taxes required to be paid by such Indemnitee with respect to such payment
     or indemnity (including any payments pursuant to this Section 5.10.

5.11 Lessor Obligations Following Expiry Date

     Within 91 days (or such shorter period after the Expiry Date to which
     Lessor may agree after Lessee demonstrates to Lessor's reasonable
     satisfaction that Lessee has a net worth, determined in accordance with
     GAAP, of not less than Five Million Dollars ($5,000,000.00) as of the
     Expiry Date) after:


                                     - 13 -
<PAGE>

     (a)  redelivery of the Aircraft to Lessor in accordance with and in the
          condition required by the Lease; or

     (b)  payment to Lessor of the Agreed Value following an Event of Loss after
          the Delivery Date;

     and in each case so long as all amounts which may then be due and payable
     under the Lease and the Other Agreements shall have been paid in full and
     (no other Default has occurred and is continuing:

          (i)  Lessor will pay to Lessee the balance of the Deposit (if any);

          (ii) Lessor will pay to Lessee the amount of any Rent received in
               respect of any period falling after the date of redelivery of the
               Aircraft or payment of the Agreed Value, as the case may be; and

          (iii) Lessor will return to Lessee or cancel any Letter of Credit.

5.12 Net Lease

     The Lease is a net lease. The Lessee's obligation to pay Rent and to
     perform all of its other obligations under the Lease is absolute and
     unconditional no matter what happens and no matter how fundamental or
     unforeseen the event, including any of the following: (a) any right of
     set-off, counterclaim, recoupment, defense or other right which either
     party to the Lease may have against the other (including any right of
     reimbursement) or which Lessee may have against the Manufacturer, any
     manufacturer or seller of or any Person providing services with respect to
     the Aircraft, any Engine or any Part or any other Person, for any reason
     whatsoever; (b) any unavailability of the Aircraft for any reason,
     including a requisition of the Aircraft or any prohibition or interruption
     of or interference with or other restriction against Lessee's use,
     operation or possession of the Aircraft (whether or not the same would, but
     for this provision, result in the termination of the Lease by operation of
     law); (c) any lack or invalidity of title or any other defect in title,
     airworthiness, merchantability, fitness for any purpose, condition, design,
     or operation of any kind or nature of the Aircraft for any particular use
     or trade, or for registration or documentation under the Laws of any
     relevant jurisdiction, or any Event of Loss in respect of or any damage to
     the Aircraft; (d) any insolvency, bankruptcy, reorganization, arrangement,
     readjustment of debt, dissolution, liquidation or similar proceedings by or
     against Lessor, Lessee or any other Person; (e) any invalidity or
     unenforceability or lack of due authorization of, or other defect in, the
     Lease; (f) any Security Interests or Taxes; and/or (g) any other cause or
     circumstance which but for this provision would or might otherwise have the
     effect of terminating or in any way affecting any obligation of Lessee
     under the Lease. Lessee acknowledges and agrees that it has used its own
     judgement in selecting the Aircraft, and has not relied on Lessor or

                                     - 14 -
<PAGE>


     on any information supplied by Lessor, that Lessor is not a manufacturer of
     or dealer in aircraft and that Lessor has all of the rights and benefits of
     a lessor under a lease to which Section 2A-407 of the UCC applies as
     provided in such Section 2A-407.

     Except as expressly set forth elsewhere in the Lease, Lessee hereby waives,
     to the extent permitted by applicable Law, any and all right which it may
     now have or which at any time hereafter may be conferred upon it, by
     statute or otherwise, to terminate, abate, cancel, quit, reduce, defer,
     suspend or surrender the Lease or the Aircraft or any obligation imposed
     upon Lessee under the Lease (including payment of Rent or Supplemental
     Rent).

     Each payment of Rent or Supplemental Rent made by Lessee shall be final.
     Lessee will not seek to recover all or any part of any payment of Rent or
     Supplemental Rent for any reason whatsoever except manifest error.

     If for any reason whatsoever the Lease shall be terminated in whole or in
     part by operation of Law, except as specifically provided in the Lease,
     Lessee waives all rights (if any) to any termination or diminution in its
     Rent or Supplemental Rent obligations hereunder and-nonetheless agrees to
     pay to Lessor, an amount equal to each Rent and Supplemental Rent payment
     at the time such payments would have become due and payable in accordance
     with the terms thereof had the Lease not been terminated in whole or in
     part and so long as such payments are made and all other terms and
     conditions hereof are complied with by Lessee, Lessor and Lessee will deem
     the Lease to remain in full force and effect and Lessee shall continue in
     possession of the Aircraft under the terms and conditions of the Lease.

     Nothing in this Section 5.12 will be construed to limit Lessee's night to
     institute separate legal proceedings against Lessor in the event of
     Lessor's breach of the Lease as and to the extent permitted by Sections 7.1
     and 16.3 of this CTA, or to limit Lessee's rights and remedies against any
     other Person.

5.13 Further Provisions regarding Deposit

     (a)  If, under the Lease, Lessee is required to pay a Deposit, Lessee
          hereby grants a security interest in the Deposit to Lessor and the
          remaining provisions of this Section shall apply. Lessee agrees that
          Lessor shall be entitled to commingle the Deposit with Lessor's
          general or other funds, Lessor will have no obligation to pay any
          interest thereon and Lessor will not hold any such funds as agent or
          in trust for Lessee or in any similar fiduciary capacity. In this
          regard, Lessee acknowledges and agrees that it is not located in the
          State of New York within the meaning of Section 7-101 1-c. (b) of the
          New York General Obligations Law and, therefore, the requirements of
          Section 7-101 of the New York General Obligations Law to the effect
          that Lessor hold the Deposit in a separate, interest bearing account
          do not apply.


                                     - 15 -
<PAGE>

     (b)  If any Event of Default or any Default under clause (g) of Schedule 9
          shall have occurred and be continuing, in addition to all rights and
          remedies accorded to Lessor elsewhere in the Lease or under Law in
          respect of the Deposit, Lessor may immediately or at any time
          thereafter, without prior notice to Lessee, apply all or part of the
          Deposit in or towards the payment or discharge of any matured
          obligation owed by Lessee or any affiliate or associate of Lessee
          under the Lease or the Other Agreements, in such order as Lessor sees
          fit, and/or exercise any of the rights of set-off described in Section
          5.20 against all or part of the Deposit.

     (c)  If Lessor exercises the rights described in Section 5.13(b) above,
          Lessee shall, following a demand in writing from Lessor, immediately
          restore the Deposit to the level at which it stood immediately prior
          to such exercise.

5.14 Letter of Credit

     (a)  If, under the Lease, Lessee is required or elects to provide Lessor
          with a Letter of Credit, the provisions of this Section shall apply.
          Any Letter of Credit provided by Lessee to Lessor will be issued and
          payable by a Pre-Approved Bank or another bank acceptable to Lessor in
          its sole and absolute discretion and in substantially the form of
          Schedule 13, or in another form and substance acceptable to Lessor in
          its sole and absolute discretion, and, if not issued by a Pre-Approved
          Bank or by the New York branch of a major international bank
          acceptable to Lessor in its sole and absolute discretion from time to
          time, will be confirmed by and payable at the New York branch of a
          major international bank acceptable to Lessor in its sole and absolute
          discretion from time to time, and will be issued as security for all
          payment obligations of Lessee or any its Affiliates under the Lease
          and each Other Agreement (including any and all Losses suffered or
          incurred by Lessor or any of its Affiliates in respect of which Lessee
          or any if its Affiliates is obligated under the Lease or each Other
          Agreement), which shall remain in full force and effect until the
          Required LC Expiry Date and may be drawn down by Lessor upon demand at
          any time or times prior to the Required LC Expiry Date following (i)
          the occurrence of an Event of Default or a Default under clause (g) of
          Schedule 9, or (ii) the receipt by Lessor of notice of non-renewal of
          the Letter of Credit under Section 5.14(b) below.

     (b)  The Letter of Credit may have a validity period or periods ending
          prior to the Required LC Expiry Date, provided that (i) the Letter of
          Credit shall be renewed automatically, without further act or deed by
          any party, until such time as Lessor receives notice of non-renewal of
          the Letter Credit, (ii) notice of non-renewal of the Letter of Credit
          shall be provided to Lessor no less than 30 Business Days prior to its
          then scheduled expiry date, (iii) Lessor shall be entitled to draw the
          full amount of the Letter of Credit immediately in


                                     - 16 -
<PAGE>

          the event that Lessor receives any notice of non-renewal of the Letter
          of Credit; and (iv) a Letter of Credit shall remain in force at all
          times up to the Required LC Expiry Date.

     (c)  If at any time during the Term, the current issuing or confirming bank
          for the Letter of Credit ceases to meet the requirements set forth in
          the definition of Pre-Approved Bank, Lessee shall within five (5)
          Business Days after the date of notice from Lessor of such decrease in
          credit rating, cause the Letter of Credit to be replaced by a Letter
          of Credit issued by another bank that meets the definition of a
          Pre-Approved Bank and (if requested by Lessor in its sole and absolute
          discretion) that such replacement Letter of Credit is confirmed by an
          another bank that meets the requirement of a Pre-Approved Bank.

     (d)  If Lessor makes a drawing under the Letter of Credit, Lessee shall,
          following a demand in writing by Lessor, immediately cause the maximum
          amount available for drawing under the Letter of Credit to be restored
          to the level at which it stood immediately prior to such drawing.

5.15 Guarantee

     If, under the Aircraft Lease Agreement, Lessee is required to provide
     Lessor with a Guarantee, Lessee will on or prior to the Delivery Date
     provide Lessor with the Guarantee.

5.16 Late Payment Interest

     If Lessee fails to pay any amount payable under the Lease on the due date,
     Lessee will pay on demand from time to time to Lessor interest (both before
     and after judgement) on that amount, from the due date to the date of
     payment in full by Lessee to Lessor, at the Interest Rate. All such
     interest will be compounded monthly and calculated on the basis of the
     actual number of days elapsed in the month, assuming a 30 day month and a
     360 day year.

5.17 Currency

     (a)  Except for Losses and expenses suffered or incurred by Lessor, which
          shall be payable by Lessee to Lessor in the currency and in the amount
          in which such Loss is suffered or incurred, all amounts payable to
          Lessor under the Lease shall be payable in Dollars in New York and
          payment in Dollars in New York is of the essence. Lessee must
          indemnify Lessor against any Loss Lessor suffers if:

          (i)  Lessor receives an amount relating to Lessee's obligations in a
               different currency from that in which payments should be made
               under the Lease; or

          (ii) Lessee pays a judgement or claim in a different currency from
               that in which payments should be made under the Lease.


                                     - 17 -
<PAGE>

     (b)  Lessee relinquishes any right to pay any amount under the Lease in a
          currency which is different from the currency provided in the Lease.
          Notwithstanding any such receipt, judgement or claim described in
          Section 5.17(a), Lessee shall have a separate obligation to pay, and
          Lessor shall have a separate claim against Lessee for, amounts to be
          indemnified by Lessee under this Section 5.17.

5.18 Certificates

     Except where expressly provided in the Lease, any certificate or
     determination by Lessor as to any rate of interest or as to any other
     amount payable under the Lease will, in the absence of manifest error, be
     presumed to be correct.

5.19 Appropriation

     If any sum paid or recovered by Lessor in respect of the liabilities of
     Lessee under the Lease is less than the amount then due, Lessor may apply
     that sum to amounts due under the Lease in such proportions and order and
     generally in such manner as Lessor may determine in its sole discretion.

5.20 Set-off

     (a)  In this sub-clause, references to Lessee will also include Lessee
          Affiliates.

     (b)  Lessor may, without notice, set-off any obligations owed by Lessee
          under the Lease or under the Other Agreements against any obligation
          Lessor or any of its Affiliates owes Lessee under the Lease or under
          the Other Agreements, regardless of the place of payment or currency.
          Promptly after making any such set-off, Lessor shall notify Lessee
          thereof, including in such notice such information about the set-off
          as may be reasonably required to enable a reasonable person to
          identify the claims so set off and to verify the calculation of the
          set-off, but neither failure to give such notice nor any alleged
          defect in such notice shall affect the effectiveness of any such
          set-off.

     If the obligations are in different currencies, Lessor may convert either
     obligation at the market rate of exchange available in New York. If the
     amount of an obligation is unknown, Lessor may estimate the amount. Any
     difference between the estimated obligation and the actual obligation will
     be paid by either Lessor or Lessee, as appropriate, when the amount becomes
     known.

5.21 Expenses

     Lessee will pay to Lessor on demand all reasonable expenses (including all
     legal fees and expenses and the fees and expenses of other professional
     advisers) that the Lessor suffers or incurs:


                                     - 18 -
<PAGE>

     (a)  to deal with any amendments, extensions, consents or waivers that are
          required in connection with the Lease (but excluding any expenses
          incurred by Lessor or Owner in connection with any change in the
          ownership or financing of the Aircraft or a change in the Lease that
          is otherwise requested by Lessor or Owner, and in each case unrelated
          to any consent, waiver or amendment requested by Lessee or any other
          act or omission of Lessee) or to deal with any replacement of any
          Engine or Part (except for the replacement of an Engine by or at the
          request of Lessor prior to the Delivery Date);

     (b)  for FAA counsel and otherwise to act upon any advice and obtain
          assistance to perfect the Lease, in the State of Registry and the
          State of Incorporation (and any other appropriate place); and

     (c)  in contemplation of, or otherwise in connection with, the enforcement
          or preservation of any of Lessor's rights under the Lease (including
          under Section 10) or in respect of the repossession of any Aircraft.

     All amounts payable pursuant to this Section 5.21 will be paid in the
     currency in which they are incurred by Lessor.

6.   MANUFACTURER'S WARRANTIES

     (a)  So long as no Default has occurred which is continuing, Lessor shall
          make available to Lessee during the Term the benefit of all
          manufacturer's warranties in relation to the repair or remedy of any
          defect in the Aircraft (including compensation for loss of use of the
          Aircraft) to the extent that it is permitted to do so. In furtherance
          of the foregoing, Lessor shall take such actions, at Lessee's cost and
          expense, as Lessee may reasonably request to make such warranties
          available to Lessee.

     (b)  If a Default has occurred and is continuing Lessor may immediately
          recover from Lessee the proceeds of any warranty claims previously
          paid to Lessee to the extent that such claims relate to any defect in
          the Aircraft not fully and completely rectified by Lessee before such
          Default and Lessor may:

          (i)  retain for its own account any such proceeds previously paid to
               Lessor which would have been remitted to Lessee under this
               Section 6 in the absence of such Default; and

          (ii) cause any proceeds of any pending claims to be paid to Lessor,
               rather than Lessee.


                                     - 19 -
<PAGE>

     (c)  Lessee will take all steps at the end of the Term as may be reasonably
          required to ensure that the benefit of any warranties relating to the
          Aircraft which have not expired is vested in Lessor.

7.   LESSOR'S COVENANTS

7.1  Quiet Enjoyment

     So long as no Default has occurred and is continuing, Lessor will not
     interfere with Lessee's right to quiet use and possession of the Aircraft
     during the Term. Exercise by Lessor of its rights of inspection or other
     rights provided to it under the Lease in the absence of a Default shall
     not be considered to be a breach of the foregoing covenant. Lessee agrees
     that its only right with respect to a default by Lessor under the Lease is
     to make a claim against Lessor for actual damages resulting directly
     therefrom and in any event subject to Section 16.3 hereof, and Lessee
     hereby waives any and all other rights or remedies it may have under
     Section 2A-211 of the UCC or Sections 2A-508 through 2A-522 of the UCC or
     otherwise.

7.2  Maintenance Contributions

     If, under the Aircraft Lease Agreement for the Aircraft, Lessee is required
     to pay Supplemental Rent, then provided no Default has occurred and is
     continuing, Lessor will pay such amounts, if any, as may be specified in
     the Aircraft Lease Agreement to Lessee by way of contribution to the cost
     of maintenance of the Aircraft, which payments, if any, shall be made in
     the amounts and in the manner specified in the Aircraft Lease Agreement.

8.   LESSEE'S COVENANTS

8.1  Duration: Lessee shall perform and comply, or cause its Permitted
     Sub-Lessee or maintenance contractor to perform and comply, with its
     undertakings and covenants in the Lease at all times during the Term. All
     such undertakings and covenants shall, except where expressly otherwise
     stated, be performed at the expense of Lessee.

8.2  Information

     Lessee will:

     (a)  provide Lessor with a Technical Report for the Aircraft within 15 days
          after the end of each calendar month throughout the Term and otherwise
          provide Lessor with a Technical Report for the Aircraft within thirty
          (30) days after Lessor's request therefor;

     (b)  provide Lessor with the Financial Information;


                                     - 20 -
<PAGE>

     (c)  (i) notify Lessor of any Event of Loss and of any event which is
          likely to result in an insurance claim in excess of the Damage
          Notification Threshold promptly after the occurrence of any such
          event, (ii) consult with Lessor in the course of, and keep Lessor
          fully apprised as to the details of, any negotiations with its
          insurers or insurance brokers (and, in the case of repairable damage,
          with any applicable repair facility) with respect to any insurance
          claim arising out of such event, and (iii) obtain Lessor's prior
          approval before agreeing to any disposition of any insurance claim in
          excess of the Damage Notification Threshold;

     (d)  upon the occurrence of any event which is likely to give rise to an
          insurance claim under any of the Insurances relating to the Aircraft,
          Lessee shall promptly execute and deliver all documents and
          instruments and take all such other action as may reasonably be
          required to initiate and process any such claim under the applicable
          insurance, and in any event, Lessee shall initiate such claim, execute
          such documents or instruments and take such other action promptly
          following a written request by Lessor that Lessee initiate such claim,
          execute such document or instrument or take such other action;

     (e)  provide Lessor, upon request, with evidence that all Taxes and charges
          that are due and payable and were incurred by Lessee in connection
          with the Aircraft, its location and its operations, including those
          invoiced by airports and air traffic control authorities have been
          paid in full (or are being contested in good faith by appropriate
          proceedings in respect of which adequate reserves have been provided
          by Lessee and non-payment of which does not give rise to any risk of
          the Aircraft or any interest therein being sold, forfeited or
          otherwise lost or of criminal liability on the part of Lessor or
          Owner);

     (f)  provide Lessor with such other information concerning the location,
          condition, use and operation of the Aircraft or concerning the
          business or financial affairs of Lessee, as Lessor may from time to
          time reasonably request;

     (g)  [NOT APPLICABLE];

     (h)  [NOT APPLICABLE];

     (i)  notify Lessor promptly as to any material modification to Lessee's
          Maintenance Program (including, without limitation, any change from
          maintenance on a block format to maintenance on a phase-basis);
          provided, however, that Lessee shall not make any modifications to
          Lessee's Maintenance Program which may adversely affect the return
          conditions specified in Part III of Schedule A to the Aircraft Lease
          Agreement without prior consultation with Lessor. For the avoidance of
          doubt, changes to Lessee's Maintenance Program extending or shortening
          times between scheduled overhaul of Parts


                                     - 21 -
<PAGE>

          shall not be deemed to be material modification or to adversely affect
          the return conditions;

8.3  Lawful and Safe Operation

     Lessee will operate the Aircraft for commercial purposes from the Delivery
     Date until the Return Occasion from a base within the State of Registry
     or from such other base outside the State of Registry pursuant to a
     sub-lease or a wet-lease complying with Section 8.4(a), provided, always
     that Lessee must not use or operate the Aircraft or suffer or permit the
     Aircraft to be used or operated:

     (a)  in violation of any applicable Regulations or in a manner causing
          Lessor, Owner, any Financing Party or GECAS to be in violation of (i)
          any applicable Regulations of the United States, (ii) any applicable
          Regulations of any jurisdiction of which Lessee is notified in
          writing by Lessor as a jurisdiction applicable to Lessor, Owner,
          GECAS or any Financing Party, or (iii) any applicable Regulations of
          any other jurisdiction into which or over which the Aircraft is
          operated; provided, however, that nothing in Section 8.3(a)(ii) shall
          be deemed to require Lessee to comply with any Regulations of any
          jurisdiction other than the United States which pertain to the
          maintenance or modification of aircraft.

     (b)  for any purpose for which the Aircraft was not designed or which is
          illegal;

     (c)  to carry cargo which could reasonably be expected to damage the
          Aircraft;

     (d)  in any circumstances or place where the Aircraft is not covered by the
          Insurances; or

     (e)  for purposes of training, qualifying or re-confirming the status of
          cockpit personnel except for the benefit of Lessee's or a Permitted
          Sub-Lessee's cockpit personnel, and then only if the use of the
          Aircraft for such purpose is not disproportionate to the use for such
          purpose of other aircraft of the same type operated by Lessee or such
          Permitted Sub-Lessee, as the case may be.

8.4  Subleasing

     (a)  AT NO TIME PRIOR TO THE RETURN OCCASION WELL LESSEE SUB-LEASE,
          WET-LEASE OR OTHERWISE GIVE POSSESSION OR CONTROL OF THE AIRCRAFT OR
          ANY ENGINE TO, OR OTHERWISE PERMIT THE AIRCRAFT OR ANY ENGINE TO BE IN
          THE POSSESSION OR CONTROL OF, ANY PERSON EXCEPT:


                                     - 22 -
<PAGE>

          (i)  when the prior written consent of Lessor has been obtained, which
               consent shall not be unreasonably withheld (it being expressly
               acknowledged by Lessor and Lessee that the withholding of
               Lessor's consent in respect of any sub-lease or wet lease shall
               not be deemed to be unreasonable if the terms of such sub-lease
               do not comply with the conditions set out in Section 8.4(b) or
               the terms of such wet lease do not comply with Section 8.4(c), as
               the case may be); or

          (ii) where the Aircraft or Engine is delivered to a manufacturer or
               maintenance facility for work to be done on it as required or
               permitted under the Lease; or

          (iii) to a sub-lessee of the Aircraft to which Lessor consents in
               writing (a "PERMITTED SUB-LESSEE"), pursuant to a sub-lease to
               which Lessor consents in (a "PERMITTED SUB-LEASE"), which
               complies with the conditions set out in Section 8.4(b), and
               provided that no Default shall have occurred and be continuing at
               the commencement of such sub-lease;

          (iv) on a wet-lease which complies with Section 8.4(c); or (v) with
               respect to an Engine, as permitted under Section 8.11.

     (b)  If Lessor grants its consent to a proposed sub-lessee and a proposed
          sub-lease, in addition to any conditions required by Lessor as part of
          any such consent of Lessor, each of the following conditions shall be
          required to be satisfied in relation to any Permitted Sub Lease prior
          to any sub-leasing pursuant to this Section:

          (i)  NOTIFICATION: at least 30 days prior to entering into any
               Permitted Sub-Lease, Lessee shall give Lessor written notice,
               specifying the identity of the Permitted Sub-Lessee, the term of
               the Permitted Sub-Lease, the delivery date under the Permitted
               Sub-Lease and the habitual base of the Permitted Sub-Lessee;

          (ii) TERM: the term of the Permitted Sub-Lease shall not be capable of
               extending beyond one month (or such shorter period as Lessor may
               agree (which agreement shall not be unreasonably withheld) in
               giving its consent to such Permitted Sub-Lease) before the
               Scheduled Expiry Date;

          (iii) FORM: a Permitted Sub-Lease shall:

               (aa) not contain provisions inconsistent with the provisions of
                    the Lease (but may impose additional or more stringent
                    obligations on any Permitted Sub-Lessee than are imposed on
                    Lessee under the Lease);


                                     - 23 -
<PAGE>

               (bb) provide that no further subleases of the Aircraft by such
                    Permitted Sub-Lessee are permitted; and

               (cc) include provisions substantially identical to or having
                    substantially the same effect as Sections 2.1, 5.6, 5.7,
                    5.10, 5.12, 5.16, 5.17, 5.21, 8, 9, 10, 11, 13, 15.1, 15.8
                    and 16 and Schedules 2 (Section 1.1), 7 and 9 of the Lease
                    (but the Permitted Sub-Lease may impose additional or more
                    stringent obligations on any Permitted Sub-Lessee than are
                    imposed on Lessee under the Lease);

          (iv) SUBORDINATION AND ASSIGNMENT: the Permitted Sub-Lease shall
               provide that (aa) the Permitted Sub-Lease is subject and
               subordinate to the Lease in all respects and the rights of the
               Permitted Sub-Lessee under the Permitted Sub-Lease are subject
               and subordinate in all respects to the rights of Lessor under the
               Lease; and (bb) prior to delivery of the Aircraft to the
               Permitted Sub-Lessee (as a condition precedent thereof), the
               Permitted Sub-Lessee shall provide an acknowledgement to Lessor
               and Owner in a form, reasonably satisfactory to Lessor,
               confirming its agreement to this provision and confirming that,
               except to the extent, if any, that it receives a quiet enjoyment
               letter from Lessor pursuant to Section 8.4(b)(v) below, its
               rights to possession of the Aircraft under the Permitted
               Sub-Lease will terminate immediately upon the termination of the
               Lease, and that it will redeliver the Aircraft to Lessor, upon
               notification from Lessor that an Event of Default has occurred
               and that it has, as a result thereof, terminated Lessee's right
               to possession of the Aircraft under the Lease (the "SUBORDINATION
               ACKNOWLEDGEMENT"). The Permitted Sub-Lease shall be assigned, as
               security, to Lessor for Lessee's obligations under the Lease,
               pursuant to an agreement reasonably acceptable to Lessor (the
               "SUB-LEASE ASSIGNMENT") (and, if applicable, Lessor's interest in
               such Sub-Lease Assignment may be reassigned, as security, to
               Owner and/or the Financing Parties' Representative);

          (v)  QUIET ENJOYMENT: the Permitted Sub-Lease shall provide that the
               Permitted Sub-Lessee shall have the right to quiet enjoyment of
               the Aircraft for so long as no Event of Default has occurred
               under the Lease; provided, however, that, upon request by a
               Permitted Sub-Lessee, Lessor shall, and shall cause the Financing
               Parties Representative (if applicable) to, execute and deliver to
               the Permitted Sub-Lessee a letter of quiet enjoyment in respect
               of the Permitted Sub-Lessee's use and possession of the Aircraft
               for so long as no event of default occurs under the Permitted
               Sub-Lease, notwithstanding the occurrence of an Event of Default
               under the Lease, in a form substantially similar to Section 7.1
               hereof if Lessor is satisfied in its sole discretion as to (i)
               the creditworthiness of the Proposed Sub-


                                     - 24 -
<PAGE>


               Lessee at the time of such request, (ii) the sufficiency of the
               rentals and other payment obligations, including indemnities
               under the Permitted Sub-Lease to discharge in full the Rent and
               the indemnity obligations of Lessee under the Lease, (iii) the
               installment frequency of the rent payable under the Permitted
               Sub-Lease, (iv) the acknowledgment of and agreement by the
               Permitted Sub-Lessee to be bound by the provisions of Section 16
               hereof, (v) the acknowledgment by each of the Permitted
               Sub-Lessee and the Lessee that Lessor shall have no greater
               liability to either Permitted Sub-Lessee or the Lessee in respect
               of Lessor's obligations under Section 7.1 hereof or under such
               letter than Lessor would have had under Section 7.1 in the
               absence of the Permitted Sub-Lease, (vi) the form and substance
               of the Subordination Acknowledgment, and (vii) the terms of the
               Permitted Sub-Lease in respect of the matters contemplated by
               this Section 8.4(b);

          (vi) OBLIGATIONS OF LESSEE: Lessee shall remain primarily liable under
               the Lease for the performance and observance of all its
               obligations to the same extent as if no Permitted Sub-Lease had
               been entered into. To the extent that the Permitted Sub-Lessee
               properly performs an obligation under the Permitted Sub-Lease,
               Lessor agrees that such performance shall also be regarded as
               discharging (to such extent) Lessee's corresponding obligation;

          (vii) INSURANCES: all insurance requirements herein shall be complied
               with either by Lessee or by the Permitted Sub-Lessee as if
               references in the insurance provisions of the Lease to "Lessee"
               were references to "the Permitted Sub-Lessee", and Lessee shall
               provide or cause the Permitted Sub-Lessee to provide the
               insurance certificate and brokers' letter of undertaking referred
               to in Section 9.3(c)(ii) at least five (5) Business Days prior to
               the commencement of the Permitted Sub-Lease;

          (viii) REGISTRATION: there shall be no change in the registration of
               the Aircraft from its State of Registry;

          (ix) REPOSSESSION OR POLITICAL RISK INSURANCE: if reasonably required
               by Lessor or if required of Lessor by Owner or the Financing
               Parties' Representative, repossession or political risk
               insurance, as the case may be, shall be obtained by Lessor at
               Lessee's cost, provided that repossession or political risk
               insurance , as the case may be, will not be required if the
               Permitted Sub-Lessee meets the requirements of Sections 8.7(iv)
               and (v). If repossession or political risk insurance is required,
               the Permitted Sub-Lease must provide that, if any such
               repossession or political risk, as the case may be, insurance
               cannot be obtained or renewed, a termination event will occur
               upon notice by Lessor to Lessee or the


                                     - 25 -
<PAGE>

               Permitted Sub-Lessee of an inability to procure repossession or
               political risk, as the case may be, insurance;

          (x)  LEGAL OPINIONS: as a condition precedent to the effectiveness of
               the Permitted Sub-Lease, Lessee shall provide to Lessor the
               following legal opinions (at Lessee's or Permitted Sub-Lessee's
               expense) addressed to Lessor, Owner and the Financing Parties'
               Representative from counsel reasonably acceptable to Lessor;

               (aa) a legal opinion in relation to the Permitted Sub-Lease in
                    form and substance reasonably satisfactory to, and
                    containing such other matters set out in Schedule 8
                    requested by, Lessor and confirming further that each of the
                    Subordination Acknowledgement, the Permitted Sub-Lease and
                    the Sub-Lease Assignment is valid, binding and (except as
                    limited by any equitable principles and applicable
                    bankruptcy, insolvency, reorganization, moratorium or
                    similar laws affecting creditors' or lessors' rights
                    generally) enforceable against Permitted Sub-Lessee and, in
                    the case of the Sub-Lease Assignment, properly perfected as
                    against Lessee;

               (bb) if the Habitual Base is not in the United States, one or
                    more legal opinions in form and from counsel reasonably
                    acceptable to Lessor to the effect, inter alia, that
                    Lessor's, Owner's and Financing Parties' Representative's
                    interests in the Aircraft will be recognized under the laws
                    of such country or countries (it being expressly understood
                    that there shall be no requirement that any single legal
                    point or issue be covered in opinions from more than one
                    counsel except to the extent, if any, that the laws of more
                    than one jurisdiction may be at issue); and

               (cc) such opinions as may be required under the Financing
                    Documents.

               Final forms of the foregoing opinion or opinions (x) shall be
               forwarded promptly to Lessor at least five Business Days prior to
               the effective date of the Permitted Sub-Lease, and (y) may, if
               different opinions are required hereunder, be made by a single
               counsel qualified to render opinions in each such country;

          (xi) FILINGS: Lessee shall co-operate with Lessor (at no cost to
               Lessor) in connection with the execution and filing of any
               documents reasonably required by Lessor to be executed and filed
               from time to time with any registry or authority in the Habitual
               Base, the State of Registration and State of Incorporation (of
               each of Lessee and the Permitted Sub-Lessee) in order to protect
               the interests of Lessor, Owner and Financing Parties'
               Representative in and to the Aircraft, the Lease or


                                     - 26 -
<PAGE>

               the Permitted Sub-Lease and/or to ensure the validity,
               enforcement or priority thereof;

         (xii) EXPENSES: Lessee will pay to Lessor on demand all reasonable out
               of pocket expenses (including legal, survey and other costs) and
               Taxes payable or incurred by Lessor, Owner or Financing Parties'
               Representative in connection with the review and approval of the
               documentation required pursuant to this Section or otherwise
               incurred in connection with any requested sub-lease or the
               sub-leasing of the Aircraft thereunder, and will pay any Sublease
               Fee specified in the Aircraft Lease Agreement for such Aircraft;

        (xiii) PERMITTED SUB-LEASE: Promptly after its execution, Lessee shall
               provide Lessor with a copy of the signed Permitted Sub-Lease;

         (xiv) ACKNOWLEDGEMENT BY GUARANTOR: If a Guarantee is required under
               the Aircraft Lease Agreement, Lessee shall provide to Lessor at
               least five Business Days prior to the effective date of the
               Permitted Sub-Lease an acknowledgement by Guarantor of the
               Permitted Sub-Lease and confirmation that the Guarantee will
               remain in full force and effect during the term of such Permitted
               Sub-Lease;

          (xv) FINANCING RESTRICTIONS AND REQUIREMENTS: If Lessee requests
               Lessor's consent to a sub-lease, it will not be unreasonable for
               Lessor to decline its consent to such sub-lease, if such
               sub-lease would result in a breach by Lessor of the restrictions
               contained in or give rise to any liability or adversely affect
               Lessor's rights or obligations or otherwise result in a detriment
               under any of the Financing Documents; and

         (xvi) MAINTENANCE PROGRAM: Lessee shall, or shall cause the Permitted
               Sub-Lessee to, provide Lessor with such information as Lessor may
               reasonably request with respect to the Maintenance Program of the
               Permitted Sub-Lessee, and Lessor shall be reasonably satisfied
               with the Maintenance Program of the Permitted Sub-Lessee.

     (c)  Notwithstanding Section 8.4 (a), Lessee shall be permitted to wet
          lease the Aircraft provided such wet lease constitutes an arrangement
          whereby Lessee agrees to furnish the Aircraft to a third party
          pursuant to which the Aircraft (i) shall be operated solely by regular
          employees of Lessee possessing all current certificates and licenses
          that are required by applicable Regulations, including by the State of
          Registry, and shall remain in the operational control and possession
          of Lessee, (ii) shall be subject to insurance coverage as provided for
          in the Lease, (iii) shall be used and operated in accordance with the
          Lease and shall be maintained or caused to be maintained by Lessee in
          accordance


                                     - 27 -
<PAGE>

          with Lessee's Maintenance Program and Lessee's normal maintenance
          practices, (iv) shall not be subject to any change in its State of
          Registry, and (v) shall not be operated out of a Habitual Base located
          outside the United States; and provided always that, such arrangement
          is expressly subordinated to the Lease and the rights of Lessor and
          Owner thereunder and to the Aircraft, and Lessee provides Lessor with
          all opinions, certificates and other documents requested by Lessor
          which are required to be provided, and takes all other action
          requested by Lessor which is required of Lessee or Lessor under any
          Financing Document in connection with such a wet lease.

8.5  Inspection

     (a)  Lessee will permit Lessor's, Owner's and the Financing Parties'
          Representative representatives to inspect the Aircraft at any time.
          Unless a Default has occurred and is continuing, any such Person will
          give Lessee reasonable notice of inspection and will ensure that it
          does not result in a disruption to the scheduled operation or
          maintenance of the Aircraft. Lessee shall comply with the reasonable
          requests of Lessor's, Owner's and the Financing Parties'
          Representative representatives during the course of an inspection,
          including any request to travel on the flight deck of the Aircraft as
          an observer, subject, to any applicable Regulations and insurance
          requirements.

     (b)  The cost of conducting an inspection shall be borne by Lessor, Owner
          or the Financing Parties, as the case may be, unless, as a result of
          that inspection, Lessee is found to be in material default of its
          obligations under the Lease in which case the cost shall be borne by
          Lessee.

     (c)  No liability or obligation will be incurred by Lessor, Owner,
          Financing Parties' Representative or the Financing Parties, as the
          case may be, by reason of non-exercise by any of them of the
          inspection rights referred to in this Section.

8.6  Ownership; Property Interests; Related Matters

     (a)  Lessee will:

          (i)  fix and maintain Nameplates containing the Nameplate Inscription
               in a prominent position in the cockpit or cabin of the Aircraft
               and on each Engine;

          (ii) in any circumstance where such interests are relevant, take all
               reasonable steps to make sure that all relevant Persons know
               about the interests of Owner, Lessor and Financing Parties
               Representative in the Aircraft; and

         (iii) pay all navigation charges, air traffic control charges, landing
               charges or other amounts of any nature imposed by any Government
               Entity with respect to


                                     - 28 -
<PAGE>

               Lessee, the Aircraft and/or the Lease except to the extent that,
               in the reasonable opinion of Lessor, such payment is being
               contested in good faith by appropriate proceedings in respect of
               which adequate reserves have been provided by Lessee and
               non-payment of which does not give rise to any material
               likelihood of the Aircraft or any interest therein being sold,
               forfeited or otherwise lost or of criminal liability on the part
               of Lessor or Owner.

     (b)  Lessee will not:

          (i)  represent that it is the owner of the Aircraft or that it has an
               economic interest (equivlent to ownership) in the Aircraft for
               Tax treatment or other purposes;

          (ii) take any action or fail to take any action, other than action
               required under the Lease (including under Section 7.1). to be
               taken by Lessor, Affiliates of Lessor, Owner or a Financing
               Party, if such action or omission could result in a forfeiture or
               seizure of the Aircraft or otherwise similarly put Owner's and/or
               Lessor's and/or Financing Parties' Representative's rights or
               interests at risk;

          (iii) represent to others that Owner, Lessor or Financing Parties'
               Representative is associated with or responsible for the business
               activities and/or flight operations of Lessee;

          (iv) allow the Aircraft or Owner's, Lessor's or Financing Parties'
               Representative's interest in it or the Lease to become or remain
               subject to any Security Interest (other than a Permitted Lien);
               or

          (v)  allow the name of any Person to be placed on the Aircraft or any
               Engine as a designation that could reasonably be interpreted as a
               claim of ownership or as a Security Interest; provided, that
               Lessee may place thereon, or allow a Permitted Sub-Lessee to
               place thereon, its customary livery, insignia and colors.

8.7  General

               Lessee will:

          (i)  maintain its business as a commercial scheduled airline, will
               preserve its corporate existence (other than as permitted in
               Section 8.7 (vii) below) and will maintain all rights,
               privileges, licenses and franchises material thereto or material
               to performing its obligations under the Lease;

          (ii) not operate, maintain, insure or deal with, or keep records with
               respect to, the Aircraft in a manner which discriminates against
               the Aircraft adversely insofar as


                                     - 29 -
<PAGE>

               Lessor's, Owner's or Financing Parties' interests are concerned,
               when compared with the manner in which Lessee operates,
               maintains, insures or deals with, or keep records with respect
               to, similar aircraft, engines or parts in Lessee's fleet;
               provided, however, in the event that Lessee determines that any
               particular expenditure or modification may not be prudent during
               the last nine months prior to the Scheduled Expiry Date, then
               Lessor and Lessee shall discuss the issue and negotiate in good
               faith to agree on a mutually acceptable solution.

         (iii) not change the location of its chief executive office from that
               described in the heading of the Aircraft Lease Agreement or
               otherwise be located (as defined in Section 9-103(3)(d) of the
               UCC) at any place in the United States other than the location
               described the heading of the Aircraft Lease Agreement, except
               upon 30 days prior written notice thereof to Lessor;

          (iv) remain a Certificated Air Carrier and maintain its status so as
               to fall within the purview of Section 1110 of Title 11 of the
               U.S.C. or any analogous statute;

          (v)  remain a "citizen of the United States" as defined in Section
               40102(a)(15)(c) of Title 49 of the U.S.C.;

          (vi) not liquidate or dissolve; and

         (vii) not consolidate with or merge into or with any other corporation
               or other Person, and not convey, transfer, lease or otherwise
               dispose of all or substantially all of its property and other
               assets to, or acquire all or any substantial part of the property
               or other assets or capital stock of (if such acquisition is
               analogous in either purpose or effect to a consolidation or
               merger), any corporation or other Person, unless Lessee provides
               Lessor with written notice of such transaction promptly following
               Lessee's execution of a binding agreement or commitment to enter
               into any such transaction, which notice shall in any event be
               provided no later than 30 days prior to the effectiveness or
               consummation of any such transaction and which notice shall
               describe such transaction in reasonable detail and contain or be
               accompanied by evidence reasonably satisfactory to Lessor
               demonstrating that such transaction will comply with the
               following requirements of this Section and unless:

               (x)  such transaction shall not have any material adverse effect
                    on the rights of Lessor, Owner or the Financing Parties'
                    Representative under or in respect of the Lease or the
                    Aircraft; and all applicable requirements of the Financing
                    Documents shall have been complied with in connection
                    therewith;


                                     - 30 -
<PAGE>

               (y)  the Person formed by or surviving such consolidation or
                    merger or the Person which acquires by conveyance, transfer,
                    lease or other disposition all or substantially all of such
                    property and other assets or stock (the "SUCCESSOR ENTITY"):
                    (A) shall be a corporation organized and existing under the
                    laws of the United States or any State thereof or the
                    District of Columbia; (B) immediately after giving effect to
                    such transaction, shall be Lessee or shall have acquired or
                    succeeded to all or substantially all of the property and
                    other assets of Lessee (if such assets are being
                    transferred) as an entirety, and shall have a tangible net
                    worth (determined in accordance with GAAP) of not less than
                    Lessee's tangible net worth (determined in accordance with
                    GAAP) immediately prior to such transaction; (C) shall be a
                    "citizen of the United States" of America as defined in
                    Section 40102(a)(15)(c) of Title 49 of the U.S.C. and a
                    Certificated Air Carrier; and (D) shall execute and deliver
                    to Lessor such recordations and filings with any
                    Governmental Entity and such other documents as Lessor
                    determines shall be reasonably necessary or advisable to
                    evidence, or in connection with, such consolidation,
                    merger, sale, lease, transfer or other disposition and an
                    agreement, in form and substance reasonably satisfactory to
                    Lessor which is a legal, valid, binding and enforceable
                    assumption by such Successor Entity of the due and punctual
                    performance and observance of each covenant and condition of
                    the Lease and the other related documents to which Lessee is
                    a party, and an officer's certificate to such effect and to
                    the effect that the other requirements of this Section have
                    been satisfied, and a legal opinion from counsel to such
                    effect and otherwise in such form and substance reasonably
                    satisfactory to Lessor; and

               (z)  no Default shall have occurred and be continuing or shall
                    occur as a result thereof.

8.8  Records

     Lessee will keep all Aircraft Documents and Records:

     (a)  in English;

     (b)  according to good United States airline practice; and

     (c)  so they meet the requirements of applicable Regulations (including FAR
          91.417) and Lessee's Maintenance Program.


                                     - 31 -
<PAGE>

8.9  Protection

     Lessee will:

     (a)  take all actions requested by Lessor that are within Lessee's control
          to keep the Aircraft registered with the Air Authority in the name of
          Owner and, if applicable, subject to the first-priority Security
          Interest in favor of Financing Parties' Representative; and

     (b)  make any and all filings required to be made with the Air Authority
          registry that are within its control and take all other actions within
          its control that are necessary or advisable to reflect on the Air
          Authority registry any change in the ownership of the Aircraft, or in
          the interests of Lessor, Owner or the Financing Parties'
          Representative in the Lease or the Aircraft, any modification to the
          Aircraft (such as the permanent replacement of any Engine or Part in
          accordance with the Lease) or as a result of any change in applicable
          Regulation. Lessor will bear any costs incurred as a consequence of a
          transfer by Lessor, Owner or the Financing Parties' Representative of
          the interests of Lessor, Owner or the Financing Parties'
          Representative in the Lease or the Aircraft or a change in the
          identity of Lessor, Owner or the Financing Parties' Representative (in
          each case, unrelated to the replacement of any Engine or Part or a
          Default), and Lessee will bear any other costs incurred in complying
          with this Section, including in connection with the replacement of any
          Engine or Part.

8.10 Maintenance and Repair

     Lessee will maintain, overhaul and repair the Aircraft (or arrange for the
     Aircraft to be maintained, overhauled and repaired, through the Maintenance
     Performer), so that:

     (a)  the Aircraft is kept in as good operating condition and repair as the
          condition of the Aircraft as at Delivery and after giving effect to
          any post-Delivery modifications, repairs or maintenance paid for or
          otherwise provided by or on behalf of Lessor, except for ordinary wear
          and tear;

     (b)  the Lessee has a current certificate of airworthiness (issued by the
          Air Authority in the appropriate public transport category) for the
          Aircraft;

     (c)  the Aircraft complies with (i) all applicable Regulations including
          the standard stipulated by FAR Part 121 Subpart L and any other rules
          and regulations of the FAA and, subject to the provisions of
          ss.8.10(d), in at least the same manner and with at least the same
          care, including record keeping, maintenance scheduling, modification
          status and technical condition, as is the case with respect to similar
          aircraft owned or otherwise operated by Lessee and as if Lessee were
          to retain and continue operating the Aircraft in its fleet after


                                     - 32 -
<PAGE>

          the Expiry Date, including all maintenance to the Airframe, any Engine
          or any Part required to maintain all warranties, performance
          guaranties or service life policies that are assigned by Lessor to
          Lessee in full force and effect; and (ii) the requirements of all
          Airworthiness Directives and all service bulletins designated by the
          State of Design or State of Registry as "mandatory," and to be carried
          out before the Return Occasion or the Scheduled Expiry Date, whichever
          is later, or within a period of 180 days after the Return Occasion or
          the Scheduled Expiry Date, whichever is later; and

     (d)  all maintenance is carried out according to Lessee's Maintenance
          Program in at least the same manner and with at least the same care,
          including maintenance scheduling, modification status and technical
          condition, as is the case with respect to similar aircraft owned or
          otherwise operated by Lessee; provided, however, in the event that
          Lessee determines that any particular expenditure or modification may
          not be prudent during the last nine months prior to the Scheduled
          Expiry Date, then Lessor and Lessee shall discuss the issue and
          negotiate in good faith to agree on a mutually acceptable solution.

8.11 Removal of Engines and Parts

     (a)  GENERAL: Lessee must replace, within one hundred and five (105) days
          thereof, any Engine that has suffered an Engine Event of Loss in
          accordance with Section 8.11(b), and any Part which is permanently
          removed from the Aircraft must be replaced in accordance with Section
          8.11(b). Any Part which otherwise is lost, stolen, destroyed, seized,
          obsolete, confiscated, damaged beyond repair or permanently rendered
          unfit for any reason, must be replaced in accordance with Section
          8.1l(b). Any Engine or Part may be installed on another aircraft
          Lessee owns or leases in accordance with Section 8.11(c). Lessee may
          temporarily install an engine or part in accordance with Section
          8.11(d). Lessee shall obtain from any Person to whom possession of an
          Engine is given (other than (i) any Maintenance Performer to whom an
          Engine is delivered for maintenance, repair or overhaul, (ii) the
          Engine Manufacturer, or (iii) any other Person to whom an Engine is
          given solely for purpose of transporting the Engine), and from the
          lessor of any airframe on which an Engine is installed and from any
          holder of a Security Interest in any airframe on which an Engine is
          installed, an agreement in writing (which agreement, in the case of a
          lease or Security Interest, may be contained in the applicable lease
          or Security Interest agreement covering such airframe) that such
          Person will not acquire or claim any rights, title or interest in such
          Engine as a result of such Engine being installed on such other
          airframe at any time while such Engine is subject to the Lease. In the
          event Lessee shall have received from a lessor of or secured party
          holding a Security Interest in any airframe leased to Lessee or owned
          by Lessee a written agreement pursuant to the foregoing sentence and
          the lease or Security Interest covering such airframe also covers an
          engine or engines owned by the lessor under such lease or subject to
          such Security


                                     - 33 -
<PAGE>

          Interest in favor of the secured party under such Security Interest,
          Lessor hereby agrees for the benefit of such lessor or secured party
          that Lessor will not acquire or claim as against such lessor or
          secured party, any rights, title or interest in any such engine as a
          result of such engine being installed on the Airframe at any time
          while such engine is owned by such lessor and subject to such lease or
          such Security Interest in favor of such secured party.

     (b)  PERMANENT REPLACEMENT: If Lessee permanently replaces an Engine or
          Part:

          (i)  in the case of an Engine, the replacement engine must be of the
               same manufacturer and model, or at Lessee's option an engine of
               an improved model, and have equivalent or better remaining useful
               life and modification status as the Engine it replaces, and is
               otherwise of an equivalent or better value and utility and
               suitable for installation and use on the Airframe without
               impairing the value or utility of the Airframe and compatible
               with the remaining installed Engine(s);

          (ii) in the case of a Part, the replacement part must be in good
               operating condition, have a value and utility the same or better
               than the Part it is replacing, be of the same or a more advanced
               make and model and be of the same interchangeable modification
               status as the Part it is replacing;

         (iii) the replacement engine or part must have become and remain,
               until replaced in accordance with this Section, the property of
               Owner free from Security Interests (other than Permitted Liens),
               and subject to the applicable Financing Documents;

          (iv) Lessee must have full details of the source and maintenance
               records of the replacement engine or part and in the case of
               serialized rotable parts, also have a complete service history;
               and

          (v)  Lessee must comply with the requirements of the Financing
               Documents in connection with any such replacement including to
               provide such legal opinions and other documents as may be
               required under the Financing Documents.

     (c)  OTHER AIRCRAFT: An Engine or Part may be installed on an aircraft
          which Lessee owns or leases if

          (i)  no Event of Default has occurred and is continuing;

          (ii) Lessee or a Permitted Sub-Lessee has operational control over the
               aircraft;

         (iii) Owner keeps the ownership of the Engine or Part concerned until
               replaced in accordance with Section 8.11(b);


                                     - 34 -
<PAGE>

          (iv) the Engine or Part does not become subject to a Security Interest
               and the applicable airframe is not subject to any Security
               Interest except a Permitted Lien or a lease or Security Interest
               described in Section 8.11(a) above; and

          (v)  the Engine or Part is replaced in accordance with Section 8.11(b)
               or is removed from the aircraft as soon as practicable under
               Lessee's engine rotation program but not later than the Expiry
               Date.

     (d)  TEMPORARY REPLACEMENT: Lessee may install any engine or part on the
          Aircraft as a temporary replacement if

          (i)  no Event of Default has occurred and is continuing;

          (ii) there is not available an engine or part complying with the.
               requirements of the Lease for a replacement Engine or Part;

         (iii) it would result in an unreasonable disruption of the operation
               of the Aircraft or the business of Lessee to have the Aircraft
               grounded until such time as an engine or part complying with the
               requirements of the Lease for a replacement Engine or Part
               becomes available for installation;

          (iv) as soon as practicable (under Lessee's engine rotation program in
               the case of an engine) after an engine or part is installed on
               the Aircraft, but before the earlier of sixty (60) days after
               such temporary replacement or the Expiry Date, Lessee removes
               that engine or part and replaces it with the original Engine or
               Part (or by an engine or part which is allowed by Section
               8.11(b)); and

          (v)  the Insurances for the Aircraft are not adversely affected.

     (e)  POOLING/INTERCHANGE: Lessee shall not subject any Engine or Part to
          any pooling, interchange, lease or similar arrangement unless Lessee
          obtains Lessor's prior written consent thereto, which consent shall
          not be unreasonably withheld.

     (f)  ENGINES: Notwithstanding anything to the contrary set forth in
          Sections 8.11(c) and (d) above, so long as no Default shall have
          occurred and be continuing, any Engine may remain installed on an
          aircraft other than the Aircraft, and any auxiliary power unit may
          remain installed on the Aircraft indefinitely during the Term;
          provided, however, (i) upon the occurrence of any Default, Lessee
          shall promptly, and in any case within sixty (60) days following the
          occurrence of such Default, cause each Engine to be re-installed on
          the Aircraft, or, at Lessee's election, cause any of the Engines to be
          replaced by a replacement Engine meeting the requirements of, and in
          accordance with, Section 8.11(b), and (ii) in any event Lessee shall
          cause such Engine to be either re-installed on the Aircraft or


                                     - 35 -
<PAGE>

          replaced by a replacement Engine meeting the requirements of, and in
          accordance with, Section 8.11(b) on or before the Expiry Date.

     (g)  APU: Notwithstanding anything to the contrary set forth in Sections
          8.11(c) and (d) above, so long as no Default shall have occurred and
          be continuing, the APU may remain installed on an aircraft other than
          the Aircraft, and any auxiliary power unit may remain installed on the
          Aircraft indefinitely during the Term; provided, however, (i) upon the
          occurrence of any Default, Lessee shall promptly, and in any case
          within sixty (60) days following the occurrence of such Default, cause
          the APU to be re-installed on the Aircraft, or, at Lessee's election,
          cause the APU to be replaced by a replacement auxiliary power unit
          meeting the requirements of, and in accordance with, Section 8.11(b),
          and (ii) in any event Lessee shall cause the APU to be either
          re-installed on the Aircraft or replaced by a Replacement APU meeting
          the requirements of, and in accordance with, Section 8.11(b) on or
          before the Expiry Date.

8.12 Equipment Changes

     Lessee will not make any modification or addition to the Aircraft (each an
     "EQUIPMENT CHANGE"), except for an Equipment Change which:

     (i)  is expressly permitted or required by the Lease; or

     (ii) has (x) a cost (including labor) of less than the Modification
          Approval Amount or (y) the prior written approval of Lessor, and (z)
          in either case, does not diminish the condition, utility,
          airworthiness or value of the Aircraft.

     So long as no Default has occurred and is continuing, Lessee may remove or
     reverse any Equipment Change provided that the Equipment Change is not
     required pursuant to the terms of the Lease or to maintain the Insurances
     and removal or reversal does not diminish the value, utility, airworthiness
     or condition of the Aircraft assuming that such Equipment Change was not
     made and that Aircraft is maintained in accordance with the Lease.
     Furthermore, Lessor may require Lessee to remove or reverse any Equipment
     Change on the Expiry Date and to restore the Aircraft to its condition
     prior to that Equipment Change. Any Equipment Change not so removed or
     reversed becomes the property of Lessor or Owner, as the case may be, at
     the Expiry Date.

8.13 Title on an Equipment Change

     Title to any equipment that is installed on the Airframe shall, except in
     the case of an engine or an auxiliary power unit or a temporary replacement
     of a Part or any In-Flight Equipment, vest in Owner solely by virtue of its
     attachment to the Airframe or an Engine and it shall then be subject


                                     - 36 -
<PAGE>

     to the Lease and, if applicable, the Financing Documents, as if it were
     attached to the Aircraft at Delivery. In the case of any replacement of an
     Engine or the APU pursuant to Section 8.1l(b), and otherwise if so
     requested by Lessor, Lessee will provide a properly executed bill of sale
     or similar instrument to evidence the vesting of good and marketable title,
     free and clear of Security Interest (except Lessor Liens), to any such
     Replacement Engine, Replacement APU or other equipment in Owner and all
     documents required under the Financing Documents. After Lessor has
     determined that Lessee has permanently replaced an Engine or the APU in
     accordance with Section 8.11(b) and this Section 8.13, Lessor will, or will
     procure that Owner will, without recourse or warranty (except as to the
     absence of Lessor's Liens), transfer to Lessee or will procure that Owner
     will transfer to Lessee all of Lessor's or Owner's, as the case may be,
     rights to the engine or the auxiliary power unit that has been replaced, on
     an AS IS, WHERE IS basis, and will at Lessee's expense provide or will
     procure that Owner provides a bill of sale or similar instrument as Lessee
     may reasonably request to evidence such transfer. Lessee shall indemnify,
     on an After-Tax Basis, Lessor, Owner and each other Tax Indemnitee for all
     fees, expenses and Taxes incurred by Lessor, Owner or any other Tax
     Indemnitee in connection with any such transfer.

8.14 Inflight Equipment

     (a)  Notwithstanding any other provision of this Agreement, Lessor
          acknowledges that Lessee may at any time during the Term install a
          telephone system and/or an inflight entertainment system for passenger
          use (collectively, the Inflight Equipment) on the Aircraft
          notwithstanding that the Inflight Equipment may not be owned by Lessee
          provided that:

          (i)  Lessee shall give Lessor notice of the installation of any Might
               Equipment on the Aircraft and the name and address of the owner
               of such Inflight Equipment;

          (ii) the documents pursuant to which the owner of the Inflight
               Equipment installs same on the Aircraft shall provide that such
               owner shall not have any lien, security interest, claim or other
               encumbrance on or against the Aircraft, and such owner only right
               with respect to the Aircraft shall be to remove the Inflight
               Equipment from the Aircraft and, such documents shall also
               provide that such owner shall remove the Inflight Equipment from
               the Aircraft not later than the earlier of (A) thirty (30) days
               after notice from Lessor of the occurrence of an Event of
               Default, and (B) the Expiry Date;

          (iii) such right of removal is subject to and conditioned upon such
               owner restoring, or causing Lessee to restore, all alterations
               made to the Aircraft in connection with the installation of the
               Inflight Equipment to the condition prior to the installation
               thereof (ordinary wear and tear excepted).

     (b)  Lessor acknowledges that at all times:

          (i)  the owner of the Inflight Equipment has and will retain sole and
               exclusive right and title to and in the Inflight Equipment;

          (ii) the Inflight Equipment shall not constitute a Part or a part of
               the Aircraft;


                                     - 37 -
<PAGE>

         (iii) title to the Inflight Equipment shall not transfer to or from
               Lessor pursuant to Clauses 8.12 and 8.13; and

          (iv) the Inflight Equipment shall not become subject to the Security
               Interest of any Person to whom Lessor grants a Security Interest
               in the Aircraft pursuant to Clause 14.1.

9.   INSURANCE

9.1  Insurance

     Lessee will maintain the Insurance in full force during the Term, and
     thereafter as expressly required in the Lease, which Insurance shall be of
     the type usual and customary in the industry for comparable operators
     operating similar equipment in similar circumstances, and shall be through
     reputable brokers and insurers of recognized standing in the commercial
     aviation insurance industry. The Insurance shall in any event meet the
     requirements set forth in Schedule 7.

9.2  [NOT APPLICABLE]

9.3  Insurance Undertakings and Information: Lessee will:

     (a)  comply with the terms and conditions of each policy of any Insurance
          and not do, consent or agree to any act or omission which:

          (i)  invalidates or may invalidate any Insurance; or

          (ii) renders or may render void or voidable the whole or any part of
               any Insurance; or

         (iii) brings any particular liability within the scope of an exclusion
               or exception to any Insurance;

     (b)  not take out any insurance or reinsurance in respect of the Aircraft
          other than that which is required under the Lease which adversely
          affects the Insurance required to be maintained hereunder; provided,
          however, Lessee may purchase a separate "hull total loss" policy with
          respect to the Aircraft in such amount as Lessee may desire;

     (c)  commence renewal procedures at least 30 days prior to expiry of any of
          the Insurance and provide to Lessor:

          (i)  if requested by Lessor in writing, a written status report of
               renewal negotiation as of the time of the request;

          (ii) [NOT APPLICABLE];

                                     - 38 -
<PAGE>

         (iii) receipt of certificates of insurance (and where appropriate
               certificates of reinsurance), and broker's (and any reinsurance
               broker's) letter of undertaking in a form acceptable to Lessor,
               detailing the coverage and confirming compliance with the
               specified insurance requirements of the Lease and, in the case of
               the broker's letter of undertaking, opining that the Insurance
               complies with the requirements of the Lease on or before each
               renewal date;

     (d)  on reasonable request, provide to Lessor copies of documents or other
          information evidencing the Insurances; and

     (e)  provide any other insurance and reinsurance related information, or
          assistance, in respect of the Insurance as Lessor may reasonably
          require.

9.4  Failure to Insure

     If Lessee fails to maintain any of the  Insurance in  compliance  with the
     Lease:

     (a)  each of the Indemnitees will be entitled but not bound (without
          prejudice to any other rights of Lessor under the Lease) to pay the
          premiums due or to effect and maintain insurance satisfactory to such
          Indemnitee or otherwise remedy Lessee's failure in such manner
          (including, without limitation to effect and maintain an "owner's
          interest" policy) as such Indemnitee considers appropriate. Any sums
          so expended by any such Indemnitee will become immediately due and
          payable by Lessee on demand by Lessor together with interest thereon
          at the Interest Rate, from the date of expenditure by such Indemnitee
          up to the date of reimbursement by Lessee; and

     (b)  Lessor at any time while such failure is continuing may require the
          Aircraft to remain at any airport or to proceed to and remain at any
          airport designated by Lessor until the failure is remedied to Lessor's
          reasonable satisfaction.

9.5  Continuing Indemnity

     Lessee shall effect and maintain product legal liability insurance after
     the Expiry Date with respect to its liability under Section 10 (INDEMNITY)
     for two years, and such insurance shall name each Indemnitee as an
     additional insured.

10.  INDEMNITY

     (a)  Except as provided in Section 10(b) below, Lessee agrees to assume
          liability for and to indemnify each of the Indemnitees against and
          agrees to pay on demand any and all Losses which an Indemnitee may at
          any time suffer or incur at any time, whether directly or indirectly,
          arising out of, related to or in any way connected with:

                                     - 39 -
<PAGE>

          (i)  the ownership, maintenance, overhaul, service, repair, delivery,
               possession, transfer of ownership or possession, import, export,
               registration, control, storage, modification, leasing, insurance,
               inspection, testing, design, date processing, sub-leasing, use,
               condition, redelivery or other matters relating to the Aircraft,
               any Engine or any Part (regardless of whether in the air or on
               the ground, and regardless of whether such Losses are based on
               strict liability in tort, any act or omission, including the
               negligence, of any Indemnitee, or otherwise); or

          (ii) any breach by the Lessee of any of its obligations under the
               Lease; or

         (iii) the design, testing or use of or any article or material in, the
               Aircraft, any Engine or any Part or its use or operation,
               including any defect in design and regardless of whether it is
               discoverable, and any infringement of patent, copyright,
               trademark, design or other proprietary right claimed by any
               Person or a breach of any obligation of confidentiality claimed
               to be owed to any Person.

               For the avoidance of doubt, the reference to "ownership" in
               clause (i) shall not require Lessee to indemnify Lessor in
               respect of (y) any defect in Lessor's or Owner's title to the
               Aircraft or (z) any decline in residual value of the Aircraft if
               Lessee shall have fully complied with its obligations under the
               Lease.

     (b)  Lessee is not required to indemnify any particular Indemnitee
          (provided that (i) Lessor and its Subsidiaries and Affiliates and its
          and their officers, directors, representatives, agents, partners,
          contractors and employees shall be treated as a single Indemnitee, and
          (ii) each Financing Party and its shareholders, subsidiaries,
          affiliates, partners, contractors, directors, officers,
          representatives, agents and employees shall be treated as a single
          Indemnitee) under this Section, to the extent a particular Loss is:

          (i)  caused solely by the willful misconduct of that Indemnitee or
               gross negligence of that Indemnitee, other than gross negligence
               imputed to that Indemnitee by reason of its interest in the
               Aircraft or the Lease;

          (ii) caused solely by Lessor's breach of the Lease which does not
               result from a Default;

         (iii) related to any Taxes (but without prejudice to any Indemnitee's
               rights under any other provision of this Lease relating to
               Taxes);

          (iv) caused solely by an event which occurs before the commencement of
               the Term (except where the Loss is suffered during the Tenn as a
               result of a pre-Delivery defect in or such Loss otherwise arises
               out of or relates to or is any way


                                     - 40 -
<PAGE>

               connected with the manufacture, design, maintenance, repair,
               rebuilding, overhaul or modification of the Aircraft);

          (v)  caused solely by an event which occurs after the redelivery of
               the Aircraft to Lessor in compliance with the Lease and is not
               attributable to any act, omission, event or circumstance
               occurring prior to such redelivery;

          (vi) caused solely as a result of any sale, assignment, transfer or
               other disposition (whether voluntary or involuntary) by such
               Indemnitee of the Aircraft or Engine or any interest therein that
               is not a replacement thereof under the Lease or is otherwise not
               contemplated under the Lease, and unless such sale, transfer or
               other disposition has resulted from or occurred following a
               Default; or

         (vii) consists of normal administrative costs and expenses of such
               Indemnitee (but excluding any such costs or expenses resulting
               from the occurrence of any Default); or

        (viii) consists of costs or expenses for which Lessor has expressly
               agreed to be responsible under any other provision of the
               Lease.

11.  EVENTS OF LOSS

11.1 Events of Loss

     (a)  If an Event of Loss occurs prior to Delivery of the Aircraft, the
          Lease will immediately terminate and except as expressly stated in the
          Lease neither party will have any further obligation other than
          pursuant to Section 5.21 and Section 3 of Schedule 4, except that
          Lessor will return the Deposit (if any) to Lessee and return to Lessee
          or cancel any Letter of Credit.

     (b)  If an Event of Loss occurs after Delivery, Lessee will pay the Agreed
          Value to Lessor on or prior to the earlier of (i) sixty (60) days
          after the Event of Loss and (ii) the date of receipt of insurance
          proceeds in respect of that Event of Loss.

     (c)  Subject to the rights of any insurers and reinsurers or other third
          party, upon irrevocable payment in full to Lessor of the Agreed Value
          and all other amounts which may be or become payable to Lessor under
          the Lease, and if Lessee requests such transfer, Lessor will, or will
          procure that Owner will, without recourse or warranty (except as to
          the absence of Lessor's Liens) transfer to Lessee or will procure that
          Owner transfers to Lessee or to Lessee's designee legal and beneficial
          title, subject to no Lessor's Liens (but otherwise without warranty),
          to the Aircraft, on an AS IS, WHERE IS basis, and will at Lessee's
          expense, execute and deliver or will procure that Owner executes and
          delivers


                                     - 41 -
<PAGE>

          such bills of sale and other documents and instruments as Lessee may
          reasonably request to evidence (on the public record or otherwise)
          such transfer, free and clear of all rights of Lessor and Owner and
          Lessor Liens. Lessee shall indemnify, on an After-Tax Basis, Lessor,
          Owner and each other Tax Indemnitee for all fees, expenses and Taxes
          incurred by Lessor, Owner or any other Tax Indemnitee in connection
          with any such transfer.

11.2 Requisition

     During any requisition for use or hire of the Aircraft, any Engine or Part
     which does not constitute an Event of Loss:

     (a)  the Rent and other charges payable under the Lease will not be
          suspended or abated either in whole or in part, and Lessee will not be
          released from any of its other obligations (other than operational
          obligations with which Lessee is unable to comply solely by virtue of
          the requisition); and

     (b)  so long as no Default has occurred and is continuing, Lessee will be
          entitled to any compensation paid by the requisitioning authority in
          respect of such authority's use of the Aircraft, such Engine or such
          Part during the Term. Lessee will, as soon as practicable after the
          end of any such requisition, cause the Aircraft to be put into the
          condition required by the Lease. Lessor will be entitled to all
          compensation payable by the requisitioning authority in respect of any
          change in the structure, state or condition of the Aircraft arising
          during the period of requisition, and Lessor will apply such
          compensation in reimbursing Lessee for the cost of complying with its
          obligations under the Lease in respect of any such change, but, if any
          Default has occurred and is continuing, Lessor may apply the
          compensation in or towards settlement of any amounts owing by Lessee
          under the Lease and/or under any Other Agreement.

12.  RETURN OF AIRCRAFT

12.1 Return

     On the Expiry Date or redelivery of the Aircraft pursuant to Section 13.2
     or termination of the leasing of the Aircraft under the Lease, Lessee will,
     unless an Event of Loss has occurred, redeliver the Aircraft and the
     Aircraft Documents and Records at Lessee's expense to Lessor at the
     Redelivery Location, in accordance with the procedures and in compliance
     with the conditions set forth in the Aircraft Lease Agreement, free and
     clear of all Security Interests (other than Lessor Liens) and in a
     condition qualifying for and having a valid and fully effective
     certification of airworthiness under FAR Part 121. Lessor shall commence
     the Final Inspection in accordance with the Aircraft Lease Agreement
     promptly upon Lessee making the Aircraft and the Aircraft Documents and
     Records available for the Final Inspection provided that Lessee gives


                                     - 42 -
<PAGE>

     Lessor no less than thirty (30) days prior written notice of the
     availability of the Aircraft and the Aircraft Documents and Records for
     such inspection.

12.2 Non-Compliance

     If at the time of Final Inspection Lessee has not fully complied with any
     of its obligations under the Lease (including, without limitation, Part III
     of Schedule A to the Aircraft Lease Agreement), or Lessee fails to make the
     Aircraft available to Lessor on a timely basis for inspection and
     redelivery pursuant to Section 12.1 and Part III of Schedule A to the
     Aircraft Lease Agreement (whether such failure is due to any act or
     omission of Lessee or any other circumstance whatsoever), the Term shall be
     extended until the time when the Aircraft has been redelivered to Lessor in
     full compliance with the Lease, for the sole purpose of enabling such
     non-compliance or failure to be promptly rectified, and during such
     extension period:

     (a)  Lessee shall not use the Aircraft in flight operations except those
          related directly to the redelivery of the Aircraft to Lessor;

     (b)  all Lessee's obligations and covenants under the Lease will remain in
          full force until Lessee so redelivers the Aircraft; and

     (c)  Lessee shall pay Rent to Lessor at a rate per month equal to the
          amount of Rent payable in respect of the last scheduled Rental Period
          plus 50 per cent thereof, calculated on a per diem basis; provided,
          however, with respect to the portion of such extension, if any,
          attributable solely to a good faith dispute between Lessor and Lessee
          as to the meaning of some particular language in the Lease applicable
          to the return of the Aircraft, whether set forth in Part III of
          Schedule A to the Aircraft Lease Agreement or elsewhere (but not, for
          the avoidance of doubt, in respect of any dispute as to the result or
          outcome of any inspection or check required in connection with the
          Final Inspection under the Lease), Lessee shall pay to Lessor Rent,
          calculated on a per diem basis, at 50% of the rate otherwise
          applicable, which rate shall be equal to (i) 50% of the rate
          applicable to the last scheduled Rental Period, without giving effect
          to the 50% premium required in the introductory clause of this
          paragraph (c), if as of the Scheduled Expiry Date the Aircraft is in
          full compliance with the requirements of the Lease for return to
          Lessor (other than the item in dispute), and (ii) 50% of the rate
          specified in the introductory clause of this paragraph (c), or 75% of
          the rate applicable to the last scheduled Rental Period, if the rate
          specified in the introductory clause of this paragraph (c) becomes
          applicable as of the Scheduled Expiry Date due to Lessee's failure to
          comply with its obligations in respect of the Final Inspection in a
          timely manner or the Aircraft otherwise fails to comply as of the
          Scheduled Delivery Date with the requirements of the Lease for return
          to Lessor in any respect other than in reference to the disputed
          language. For so long as the Aircraft remains non-compliant with any
          requirements of the Lease other than those that are the


                                     - 43 -
<PAGE>

          subject of the disputed language, Lessee shall pay to Lessor Rent in
          the amount specified in the introductory clause of this paragraph (c),
          and the Rent rate specified in this clause (ii) shall become
          applicable, if at all, only from and after such time as the Aircraft
          is brought into compliance with all requirements of the Lease for
          return to Lessor (including, but not limited to, Part III of Schedule
          A to the Aircraft Lease Agreement) other than the with respect to the
          items that are the subject of the disputed language, such that the
          disputed language remains as the sole cause in the delay in the return
          of the Aircraft to Lessor.

     Any such extension shall not prejudice Lessor's right to treat such
     non-compliance or failure as an Event of Default at any time, and to
     enforce such rights and remedies as may be available to Lessor in respect
     thereof under the terms of the Lease or applicable Law. Without limiting
     the generality of the foregoing, Lessee's Rent obligation under paragraph
     (c) above shall be without prejudice to Lessor's rights to terminate the
     letting of the Aircraft and to indemnification pursuant to Section 13.3.

     Lessor may elect (either on first tender of the Aircraft by Lessee or at
     any time during the said extension period) to accept redelivery of the
     Aircraft notwithstanding non-compliance with Section 12.1 or Part III of
     Schedule A to the Aircraft lease Agreement, in which case Lessee will
     indemnify Lessor on an After-Tax Basis, and provide cash to Lessor (in an
     amount satisfactory to Lessor) as security for that indemnity, in respect
     of the cost to Lessor of putting the Aircraft into the condition required
     by the Lease.

12.3 Redelivery

     Upon redelivery Lessee will provide to Lessor, upon Lessor's request, all
     documents necessary to export the Aircraft from the United States
     (including a valid and subsisting export certificate of airworthiness for
     the Aircraft) or required in relation to the deregistration of the Aircraft
     with the Air Authority.

12.4 Acknowledgement

     Provided Lessee has complied with its obligations under Section 12 hereof
     and Part III of Schedule A to the Aircraft Lease Agreement, following
     redelivery of the Aircraft by Lessee to Lessor at the Redelivery Location,
     Lessor will deliver to Lessee an acknowledgement confirming that Lessee has
     redelivered the Aircraft to Lessor in accordance with the Lease which
     acknowledgement shall be without prejudice to Lessor's accrued and
     continuing rights under the Lease or any Other Agreement.


                                     - 44 -
<PAGE>

13.  DEFAULT

13.1 Events

     The occurrence of any of the Events of Default will constitute a
     repudiation (but not a termination) of the Lease by Lessee (whether the
     occurrence of any such Event of Default is voluntary or involuntary or
     occurs by operation of Law or pursuant to or in compliance with any
     judgement, decree or order of any court or any order, rule or regulation of
     any Government Entity).

13.2 Rights and Remedies

     If an Event of Default occurs, Lessor may at its option (and without
     prejudice to any of its other rights under the Lease), at any time
     thereafter (without notice to Lessee except as required under applicable
     Law):

     (a)  accept such repudiation and by notice to Lessee and with immediate
          effect cancel the leasing of the Aircraft (but without prejudice to
          the continuing obligations of Lessee under the Lease), whereupon all
          rights of Lessee under the Lease shall cease; and/or

     (b)  proceed by appropriate court action or actions to enforce performance
          of the Lease including the payment of all Rent and all other amounts
          payable to Lessor or any Indemnitee pursuant to the terms of the
          Lease; and/or

     (c)  proceed by appropriate court action or actions to recover damages for
          the breach of the Lease which shall include:

          (i)  all Rent and other amounts which are or become due and payable
               hereunder prior to the earlier to occur of the date Lessor sells
               or re-leases the Aircraft or receives payment of the amount
               calculated pursuant to clause (ii) below;

          (ii) an amount equal to the aggregate Rent for the remainder of the
               Term (determined without reference to any right of Lessor to
               cancel the leasing of the Aircraft, whether or not such right is
               exercised), discounted periodically (equal to installment
               frequency) to present worth at the Discount Rate to the date of
               payment by Lessee to Lessor, less the applicable amount set forth
               below:

               A.   in the event that Lessor has re-let the Aircraft on terms
                    (other than rental payment terms) which, taken as a whole,
                    Lessor reasonably regards as being substantially similar to
                    the material economic terms of the Lease (taking into
                    account factors affecting the degree of risk associated with
                    such re-lease and/or the residual value of the Aircraft
                    thereunder, but


                                     - 45 -
<PAGE>

                    excluding the rental payment terms), an amount equal to the
                    aggregate basic rental payments to become due under such
                    re-lease for the period coinciding with the remainder of the
                    Term (determined without reference to any right of Lessor to
                    cancel the leasing of the Aircraft, whether or not such
                    right is exercised), discounted periodically (equal to
                    installment frequency) to present worth at the Discount Rate
                    to the date of payment by Lessee; or

               B.   in the event that Lessor has not re-let the Aircraft or has
                    sold the Aircraft or has re-let the Aircraft on terms which,
                    taken as a whole, Lessor does not reasonably regard as being
                    substantially similar to the material economic terms of the
                    Lease (taking into account factors affecting the degree of
                    risk associated with such re-lease and/or the residual value
                    of the Aircraft thereunder, but excluding the rental payment
                    terms), an amount equal to the fair market rental value
                    (determined pursuant to the Appraisal Procedure) of the
                    Aircraft for the period commencing with the date that Lessor
                    reasonably anticipates that the Aircraft could be re-let at
                    such rental rate and ending with the date that the Term was
                    scheduled to expire (determined without reference to any
                    right of Lessor to cancel the leasing of the Aircraft,
                    whether or not such right is exercised), discounted
                    periodically (equal to installment frequency) to present
                    worth at the Discount Rate to the date of payment by Lessee.

         (iii) all costs and other incidental damages associated with Lessor's
               exercise of its remedies hereunder or otherwise incurred by
               Lessor as a result of an Event of Default, including repossession
               costs, legal fees, Aircraft storage, maintenance and insurance
               costs, Aircraft re-lease or sale costs (including, in the case of
               a re lease, any costs incurred to transition the Aircraft to the
               next operator's maintenance program) and Lessor's internal costs
               and expenses (including the cost of personnel time calculated
               based upon the compensation paid to the individuals involved on
               an annual basis and a general Lessor overhead allocation), all
               such costs and incidental damages being referred to herein
               collectively as "Enforcement and Remarketing Costs";

          (iv) any loss, premium, penalty or expense which may be incurred in
               repaying funds raised to finance the Aircraft or in unwinding any
               financial instrument relating in whole or in part to Lessor's
               financing of the Aircraft, all such amounts being referred to
               herein collectively as "Unwind Expenses";

          (v)  any loss, cost, expense or liability, or damage to Lessor's
               residual interest in the Aircraft, sustained by Lessor due to
               Lessee's failure to maintain the Aircraft in


                                     - 46 -
<PAGE>

               accordance with the terms of this Agreement or Lessee's failure
               to redeliver the Aircraft in the condition required by this
               Agreement, including any consequential loss of revenues or
               profits, all such amounts being referred to herein collectively
               as "Aircraft Condition Damages"; and

          (vi) such additional amount, if any, as may be necessary to place
               Lessor in the same economic position, on an After-Tax Basis, as
               Lessor would have been in if Lessee had timely performed each of
               its obligations under this Agreement; and/or

     (d)  either:

          (i)  enter upon the premises where all or any part of the Aircraft is
               located and take immediate possession of and, at Lessor's sole
               option, remove the same (and/or any engine which is not an Engine
               but which is installed on the Airframe, subject to the rights of
               the lessor or secured party thereof), all without liability
               accruing to Lessor for or by reason of such entry or taking of
               possession whether for the restoration of damage to property,
               conversion or otherwise, caused by such entry or taking, except
               damages caused by gross negligence or willful misconduct; or

          (ii) by delivering notice to Lessee, require Lessee to redeliver the
               Aircraft to Lessor at Phoenix Sky Harbor International Airport in
               Phoenix, Arizona (or such other location as Lessor may require)
               on the date specified in such notice and in all respects in the
               condition required by the Lease upon the Return Occasion (it
               being understood that Lessee shall not delay any such return for
               the purpose of placing the Aircraft in such condition, but shall
               nevertheless be liable to Lessor for the failure of the Aircraft
               to be in such condition); and/or

     (e)  sell at private or public sale, as Lessor may determine, or hold, use,
          operate or lease to others the Aircraft as Lessor in its sole
          discretion may determine, all free and clear of any rights of Lessee;
          and/or

     (f)  by written notice to Lessee specifying a payment date (which shall be
          a date not earlier than five (5) Business Days following the date of
          such notice), Lessor may demand that Lessee pay to Lessor, and Lessee
          shall pay to Lessor on the payment date specified in such notice (in
          lieu of the Rent due for the period commencing after the date
          specified for payment in such notice) the sum of the following
          amounts:

          (i)  all Rent and other amounts which are or are expected to become
               due and payable hereunder prior to the payment date specified by
               Lessor;


                                     - 47 -
<PAGE>

          (ii) an amount equaling the aggregate Rent for the remainder of the
               Term (determined without reference to any right of Lessor to
               cancel the leasing of the Aircraft, whether or not such right is
               exercised), discounted periodically (equal to installment
               frequency) to present worth at the Discount Rate to the payment
               date specified by Lessee to Lessor, less the applicable amount
               set forth below:

               A.   in the event that Lessor has re-let the Aircraft on terms
                    (other than rental payment terms) which, taken as a whole,
                    Lessor reasonably regards as being substantially similar to
                    the material economic terms of the Lease (taking into
                    account factors affecting the degree of risk associated with
                    such re-lease and/or the residual value of the Aircraft
                    thereunder, but excluding the rental payment terms), an
                    amount equal to the aggregate basic rental payments to
                    become due under such re-lease for the period coinciding
                    with the remainder of the Term (determined without reference
                    to any right of Lessor to cancel the leasing of the
                    Aircraft, whether or not such right is exercised),
                    discounted periodically (equal to installment frequency) to
                    present worth at the Discount Rate to the date of payment by
                    Lessee; or

               B.   in the event that Lessor has not re-let the Aircraft or has
                    sold the Aircraft or has re-let the Aircraft on terms which,
                    taken as a whole, Lessor does not reasonably regard as being
                    substantially similar to the material economic terms of the
                    Lease (taking into account factors affecting the degree of
                    risk associated with such release and/or the residual value
                    of the Aircraft thereunder, but excluding the rental payment
                    terms), an amount equal to the fair market rental value
                    (determined pursuant to the Appraisal Procedure) of the
                    Aircraft for the period commencing with the date that Lessor
                    reasonably anticipates that the Aircraft could be re-let at
                    such rental rate and ending with the date that the Term was
                    scheduled to expire (determined without reference to any
                    right of Lessor to cancel the leasing of the Aircraft,
                    whether or not such right is exercised), discounted
                    periodically (equal to installment frequency) to present
                    worth at the Discount Rate to the date of payment by Lessee;

         (iii) an amount equal to Lessor's reasonably anticipated Enforcement
               and Remarketing Costs, Unwind Expenses and Aircraft Condition
               Damages; and

          (iv) such additional amount, if any, as may be necessary to place
               Lessor in the same economic position, on an After-Tax Basis, as
               Lessor would have been in if Lessee had timely performed each of
               its obligations under this Agreement;


                                     - 48 -
<PAGE>

          (v)  it being understood that, to the extent that any of the foregoing
               amounts represents an estimate by Lessor of losses, damages,
               costs or expenses which Lessor expects to incur, (y) Lessor shall
               adjust the amount thereof as needed to reflect the actual amount
               of such losses, damages, costs or expenses incurred by Lessor
               when substantially all of such amounts become known to Lessor,
               but Lessee shall nevertheless be obligated to pay the amount
               demanded by Lessor (subject to such subsequent adjustment in
               which (i) amounts, if any, actually paid by Lessee to Lessor upon
               such demand as may exceed the actual amount of losses, damages,
               costs or expenses incurred by Lessor as finally determined by
               Lessor are refunded to Lessee or otherwise credited to the
               account of Lessee and (ii) additional amounts, if any, as may be
               required to cure any shortfall between the estimated amounts paid
               by Lessee and the actual amount of losses, damages, costs or
               expenses incurred by Lessor as finally determined by Lessor are
               paid by Lessee to Lessor), and (z) notwithstanding the amount
               specified in such demand, Lessor shall be entitled to claim such
               other (and greater) amount in any action against Lessee
               hereunder; and/or

     (g)  draw upon the Deposit or the Letter of Credit and apply such amounts
          to any amounts owing to Lessor hereunder and/or make demand against
          any Guarantor for any or all of the foregoing.

     In addition to the foregoing, Lessor shall be entitled to exercise such
     other rights and remedies as may be available under applicable Law and
     Lessee shall be liable on an After-Tax Basis for, and shall pay Lessor on
     demand: (i) interest on all unpaid amounts at the Interest Rate, from the
     due date until the date of payment in full; (ii) all reasonable legal fees
     and other reasonable costs and expenses incurred by Lessor by reason of the
     occurrence of any Event of Default or the exercise of Lessor's remedies
     with respect thereto; and (iii) all reasonable expenses, disbursements,
     costs and fees incurred in (A) repossessing, storing, preserving, shipping,
     maintaining, repairing and refurbishing the Aircraft, the Airframe, any
     Engine or Part to the condition required by Section 12 hereof and (B)
     preparing the Aircraft, the Airframe, an Engine or Part for sale or lease,
     advertising the sale or lease of the Aircraft, the Airframe, an Engine or
     Part and selling or releasing the Aircraft, the Airframe, an Engine or
     Part.

     Lessor is hereby authorized and instructed, but shall have no obligation,
     to make any expenditures which Lessor, in its sole discretion, considers
     advisable to repair and restore the Aircraft, the Airframe, an Engine or
     Part to the condition required by Section 12 hereof (it being understood
     that Lessee shall be liable for all such expenditures).

     Lessee hereby agrees that, in the event of the return to or repossession by
     Lessor of the Aircraft, the Airframe, an Engine or Part, any rights in any
     warranty (express or implied) previously


                                     - 49 -
<PAGE>

     assigned to Lessee or other-wise held by Lessee shall without further act,
     notice or writing be assigned or reassigned to Lessor, if assignable.

     No remedy referred to in this Section 13 is intended to be exclusive, but,
     to the extent permissible under the Lease or under applicable Law, each
     shall be cumulative and in addition to any other remedy referred to above
     or otherwise available to Lessor at Law or in equity; and the exercise or
     beginning of exercise by Lessor of any one or more of such remedies shall
     not preclude the simultaneous or later exercise by Lessor of any or all of
     such other remedies; provided, however, that nothing in this Section 13
     shall be construed to permit Lessor to obtain a duplicate recovery of any
     element of damages to which Lessor is entitled. No express or implied
     waiver by Lessor of any Default or Event of Default shall in any way be, or
     be construed to be, a waiver of any future or subsequent Default or Event
     of Default.


                                     - 50 -
<PAGE>

13.3 Power of Attorney: Lessee hereby appoints Lessor as the attorney-in-fact of
     Lessee, with full authority in the place and stead of Lessee and in the
     name of Lessee or otherwise, for the purpose of carrying out the provisions
     of the Lease and taking any action and executing any instrument that Lessor
     may deem necessary or advisable to accomplish the purposes hereof;
     provided, however, that Lessor may only take action or execute instruments
     under this Section 13 after an Event of Default has occurred and is
     continuing. Lessee hereby declares that the foregoing powers are granted
     for valuable consideration, constitute powers granted as security for the
     performance of the obligations of Lessee hereunder and are coupled with an
     interest and shall be irrevocable. Without limiting the generality of the
     foregoing or any other rights of Lessor under the Lease, upon the
     occurrence and during the continuation of an Event of Default, Lessor shall
     have the sole and exclusive right and power to (i) settle, compromise,
     adjust or defend any actions, suits or proceedings relating to or
     pertaining to the Aircraft, Airframe or any Engine, or the Lease and (ii)
     make proof of loss, appear in and prosecute any action arising from any
     policy or policies of insurance maintained pursuant to the Lease, and
     settle, adjust or compromise any claims for loss, damage or destruction
     under, or take any other action in respect of, any such policy or policies.

13.4 Sale or Re-Lease

     If an Event of Default occurs, Lessor may sell or re-lease or otherwise
     deal with the Aircraft at such time and in such manner and on such terms as
     Lessor considers appropriate in its absolute discretion, free and clear of
     any interest of Lessee, as if the Lease had never been entered into. Lessor
     shall have no duty or obligation to sell the Aircraft, and Lessor shall be
     obligated to attempt to re-lease the Aircraft only to the extent, if any,
     that it is required to do so under Article 2A of the UCC, and Lessee hereby
     disclaims any right to compel Lessor to sell or otherwise release the
     Aircraft.

13.5 Removal of Lease from FAA Registry

     If an Event of Default occurs, Lessee will at the request of Lessor
     immediately take all steps necessary to enable the Aircraft to be
     redelivered to Lessor in accordance with and free and clear of the Lease
     and Lessee hereby irrevocably and by way of security for its obligations
     under the Lease appoints (which appointment is coupled with an interest)
     Lessor as its attorney-in-fact to execute and deliver any documentation and
     to do any act or thing not prohibited by Law required in connection with
     the foregoing during the continuance of an Event of Default. Without
     limiting the foregoing, Lessor may file with the FAA the Lease Termination
     Certificate provided to Lessor under the Lease.


                                     - 51 -
<PAGE>

14.  TRANSFER

14.1 Lessee

     LESSEE WELL NOT ASSIGN, DELEGATE OR OTHERWISE TRANSFER (VOLUNTARILY,
     INVOLUNTARILY, BY OPERATION OF LAW OR OTHERWISE) ANY OF ITS RIGHTS OR
     OBLIGATIONS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
     CTA), OR CREATE OR PERMIT TO EXIST ANY SECURITY INTEREST OVER ANY OF ITS
     RIGHTS UNDER THE LEASE (INCLUDING THE AIRCRAFT LEASE AGREEMENT OR THIS
     CTA), AND ANY ATTEMPT TO DO SO SHALL BE NULL AND VOID. The foregoing shall
     not be construed to prohibit a Permitted Sub-Lease.

14.2 Lessor

     Lessee acknowledges and agrees that Lessor will, if applicable under the
     Financing Documents, assign as security Lessor's interest in the Lease as
     described in the Acknowledgement and Agreement referred to in Schedule 3.

     In addition insofar as Lessee is concerned, Lessor may, without the consent
     of Lessee, further transfer all or any of its rights or obligations under
     the Lease or all or any of its right, title or interest in and to the
     Aircraft, including pursuant to:

     (a)  a sale and leaseback; or

     (b)  a novation or assignment of the Lease and/or a sale of the Aircraft
          (including to a special purpose or securitization or monetization
          trust, fund, limited liability company, corporation, partnership or
          other vehicle or in connection with any other direct or indirect
          raising of capital); or

     (c)  a secured loan financing.

     Lessor will promptly notify Lessee of any transfer and Lessee agrees
     promptly to execute and deliver in connection with any transfer such
     documents and assurances (including an acknowledgement of the transfer and
     a certificate as to the absence of any Default under the Lease) and to take
     such further action as Lessor may reasonably request to establish or
     protect the rights and remedies created or intended to be created in favor
     of the transferee in connection with any transfer. After any transfer, the
     transferee shall be entitled to be an Indemnitee and to such other rights
     under the Lease as Lessor shall specify. Upon an assignment or novation
     described in clause (b), Lessor shall be released from all obligations and
     liabilities under the Lease to the extent such obligations and liabilities
     are assumed by such transferee, and the Lease, including this CTA as in
     effect at that time and as incorporated in the Aircraft Lease Agreement,
     shall be


                                     - 52 -
<PAGE>

     deemed applicable as between Lessee and the transferee of the Lease and may
     be amended, supplemented or otherwise modified without the consent of the
     transferor (if this CTA is applicable to the Other Agreements not so
     transferred, it shall remain in full force and effect and may be amended,
     supplemented or otherwise modified without the consent of the transferee).
     Notwithstanding any such assignment or novation, Lessor, Owner, Financing
     Parties' Representative and each other Indemnitee shall continue to be
     entitled to indemnification under Section 10, and shall continue to be
     named as an additional insured under all Insurances referred to in Section
     9 for a period of not less than two years after such transfer. The
     agreements, covenants, obligations and liabilities contained in the Lease,
     including all obligations to pay Rent and indemnify each Indemnitee, are
     made for the benefit of Lessor (and, in the case of Section 10, each other
     Indemnitee) and its or their respective successors and assigns,
     notwithstanding the possibility that any such Person was not originally a
     party to the Lease or may, at the time such enforcement is sought, not be a
     party to the Lease.

14.3 Conditions

     In connection with any such transfer by Lessor:

     (a)  QUIET ENJOYMENT: as a condition precedent to such transfer becoming
          effective, Lessor will procure that the transferee or any new owner of
          the Aircraft or any new holder of a Security Interest in the Aircraft
          or any holder of an interest in the Aircraft or the Lease (by way of
          security or otherwise), as the case may be, shall in the case of a
          transferee that is the "Lessor" acknowledge Lessor's obligation under
          Section 7.1 or, if not the Lessor, execute and deliver to Lessee a
          letter of quiet enjoyment in respect of Lessee's use and possession of
          the Aircraft in a form substantially similar to Section 7.1 hereof;

     (b)  COSTS: Lessor shall reimburse to Lessee its reasonable out-of-pocket
          expenses (including reasonable legal fees and expenses) actually
          incurred in connection with co-operating with Lessor in relation to
          any such transfer referred to in this Section 14, provided that such
          expenses are substantiated to Lessor's reasonable satisfaction;

     (c)  RIGHTS OF LESSEE: as a condition precedent to any transfer becoming
          effective, such transfer shall not, at the time of the transfer,
          materially expand Lessee's obligations under the Lease or materially
          reduce Lessee's rights under the Lease, in each case as compared to
          what such obligations and rights would have been in the absence of
          such transfer; provided, however, that no transfer to any Person that
          meets the requirements of a "citizen of the United States" under 49
          U.S.C. Section 40102(a)(15) shall be deemed to materially expand
          Lessee's obligations or materially restrict Lessee's rights under the
          Lease.


                                     - 53 -
<PAGE>

15.  MISCELLANEOUS

15.1 Survival

     Lessee's obligations under Section 3 of Schedule 4, under Sections 5.6,
     5.7, 5.10, 5.21, 9.5, 10, 12, and 13.2 and under any other provision of the
     Lease providing for an obligation on the part of the Lessee to indemnify
     Lessor or any other Indemnitee shall survive the expiration or any
     termination of the Lease and continue in full force and effect.

15.2 Waivers, Remedies Cumulative

     The rights of Lessor under the Lease may be exercised as often as
     necessary, are cumulative and not exclusive of its rights under any Law;
     and may be waived only in writing and specifically. Delay by Lessor in
     exercising, or non-exercise of, any such right will not constitute a waiver
     of that right.

15.3 Delegation

     Lessor may delegate to any Person all or any of the rights, powers or
     discretion vested in it by the Lease, and any such delegation may be made
     upon such terms and conditions and subject to such regulations (including
     power to sub-delegate) as Lessor in its absolute discretion thinks fit.

15.4 Severability

     If a provision of the Lease is or becomes illegal, invalid or unenforceable
     in any jurisdiction, that will not affect:

     (a)  the legality, validity or enforceability in that jurisdiction of any
          other provision of the Lease; or

     (b)  the legality, validity or enforceability in any other jurisdiction of
          that or any other provision of the Lease.

15.5 Remedy

     If Lessee fails to comply with any provision of the Lease, Lessor may,
     without being in any way obliged to do so or responsible for so doing and
     without prejudice to the ability of Lessor to treat such non-compliance as
     a Default, effect compliance on behalf of Lessee, whereupon Lessee shall
     become liable to pay immediately any sums expended by Lessor together with
     all costs and expenses (including legal fees and expenses) in connection
     with the non-compliance.


                                     - 54 -
<PAGE>

15.6 Time of Essence

     The time stipulated in the Lease for all payments payable by Lessee and the
     prompt, punctual performance of Lessee's other obligations under the Lease
     are of the essence of the Lease.

15.7 Notices

     All notices under, or in connection with, the Lease will, unless otherwise
     stated, be given in writing by means of a overnight courier service or
     facsimile. Any such notice is deemed effectively to be given when received
     by the recipient (or if receipt is refused by the intended recipient, when
     so refused).

     The addresses and facsimile and telephone numbers of Lessee and Lessor are
     as set forth in the Aircraft Lease Agreement.

15.8 Governing Law; Jurisdiction; WAIVER OF JURY TRIAL

     (a)  PURSUANT TO AND IN ACCORDANCE WITH SECTION 5-1401 OF THE NEW YORK
          GENERAL OBLIGATIONS LAW, THE PARTIES HERETO AGREE THAT THE LEASE IN
          ALL RESPECTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
          THE LAWS OF THE STATE OF NEW YORK, UNITED STATES, AS APPLIED TO
          CONTRACTS TO BE PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK
          (EXCLUSIVE OF SECTION 7-101 OF THE NEW YORK GENERAL OBLIGATIONS LAW
          WHICH IS INAPPLICABLE TO THE LEASE). THE PARTIES AGREE THAT THE LEASE
          WAS EXECUTED AND DELIVERED IN THE STATE OF NEW YORK.

     (b)  Pursuant to and in accordance with Section 5-1402 of the New York
          General Obligations Law, Lessee and Lessor each agree that the United
          States District Court for the Southern District of New York and any
          New York state court sitting in the County of New York, New York, and
          all related appellate courts, are to have non-exclusive jurisdiction
          to settle any disputes arising out of or relating to the Lease and
          submits itself and its property to the non-exclusive jurisdiction of
          the foregoing courts with respect to such disputes.

     (c)  Without prejudice to any other mode of service, Lessee:

          (i)  appoints CT Corporation System, 1633 Broadway, New York, New York
               10019, as its agent for service of process relating to any
               proceedings before the New York courts in connection with the
               Lease and agrees to maintain the process agent in New York
               notified to Lessor;


                                     - 55 -
<PAGE>

          (ii) agrees that failure by a process agent to notify Lessee of the
               process shall not invalidate the proceedings concerned;

         (iii) consents to the service of process relating to any such
               proceedings by prepaid mailing of a copy of the process to
               Lessee's agent at the address identified in paragraph (i) or by
               prepaid mailing by air mail, certified or registered mail of a
               copy of the process to Lessee at the address set forth in Section
               15.7.

     (d)  [NOT APPLICABLE.]

     (e)  Each of Lessor and Lessee:

          (i)  waives to the fullest extent permitted by Law any objection which
               it may now or hereafter have to the courts referred to in Section
               15.8(b) above on grounds of inconvenient foram or otherwise as
               regards proceedings in connection with the Lease;

          (ii) waives to the fullest extent permitted by Law any objection which
               it may now or hereafter have to the laying of venue of any suit,
               action or proceeding arising out of or relating to the Lease
               brought in the courts referred to in Section 15.8(b); and

          (iii) agrees that a judgement or order of any court referred to in
               Section 15.8(b) in connection with the Lease is conclusive and
               binding on it and may be enforced against it in the courts of any
               other jurisdiction.

     (f)  Nothing in this Section 15.8 limits the right of either party to bring
          proceedings against the other in connection with the Lease:

          (i)  in any other court of competent jurisdiction; or

          (ii) concurrently in more than one jurisdiction.

     (g)  Each of Lessee and Lessor irrevocably and unconditionally:

          (i)  agrees that if the other brings legal proceedings against it or
               its assets in relation to the Lease no sovereign or other
               immunity from such legal proceedings (which will be deemed to
               include suit, court jurisdiction, attachment prior to judgement,
               attachment in aid of execution of a judgement, other attachment,
               the obtaining of judgement, execution of a judgement or other
               enforcement or legal process or remedy) will be claimed by or on
               behalf of itself or with respect to its assets; and


                                     - 56 -
<PAGE>

          (ii) waives any such right of immunity which it or its assets now has
               or may in the future acquire and agrees that the foregoing waiver
               shall have the fullest extent permitted under the Foreign
               Sovereign Immunities Act of 1976 of the United States and is
               intended to be irrevocable for the purposes of such Act.

     (h)  EACH OF LESSEE AND LESSOR HEREBY IRREVOCABLY AND UNCONDITIONALLY
          WAIVES ANY AND ALL RIGHTS TO A JURY TRIAL IN RESPECT OF ANY CLAIM OR
          CAUSE OF ACTION BASED UPON OR ARISING OUT OF THE LEASE OR ANY DEALINGS
          BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE
          TRANSACTIONS'CONTEMPLATED THEREBY OR THE LESSOR/LESSEE RELATIONSHIP
          BEING ESTABLISHED, including, without limitation, contract claims,
          tort claims, breach of duty claims and other common law and statutory
          claims. Each of Lessor and Lessee represents and warrants that each
          has reviewed and voluntarily waives its jury trial rights following
          consultation with its legal counsel. THIS WAIVER IS IRREVOCABLE, AND
          THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
          SUPPLEMENTS OR MODIFICATIONS TO THE LEASE. In the event of litigation,
          this Section may be filed as a written consent to a trial by the
          court.

15.9 Sole and Entire Agreement; True Lease; Section 1110

     (a)  ENTIRE AGREEMENT: The Lease is the sole and entire agreement between
          Lessor and Lessee in relation to the leasing of the Aircraft, and
          supersedes all previous agreements in relation to that leasing. Any
          amendments to the Lease must be made in writing and signed on behalf
          of Lessor and Lessee.

     (b)  TRUE LEASE: The parties intend and agree that the Lease:

          (i)  constitutes a "true lease", and not a "security interest" as
               defined in Section 1-201(37) of the UCC;

          (ii) constitutes a "true lease" for United States Federal income tax
               purposes; and

         (iii) confers only a leasehold interest on Lessee in and to the
               Aircraft on and subject to the terms of the Lease, and no
               ownership or other interest with respect to the Aircraft is
               provided to Lessee under the Lease.

     Lessee shall not file a tax return that is inconsistent with the provisions
     of this Section 15.9(b).

     (c)  SECTION 1110: Lessee acknowledges that Lessor would not have entered
          into the Lease unless it had available to it the benefits of a lessor
          under Section 1110 of Title 11 of the


                                     - 57 -
<PAGE>

          U.S.C. Lessee covenants and agrees with Lessor that to better ensure
          the availability of such benefits, Lessee shall not oppose any motion,
          petition or application filed by Lessor with any bankruptcy court
          having jurisdiction over Lessee whereby Lessor seeks recovery of
          possession of the Aircraft under said Section 1110, except in a
          situation in which Lessee shall have complied with the requirements of
          said Section 1110 to be fulfilled in order to entitle Lessee to
          continued use and possession of the Aircraft hereunder. In the event
          said Section 1110 is amended, or if it is repealed and another statute
          is enacted in lieu thereof, Lessor and Lessee agree to amend the Lease
          and take such other action not inconsistent with the Lease as Lessor
          reasonably requests so as to afford to Lessor the rights and benefits
          as such amended or substituted statute confers upon owners and lessors
          of aircraft similarly situated to Lessor.

15.10 Indemnitees

     All rights expressed to be granted to each Indemnitee (other than Lessor)
     under the Lease are given to Lessor on behalf of that Indemnitee, and each
     Indemnitee is an express third party beneficiary thereof.

15.11 Counterparts

     The Lease (including the Aircraft Lease Agreement and this CTA) may be
     executed in two or more counterparts, each of which shall be deemed an
     original, but all of which together shall constitute one and the same
     instrument. To the extent, if any, that the Lease constitutes chattel paper
     (as such term is defined in the Uniform Commercial Code as in effect in any
     applicable jurisdiction), no security interest in the Lease may be created
     through the transfer or possession of any counterpart other than the
     original counterpart, which shall be identified as the counterpart
     designated as the "original" on the signature page of the Aircraft Lease
     Agreement by Financing Parties' Representative, Owner or Lessor, as the
     case may be.

15.12 Language

     All notices to be given under the Lease will be in English. All documents
     delivered to Lessor pursuant to the Lease (including any documents to be
     delivered pursuant to the Conditions Precedent) will be in English.

16.  DISCLAIMERS AND WAIVERS

     LESSOR AND LESSEE AGREE THAT THE DISCLAIMERS, WAIVERS AND CONFIRMATIONS SET
     FORTH IN CLAUSES 16.1 TO 16.4 BELOW SHALL APPLY AT ALL TIMES DURING THE
     TERM. LESSEE'S ACCEPTANCE OF THE AIRCRAFT IN ACCORDANCE WITH SECTION 4.3
     SHALL BE CONCLUSIVE EVIDENCE THAT


                                      - 58 -
<PAGE>

     LESSEE HAS FULLY INSPECTED THE AIRCRAFT AND EVERY PART THEREOF AND THAT THE
     AIRCRAFT, THE ENGINES, THE PARTS AND THE AIRCRAFT DOCUMENTS AND RECORDS ARE
     TECHNICALLY ACCEPTABLE TO LESSEE AND SATISFY THE DELIVERY CONDITION
     REQUIREMENTS AND ARE IN SUITABLE CONDITION FOR DELIVERY TO AND ACCEPTANCE
     BY LESSEE.

16.1 Exclusion

     THE AIRCRAFT IS LEASED AND DELIVERED UNDER THE LEASE "AS IS, WHERE IS," AND
     LESSEE AGREES AND ACKNOWLEDGES THAT:

     (a)  LESSOR WILL HAVE NO LIABILITY IN RELATION TO, AND LESSOR HAS NOT AND
          WILL NOT BE DEEMED TO HAVE ACCEPTED, MADE OR GIVEN (WHETHER BY VIRTUE
          OF HAVING DONE OR FAILED TO DO ANY ACT, OR HAVING ACQUIRED OR FAILED
          TO ACQUIRE ANY STATUS UNDER OR IN RELATION TO THE LEASE OR OTHERWISE),
          ANY GUARANTEES, COVENANTS, WARRANTIES OR REPRESENTATIONS, EXPRESS OR
          IMPLIED, WITH RESPECT TO, THE AIRCRAFT OR ANY ENGINE OR PART OR ANY
          SERVICES PROVIDED BY LESSOR UNDER THE LEASE, INCLUDING (BUT NOT
          LIMITED TO) THE TITLE (EXCEPT AS AND TO THE EXTENT EXPRESSLY PROVIDED
          IN SECTION 7.1), DESCRIPTION, AIRWORTHINESS, COMPLIANCE WITH
          SPECIFICATIONS, OPERATION, MERCHANTABILITY, QUALITY, FREEDOM FROM
          INFRINGEMENT OF PATENT, COPYRIGHT, TRADEMARK OR OTHER PROPRIETARY
          RIGHTS, FITNESS FOR ANY PARTICULAR USE OR PURPOSE, VALUE, DURABILITY,
          DATE PROCESSING, CONDITION, OR DESIGN, OR AS TO THE QUALITY OF THE
          MATERIAL OR WORKMANSHIP, THE ABSENCE OF LATENT OR OTHER DEFECTS,
          WHETHER OR NOT DISCOVERABLE, OR AS TO ANY OTHER MATTER WHATSOEVER,
          EXPRESS OR IMPLIED (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A
          COURSE OF PERFORMANCE OR DEALING OR USAGE OF TRADE) WITH RESPECT TO
          THE AIRCRAFT, ANY ENGINE OR ANY PART OR ANY SERVICES PROVIDED BY
          LESSOR UNDER THE LEASE; AND

     (b)  LESSOR SHALL NOT HAVE ANY OBLIGATION OR LIABILITY WHATSOEVER TO LESSEE
          (WHETHER ARISING IN CONTRACT OR IN TORT, AND WHETHER ARISING BY
          REFERENCE TO NEGLIGENCE, MISREPRESENTATION OR STRICT LIABILITY OF
          LESSOR OR OTHERWISE) FOR:

          (i)  ANY LIABILITY, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE CAUSED
               DIRECTLY OR INDIRECTLY BY THE AIRCRAFT OR ANY ENGINE OR BY ANY
               INADEQUACY THEREOF OR DEFICIENCY OR


                                     - 59 -
<PAGE>

               DEFECT THEREIN OR BY ANY OTHER CIRCUMSTANCE IN CONNECTION
               THEREWITH (EXCEPT FOR DIRECT DAMAGES DUE TO LESSOR'S BREACH AS
               AND TO THE EXTENT EXPRESSLY PROVIDED IN SECTION 4.4 OR 7.1
               HEREOF);

          (ii) THE USE, OPERATION OR PERFORMANCE OF THE AIRCRAFT OR ANY RISKS
               RELATING THERETO;

         (iii) ANY INTERRUPTION OF SERVICE, LOSS OF BUSINESS OR ANTICIPATED
               PROFITS OR ANY OTHER DIRECT (EXCEPT FOR DIRECT DAMAGES DUE TO
               LESSOR'S BREACH AS PROVIDED IN SECTION 4.4 or 7.1), INDIRECT OR
               CONSEQUENTIAL LOSS OR DAMAGE; OR

          (iv) THE DELIVERY, OPERATION, SERVICING, MAINTENANCE, REPAIR,
               IMPROVEMENT OR REPLACEMENT OF THE AIRCRAFT, ANY ENGINE OR ANY
               PART.

16.2 Waiver

     LESSEE HEREBY WAIVES, AS BETWEEN ITSELF AND LESSOR, ALL ITS RIGHTS IN
     RESPECT OF ANY CONDITION, WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
     ON THE PART OF LESSOR AND ALL CLAIMS AGAINST LESSOR HOWSOEVER AND WHENEVER
     ARISING AT ANY TIME IN RESPECT OF OR OUT OF ANY OF THE MATTERS REFERRED TO
     IN SECTION 16.1.

16.3 Disclaimer Of Consequential Damages

     LESSEE AGREES THAT IT SHALL NOT BE ENTITLED TO RECOVER, AND HEREBY
     DISCLAIMS AND WAIVES ANY RIGHT THAT IT MAY OTHERWISE HAVE TO RECOVER, FOR
     INTERRUPTION OF SERVICE, LOSS OF BUSINESS, LOST PROFITS OR REVENUES OR
     CONSEQUENTIAL DAMAGES (AS DEFINED IN SECTION 2A-520 OF THE UCC OR
     OTHERWISE) AS A RESULT OF ANY BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF
     THE AGREEMENTS, REPRESENTATIONS OR WARRANTIES OF LESSOR CONTAINED IN THE
     LEASE (INCLUDING A BREACH BY LESSOR UNDER SECTION 4.4 OR 7.1).

16.4 Confirmation

     LESSEE CONFIRMS THAT IT IS FULLY AWARE OF THE PROVISIONS OF THIS SECTION 16
     AND ACKNOWLEDGES THAT RENT AND OTHER AMOUNTS PAYABLE UNDER THE LEASE HAVE
     BEEN CALCULATED BASED ON ITS PROVISIONS.


                                     - 60 -
<PAGE>

16.5 Limitation

     LESSOR HEREBY EXPRESSLY AGREES AND ACKNOWLEDGES THAT NOTHING IN THIS
     SECTION 16 SHALL DEROGATE FROM LESSOR'S OBLIGATIONS UNDER, OR OTHERWISE
     LIMIT LESSOR'S LIABILITY IN RESPECT OF, SECTIONS 2.2, 4.4(c), 7.1,
     7.2, 14.2 or 14.3 HEREOF OR SECTION 2(c) OF SCHEDULE 4 HERETO.

17.  BROKERS AND OTHER THIRD PARTIES

17.1 No Brokers

     Each of the parties hereby represents and warrants to the other that it has
     not paid, agreed to pay or caused to be paid directly or indirectly in any
     form, any commission, percentage, contingent fee, brokerage or other
     similar payments of any kind, in connection with the establishment or
     operation of the Lease, to any Person (other than fees payable to legal
     advisers or portfolio services).

17.2 Indemnity

     Each party agrees to indemnify and hold the other harmless from and against
     any and all claims, suits, damages, costs and expenses (including,
     reasonable legal fees and expenses) asserted by any agent, broker or other
     third party for any commission or compensation of any nature whatsoever
     based upon the Lease or the Aircraft, if such claim, suit, damage, cost or
     expense arises out of any breach by the indemnifying party, its employees
     or agents of Section 17.1.


                   REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
                           THE SIGNATURE PAGE FOLLOWS.


                                     - 61 -
<PAGE>

IN WITNESS WEHREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.


GENERAL ELECTRIC CAPITAL CORPORATION


By: /s/ NORM LIN
        --------------------------
Name:   Norm Lin
        --------------------------
Title:  Vice President
        --------------------------


ALOHA AIRLINES, INC.

By:
        --------------------------
Name:
        --------------------------
Title:
        --------------------------


By:
        --------------------------
Name:
        --------------------------
Title:
        --------------------------


<PAGE>

IN WITNESS WHEREOF the parties hereto have executed the Common Terms Agreement
on the date shown at the beginning of the document.


GENERAL ELECTRIC CAPITAL CORPORATION

By:
        --------------------------
Name:
        --------------------------
Title:
        --------------------------


ALOHA AIRLINES, INC.


By: /s/ Brenda F. Cutwright
        --------------------------
Name:   Brenda F. Cutwright
        --------------------------
Title:  Exec. Vice President & CFO
        --------------------------


By: /s/ James M. King
        --------------------------
Name:   James M. King
        --------------------------
Title:  VP Planning & Development
        --------------------------


<PAGE>

                                   SCHEDULE 1
                                   DEFINITIONS

The following words and expressions have the respective meanings set forth
below:

Act means the Federal Aviation Act of 1958, as amended, and as recodified in
Title 49 U.S.C. pursuant to Public Law 103-272, or any similar legislation of
the United States enacted in substitution or replacement thereof.

AFFILIATE means as to any Person, any other Person that, directly or indirectly,
is in control of, is controlled by, or is under common control with, such
Person. For purposes of this definition, "control" of a Person means the power,
directly or indirectly, either to (a) vote 50% or more of the securities having
ordinary voting power for the election of directors (or persons performing
similar functions) of such Person or (b) direct or cause the direction of the
management and policies of such Person, whether by contract or otherwise.

AFTER-TAX BASIS means in the case of any amount payable on an "After-Tax Basis"
to or for the benefit of any Person (including any amount payable pursuant to
this definition) that the total amount paid shall be, such that the Person
actually realizes the amount payable, after deduction from the total amount paid
of the net amount of all Taxes required to be paid by such Person with respect
to the receipt or accrual by it of such amount.

AGREED VALUE has the meaning given in the Aircraft Lease Agreement.

AIR AUTHORITY means the FAA.

AIRCRAFT has the meaning given in the Aircraft Lease Agreement.

AIRCRAFT DOCUMENTS AND RECORDS means the documents, data and records identified
in the list attached to the Certificate of Technical Acceptance, and any other
documents and records Lessee is required to maintain under Section 8.8, and all
additions, renewals, revisions and replacements from time to time made to any of
the foregoing in accordance with the Lease.

AIRCRAFT LEASE AGREEMENT means the specific aircraft lease agreement for the
Aircraft entered or to be entered into between the parties hereto or Affiliates
thereof.

AIRFRAME means the Aircraft, excluding the Engines and Aircraft Documents and
Records.

AIRFRAME STRUCTURAL CHECK has the meaning given in the Aircraft Lease Agreement.

AIRFRAME SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.


                                       1-1
<PAGE>

AIRWORTHINESS DIRECTIVE means an airworthiness directive issued by the State of
Design or the State of Registry.

ANNUAL SUPPLEMENTAL RENT ADJUSTMENT has the meaning given in the Aircraft Lease
Agreement.

APPRAISAL PROCEDURE means the following procedure for determining the "fair
market rental value" of the Aircraft pursuant to Sections 13.2 and 13.4 of the
CTA: (a) Lessor shall select an independent aircraft appraiser in its sole and
absolute discretion who shall make a determination of "fair market rental value"
of the Aircraft; and (b) the fees and expenses of the appraiser shall be paid by
Lessee. "Fair market rental value" shall mean the value determined by an
appraisal completed on an "as-is" and "where-is" basis.

APU means the auxiliary power unit installed on the Aircraft on the Delivery
Date and any replacement auxiliary power unit installed on the Aircraft and
title to which is transferred to Owner in accordance with the Lease.

APU SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.

ASSUMED UTILIZATION has the meaning given in the Aircraft Lease Agreement.

ASSUMED RATIO has the meaning given in the Aircraft Lease Agreement.

BUSINESS DAY means any day other than a Saturday, Sunday or other day on which
banking institutions in New York, New York or Honolulu, Hawaii are authorized or
required by Law to be closed.

"C" CHECK means a block "C" check in accordance with Lessee's Maintenance
Program or, if the Lessee's Maintenance Program is not based on the
Manufacturer's Maintenance Planning Document on a block basis, in accordance
with the Manufacturer's Maintenance Planning Document.

CERTIFICATE OF TECHNICAL ACCEPTANCE means a certificate of technical acceptance
in the form of Part 1 or Part 2, as applicable, of Schedule 5.

CERTIFICATED AIR CARRIER means any Person (except the United States Government)
that is a "citizen of the United States of America" (as defined in Section 40102
of Title 49 of the U.S.C.) and holding a Certificate of Public Convenience and
Necessity issued under Section 41102 of Title 49 of U.S.C. by the Department of
Transportation or any predecessor or successor agency thereto, and an air
carrier operating certificate issued pursuant to Chapter 447 of Title 49 of
U.S.C. or, in the event such certificates shall no longer be applicable, any
Person (except the United States Government) that is a citizen of the United
States (as defined in Section 40102 of Title 49 of the U.S.C.) and legally
engaged in the business of transporting for hire passengers or cargo by air
predominantly to, from or between points within the United States of America,
and, in either event, operating commercial jet aircraft capable of carrying ten
or more individuals or 6,000 pounds or more of cargo, which also is certificated
so as to entitle Lessor, as a lessor, to the benefits of Section 1110 of Title
11 of U.S.C. with respect to the Aircraft.


                                       1-2
<PAGE>

CONDITIONS PRECEDENT means Lessee Conditions Precedent and Lessor's Conditions
Precedent, collectively, or any of them, as the context may require.

CYCLE means one take-off and landing of the Aircraft.

DAMAGE NOTIFICATION THRESHOLD has the meaning given in the Aircraft Lease
Agreement.

DEDUCTIBLE AMOUNT has the meaning given in the Aircraft Lease Agreement.

DEFAULT means any Event of Default or any event or. circumstance which, with.
the giving of notice and/or lapse of time and/or determination of materiality
and/or fulfillment of any other condition, would constitute an Event of Default.

DEFECT means any defect or non-conformity with the Delivery Condition
Requirements notified by Lessee to Lessor during the Pre-Delivery Procedure.

DELIVERY means delivery of the Aircraft by Lessor to Lessee under the Lease.

DELIVERY CONDITION REQUIREMENTS has the meaning given in the Aircraft Lease
Agreement.

DELIVERY DATE means the date on which Delivery occurs.

DELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.

DEPOSIT has the meaning given in the Aircraft Lease Agreement.

DISCOUNT RATE has the meaning given in the Aircraft Lease Agreement.

DOLLARS AND $ means the lawful currency of the United States.

ENGINE means, whether or not installed on the Aircraft:

     (a)  each engine of the manufacture and model specified in the Aircraft
          Lease Agreement for the Aircraft which Lessor offers to Lessee for
          delivery with the Airframe on the Delivery Date, such engines being
          described as to serial numbers on the Certificate of Technical
          Acceptance; and

     (b)  any Replacement Engine, with effect from the time when title thereto
          has passed to Owner in accordance with the Lease;

and in each case includes all modules and Parts from time to time belonging to
or installed in that engine but excludes any properly replaced engine title to
which has passed to Lessee pursuant to the Lease.

ENGINE CYCLE means operation of an engine on an aircraft from and including a
take-off to and including the landing of that aircraft.


                                       1-3
<PAGE>

ENGINE EVENT OF LOSS means the occurrence, with respect to the Engine only,
whether or not installed on the Airframe, of any of those events described in
the definition of Event of Loss.

ENGINE FLIGHT HOUR means each hour or part thereof an Engine is operated,
elapsing from the moment the wheels of an aircraft on which such Engine is
installed leave the ground until the wheels of such aircraft next touch the
ground.

ENGINE LLP REPLACEMENT has the meaning given in Section 7.2(ii);

ENGINE LLP SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.

ENGINE REFURBISHMENT means all scheduled and unscheduled off the wing Engine
maintenance and repair accomplished for each module in accordance with the
performance restoration or full overhaul sections of the Manufacturer's
workscope planning guide.

ENGINE SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease Agreement.

EQUIPMENT CHANGE has the meaning given in Section 8.12.

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

EVENT OF DEFAULT means any event or condition specified in Schedule 9.

EVENT OF LOSS means with respect to the Aircraft (including for the purposes of
this definition the Airframe):

     (a)  the actual or constructive, compromised, arranged or agreed total loss
          of the Aircraft; or

     (b)  the Aircraft being destroyed, damaged beyond reasonable economic
          repair as determined by Lessor or permanently rendered unfit for
          normal use for any reason whatsoever; or

     (c)  the Aircraft being condemned, confiscated or requisitioned for title,
          or title to the Aircraft being otherwise compulsorily acquired by the
          government of the State of Registry or any other Government Entity; or

     (d)  the Aircraft being hijacked, stolen, confiscated, detained, seized,
          condemned or requisitioned for use or hire for the lesser of (i) a
          period of more than 30 days (or 60 days in the case of requisition for
          use or hire by the government of the State of Registry) or (ii) a
          period equal to or exceeding the remaining balance of the Term; or

     (e)  as a result of any rule, regulation, order or other action by the FAA
          the use of the Aircraft by Lessee or any Permitted Sub Lessee shall
          have been prohibited for a period of twelve (12) consecutive months.


                                       1-4
<PAGE>

EXPIRY DATE means the Scheduled Expiry Date or, if earlier (i) the date when
Lessor acting in accordance with the provisions of the Lease, terminates the
leasing of the Aircraft to Lessee under the Lease, or (ii) subject to the
provisions of Section 11.1 and 11.2, the date when Lessor receives the Agreed
Value together with any other amounts then due and unpaid under the Lease and
the Other Agreements following an Event of Loss; provided, that if the Term is
extended pursuant to Section 12.2, the Expiry Date shall be extended to the date
to which the Term is extended pursuant to Section 12.2.

FAA means the Federal Aviation Administration of the United States and any
successor thereof.

FAR means the Federal Aviation Regulations set forth in Title 14 of the United
States Code of Federal Regulations, as amended and modified from time to time.

FINAL DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.

FINAL INSPECTION has the meaning given in Section 1.1 of Part III of Schedule A
to the Aircraft Lease Agreement.

FINANCIAL INDEBTEDNESS means any indebtedness in respect of:
     (a)  money's borrowed or raised;

     (b)  any liability under any debenture, bond, note, loan stock, acceptance,
          documentary credit or other security;

     (c)  the acquisition cost of any asset to the extent payable before or
          after the time of acquisition or possession (exclusive of trade
          payables); or

     (d)  any guarantee, indemnity or similar assurance against financial loss
          of any person in respect of the above.

FINANCIAL INFORMATION means:

     (a)  as soon as available but not in any event later than 60 days after the
          last day of each fiscal quarter of Lessee, the consolidated financial
          statements of Aloha Airgroup, Inc. (consisting of a balance sheet and
          statements of operations and of retained earnings and cash flows)
          prepared for the most recent previous fiscal quarter certified by a
          qualified financial officer of Aloha Airgroup, Inc. as being true and
          correct and fairly presenting its financial condition and results of
          operation in accordance with GAAP (subject to year end adjustments);
          and

     (b)  as soon as available but not in any event later than 120 days after
          the last day of each fiscal year of Lessee, the audited combined
          financial statements of Aloha Airgroup, Inc. (consisting of a balance
          sheet and statements of operations and of retained earnings and cash
          flows), prepared for the fiscal year. then most recently ended
          certified by the independent auditors of Aloha Airgroup, Inc. without
          qualification.


                                       1-5
<PAGE>

FINANCING DOCUMENTS (if applicable) has the meaning given in the Aircraft Lease
Agreement.

FINANCING DOCUMENTS CONTEST RIGHTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.

FINANCING DOCUMENTS INDEMNITY AMOUNTS (if applicable) has the meaning given in
the Aircraft Lease Agreement.

FINANCING DOCUMENTS TAX AMOUNTS (if applicable) has the meaning given in the
Aircraft Lease Agreement.

FINANCING PARTIES (if applicable) has the meaning given in the Aircraft Lease
Agreement.

FINANCING PARTIES' REPRESENTATIVE (if applicable) has the meaning given in the
Aircraft Lease Agreement.

FINANCING STATEMENTS means Uniform Commercial Code Financing Statements in
respect of the Lease and the Aircraft and Engines leased thereunder prepared in
a form acceptable for filing with the applicable Government Entities in the
state in which Lessee's chief executive office is located (as the term "chief
executive office" is defined in Article 9 of the Uniform Commercial Code as in
effect in such state) and such other jurisdictions as Lessor shall reasonably
require.

FLIGHT HOUR means each hour or part thereof elapsing from the moment the wheels
of the Aircraft leave the ground on take off until the wheels of the Aircraft
next touch the ground.

GAAP means generally accepted accounting principles in the United States.

GE CAPITAL means General Electric Capital Corporation.

GECAS means either or both of GE Capital Aviation Services, Limited and GE
Capital Aviation Services, Inc.

GOVERNMENT ENTITY means:

     (a)  national government, political subdivision thereof, or local
          jurisdiction therein;

     (b)  any instrumentality, board, commission, court, or agency of any of the
          above, however constituted; and

     (c)  any association, organization, or institution of which any of the
          above is a member or to whose jurisdiction any thereof is subject or
          in whose activities any of the above is a participant.


                                       1-6
<PAGE>

GUARANTEE means, if applicable, a guarantee by the Guarantor in form and
substance reasonably acceptable to Lessor and references to the Guarantee
include reference to any replacement or re-issued guarantee.

GUARANTOR (if applicable) has the meaning given in the Aircraft Lease Agreement.

HABITUAL BASE means the jurisdiction in which the Aircraft's primary aircraft
operations center is located.

INDEMNITEE has the meaning given in the Aircraft Lease Agreement.

INTEREST RATE has the meaning given in the Aircraft Lease Agreement.

INSURANCE means the insurance in respect of the Aircraft in form and substance
satisfactory to Lessor, and includes any insurance and reinsurance required by
Section 9 and Schedule 7.

LANDING GEAR means the landing gear assembly of the Aircraft excluding any
rotable components.

LANDING GEAR SUPPLEMENTAL RENT has the meaning given in the Aircraft Lease
Agreement.

LAW means and includes (a) any statute, decree, constitution, regulation, order,
judgement or other directive of any Government Entity; (b) any treaty, pact,
compact or other agreement to which any Government Entity is a signatory or
party; (c) any judicial or administrative interpretation or application of any
Law described in (a) or (b) above; and (d) any amendment or revision of any Law
described in (a), (b) or (c) above.

LC AMOUNT has the meaning given in the Aircraft Lease Agreement.

LEASE means the Aircraft Lease Agreement for the Aircraft (of which this CTA
forms a part), any schedules or documents executed pursuant to the Schedules
hereto or pursuant to the Aircraft Lease Agreement, any Lease Supplement to the
Lease (including Lease Supplement No. 1), and any side letters related to the
Lease.

LEASE SUPPLEMENT means any Lease Supplement executed and delivered with respect
to the Lease.

LEASE SUPPLEMENT NO. 1 means a Lease Supplement No. 1 substantially in the form
of Schedule 12.

LEASE TERMINATION CERTIFICATE means a Lease Termination Certificate
substantially in the form of Schedule 11 in respect of the Lease.

LESSEE means the Person named as Lessee in the Aircraft Lease Agreement.

LESSEE AFFILIATE means any Subsidiary or other Affiliate for the time being of
Lessee.

LESSEE CONDITIONS PRECEDENT means the conditions specified in Part B of Schedule
3.


                                       1-7
<PAGE>

LESSEE'S MAINTENANCE PROGRAM means the Maintenance Program specifically approved
by the Air Authority for maintenance of the Aircraft by Lessee, or at any time
that a Permitted Sub-Lease approved by Lessor and meeting the requirements of
Section 8.4(b) is in effect, by the Permitted Sub-Lessee under such Permitted
Sub-Lease.

LESSOR means the Person named as Lessor in the Aircraft Lease Agreement.

LESSOR CONDITIONS PRECEDENT means the conditions specified in Part A of Schedule
3.

LESSOR LIEN means (i) any Security Interest whatsoever from time to time created
by Lessor or Owner in connection with the financing of the Aircraft, including
the Financing Documents, and (ii) any other Security Interest in the Aircraft
which (a) results from acts of or claims against Lessor or Owner or any
affiliate of Lessor or Owner that do not relate to the transactions contemplated
by the Lease or by any other contract or agreement between Lessee or any
affiliate of Lessee and Lessor or Owner or any affiliate of Lessor or Owner and
(b) is not attributable to Lessee or Lessee's use or possession of the Aircraft.

LESSOR/OWNER TAX JURISDICTION has the meaning given in the Aircraft Lease
Agreement.

LESSOR TAXES means Taxes for which Lessee is not obligated to indemnify Lessor
and/or Owner and/or a Financing Party as provided in Section 5.7(c).

LETTER OF CREDIT means any letter of credit issued in relation to the Lease
pursuant to Section 5.14 and any replacement or renewal of that letter of
credit.

LOSSES means any and all cost, expense (including any and all reasonable legal
fees and expenses and the fees and expenses of other professional advisers),
claims, proceedings, losses, liabilities, obligations, damages (whether direct,
indirect, special, incidental or consequential), suits, judgements, fees,
penalties or fines (whether criminal or civil) of any kind or nature whatsoever,
including any of the foregoing arising or imposed with or without any
Indemnitee's fault or negligence, whether passive or active or under the
doctrine of strict liability.

MAINTENANCE CONTRIBUTIONS means, as and if applicable, all amounts payable by
Lessor pursuant to Section 7.2.

MAINTENANCE PERFORMER means (1) any of the Persons identified on Schedule 14
hereto (until such time as Lessor delivers written notice to Lessee of the
removal of any such Person from the list of Maintenance Performers), or (ii)
such other mutually acceptable Persons as may be added to Schedule 14 hereto
from time to time (Lessee shall advise Lessor in writing of any request to add a
Person to Schedule 14 and Lessor shall respond in writing).

MAINTENANCE PROGRAM means an Air Authority approved maintenance program for the
Aircraft and encompassing scheduled maintenance, condition-monitored
maintenance, and/or on-condition


                                       1-8
<PAGE>

maintenance of Airframe, Engines and Parts, including servicing, testing,
preventive maintenance, repairs, structural inspections, system checks,
overhauls, approved modifications, engineering orders, airworthiness directives,
corrosion control, inspections and treatments.

MAJOR CHECKS means any C-check, multiple C-check or heavier check (including
structural inspections and CPCP) suggested for commercial aircraft of the same
model as the Aircraft by its manufacturer (however denominated) as set out in
the Lessee's Maintenance Program.

MANUFACTURER has the meaning given in the Aircraft Lease Agreement.

MANUFACTURER'S MAINTENANCE PLANNING DOCUMENT means the recommended maintenance
program for the Aircraft issued by the Manufacturer as in effect at the time of
any applicable determination.

MINIMUM AIRFRAME LIFE LIMITED COMPONENT CYCLES has the meaning given in the
Aircraft Lease Agreement.

MINIMUM AIRFRAME LIFE LIMITED COMPONENT FLIGHT HOURS has the meaning given in
the Aircraft Lease Agreement.

MINIMUM APU LIMIT has the meaning given in the Aircraft Lease Agreement.

MINIMUM APU LLP LIMIT has the meaning given in the Aircraft Lease Agreement.

MINIMUM COMPONENT CALENDAR LIFE has the meaning given in the Aircraft Lease
Agreement.

MINIMUM COMPONENT CYCLES has the meaning given in the Aircraft Lease Agreement.

MINIMUM COMPONENT FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.

MINIMUM ENGINE CYCLES has the meaning given in the Aircraft Lease Agreement.

MINIMUM ENGINE FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LANDING GEAR CALENDAR TIME has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LANDING GEAR CYCLES has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LANDING GEAR FLIGHT HOURS has the meaning given in the Aircraft Lease
Agreement.

MINIMUM LIABILITY COVERAGE has the meaning given in the Aircraft Lease
Agreement.

MINIMUM MEASURABLE FUEL REQUIREMENT has the meaning given in the Aircraft Lease
Agreement.

NAMEPLATE INSCRIPTION means the inscription to be included on the Nameplates as
reasonably requested by Lessor from time to time.


                                       1-9
<PAGE>

NAMEPLATES means the fireproof plates to be installed on the Aircraft in
accordance with Section 8.6(a).

OTHER AGREEMENTS means any aircraft, engine or spare parts related lease or
financing agreement (including an aircraft, engine or spare parts related loan,
hire purchase, conditional sale, credit sale or security agreement) from time to
time entered into between Lessor (or any Subsidiary or Affiliate of Lessor), on
the one hand, and Lessee (or any Subsidiary or Affiliate of Lessee), on the
other hand.

OWNER has the meaning given in the Aircraft Lease Agreement.

PART means, whether or not installed on the Aircraft:

     (a)  any component, furnishing or equipment (other than a complete Engine
          or engine) incorporated or installed in or attached to or furnished
          with the Aircraft on the Delivery Date or thereafter if paid for or
          otherwise provided by or on behalf of Lessor; and

     (b)  any other component, furnishing or equipment (other than a complete
          Engine or engine), with effect from the time when title thereto has
          passed to Owner pursuant to the Lease;

     (c)  but excludes any such items title to which has passed to Lessee
          pursuant to the Lease.

PART 36 OR FAR PART 36 means Part 36 of the FAR, as amended or modified from
time to time.

PART 121 OR FAR PART 121 means Part 121 of the FAR, as amended or modified from
time to time.

PERMITTED LIEN means:

     (a)  any lien for Taxes not assessed or, if assessed, not yet due and
          payable, or being diligently contested in good faith by appropriate
          proceedings;

     (b)  any lien of a repairer, mechanic, hangar-keeper or other similar lien
          arising in the ordinary course of business by operation of Law in
          respect of obligations which are not overdue or are being diligently
          contested in good faith by appropriate proceedings;

     (C)  any Lessor Lien; and

     (d)  rights of others under any sub-lease or other arrangements to the
          extent expressly permitted under Section 8.4;

 but only if (in the case of both (a) and (b)) (i) adequate  reserves have been
 provided by Lessee for the payment of such Taxes or obligations;  and (ii) such
 proceedings,  or the  continued  existence of the lien, do not give rise to any
 risk of the sale,  forfeiture  or other loss of the  Aircraft  or any  interest
 therein or of criminal liability on the part of Lessor or Owner.


                                      1-10
<PAGE>


PERMITTED SUB-LEASE means any sub-lease of the Aircraft to a Permitted
Sub-Lessee to which Lessor has consented as provided for in Section 8.4(a).

PERMITTED SUB-LESSEE means any sub-lessee of the Aircraft to which Lessor has
consented as provided in Section 8.4(a).

PERSON means any individual person, any form of corporate or business
association, trust, Government Entity, or organization or association of which
any of the above is a member or a participant.

PRE-APPROVED BANK has the meaning given in the Aircraft Lease Agreement.

PRE-DELIVERY PROCEDURE means the procedure leading to Delivery as specified in
Schedule 4.

REDELIVERY LOCATION has the meaning given in the Aircraft Lease Agreement.

REGULATIONS means any Law or regulation, official directive or recommendation,
mandatory requirement, or contractual undertaking, or airworthiness requirements
or limitations, which applies to Lessee or the Aircraft and any Law or
regulation, official directive or recommendation or mandatory requirement which
applies to Lessor, Owner, Financing Parties' Representative or GECAS.

RENT means the basic monthly "Rent", as defined in Schedule B of the Aircraft
Lease Agreement, and payable pursuant to Section 5.3.

RENT COMMENCEMENT DATE has the meaning given in the Aircraft Lease Agreement.

RENTAL PERIOD means each period ascertained in accordance with Section 5.2.

RENT DATE means the first day of each Rental Period.

REPLACEMENT APU means an "APU" that has duly replaced the APU in accordance with
the requirements of Section 8.11(b).

REPLACEMENT ENGINE means an "Engine" that has duly replaced an "Engine" in
accordance with the requirements of Section 8.11(b).

REQUIRED LC EXPIRY DATE means the date being 91 days after the Expiry Date.

RETURN OCCASION means the date on which the Aircraft is redelivered to Lessor in
accordance with Section 12.

SCHEDULED DELIVERY DATE has the meaning given in the Aircraft Lease Agreement.

SCHEDULED DELIVERY MONTH has the meainng given in the Aircraft Lease Agreement.

SCHEDULED DELIVERY WEEK has the meaning given in the Aircraft Lease Agreement.


                                      1-11
<PAGE>

SCHEDULED EXPIRY DATE has the meaning given in the Aircraft Lease Agreement.

SECURITY INTEREST means any mortgage, chattel mortgage, security interest,
charge, pledge, lien, conditional sale agreement, title retention agreement,
equipment trust agreement, encumbrance, assignment, hypothecation, right of
detention, right of set-off or any other agreement or arrangement having the
effect of conferring security.

STATE OF DESIGN has the meaning specified in the Aircraft Lease Agreement.

STATE OF INCORPORATION means the United States and the state of organization of
the applicable Person as identified in the heading of the Aircraft Lease
Agreement.

STATE OF REGISTRY means the United States.

SUBSIDIARY means:

     (a)  in relation to any reference to financial statements, any Person whose
          financial statements are consolidated with the accounts of Lessee in
          accordance with GAAP; and

     (b)  for any other purpose, an entity from time to time of which another
          has direct or indirect control or owns directly or indirectly more
          than 50 percent of the voting share capital or similar equity
          interests.

SUPPLEMENTAL RENT means, as and if applicable, all amounts payable under the
Lease in respect of each of Airframe Supplemental Rent, Engine Supplemental
Rent, Engine LLP Supplemental Rent, APU Supplemental Rent and Landing Gear
Supplemental Rent.

TAXES means any and all present and future taxes, duties, withholdings, levies,
assessments, imposts, fees and other governmental charges of all kinds
(including any value added or similar tax and any stamp, documentary, license,
registration or similar fees or tax) imposed by a Government Entity, together
with any penalties, fines, surcharges and interest thereon and any additions
thereto.

TAX INDEMNITEE has the meaning given in the Aircraft Lease Agreement.

TECHNICAL REPORT means a monthly report of the Flight Hours, Cycles, Engine
Flight Hours and Engine Cycles operated by the Airframe and Engines in respect
of each calendar month substantially in the form attached as Schedule 15.

TERM means the period commencing on the Delivery Date and ending on the Expiry
Date.

UCC means the Uniform Commercial Code as in effect in the State of New York.

UNFORESEEN EVENT means:


                                      1-12
<PAGE>

     (a)  civil disturbance or act of any Government Entity;

     (b)  natural disaster or any other act of God;

     (c)  Law of, or any allocation or other action by, a Government Entity or
          any unexpected shortage of labor, materials or facilities affecting
          the Aircraft;

     (d)  any damage or Defect;

     (e)  labor disputes;

     (f)  breach of contract by any Person (other than Lessor), or other failure
          to deliver or redeliver the Aircraft by any Person (whether or not a
          breach) with possession or control of the Aircraft (other than by
          Lessor, if it has possession and control of the Aircraft), including
          any failure to deliver or delay in delivery by any prior lessee, any
          seller of the Aircraft or any Person performing modifications or
          maintenance to the Aircraft and any breach by any prior lessee, seller
          or modification or maintenance performer or failure to cooperate by
          any prior lessee, seller or modification or maintenance performer, or
          any "excusable" or "inexcusable" delay under. any previous lease,
          purchase or modification or maintenance agreement for the Aircraft, or
          any purchase or modification or maintenance agreement for the Aircraft
          terminating prior to Delivery (including due to Lessor or an Affiliate
          of Lessor voluntarily terminating such agreement);

     (g)  delays in obtaining the Aircraft or any equipment or services for the
          Aircraft;

     (h)  any delay due to Air Authority certifications; or

     (i)  any other cause beyond the control of Lessor or not occasioned by
          Lessor's gross negligence or willful misconduct.

UNITED STATES means the United States of America.

U.S.C. means the United States Code.


                                      1-13
<PAGE>

                                   SCHEDULE 2
                         REPRESENTATIONS AND WARRANTIES

1.1  LESSEE'S REPRESENTATIONS AND WARRANTIES

LESSEE'S representations and warranties to Lessor as of the date of execution of
the Lease and the Delivery Date are as follows:

     (a)  STATUS: It is duly organized, validly existing and in good standing in
          its State of Incorporation.

     (b)  NON-CONFLICT: Execution, delivery and performance of the Lease do not
          contravene or breach any Regulation applicable to Lessee.

     (c)  POWER AND AUTHORITY: It has all corporate and other power and
          authority to execute, deliver and perform the Lease, and the Lease has
          been duly authorized, executed and delivered by Lessee.

     (d)  LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
          enforceable against Lessee in accordance with its terms.

     (e)  NO EVENT OF DEFAULT: No Event of Default has occurred and is
          continuing or would occur because of Delivery.

     (f)  LITIGATION: It is not involved in any litigation or other dispute
          which could materially and adversely affect its financial condition or
          its ability to perform its obligations under the Lease.

     (g)  FINANCIAL INFORMATION: Its audited financial statements most recently
          delivered to Lessor:

          (i)  have been prepared in accordance with GAAP; and

          (ii) are true and correct and present fairly the financial condition
               and results of operations of Lessee as at the date thereof and
               for the period then ending.

     (h)  FULL DISCLOSURE: Neither the audited financial statements referred to
          in paragraph (g) nor any other financial, operational or credit
          related information provided to Lessor by Lessee for the purposes of
          the Lease contains as of the date thereof any untrue statement of a
          material fact or omits to state any material fact necessary in order
          to make the statements therein not misleading in the light of the
          circumstances under which they were made.


                                       2-1
<PAGE>

     (i)  LOCATION: Lessee's chief executive office (as that term is defined in
          Article 9 of the UCC) is located at the address set forth in the
          heading of the Aircraft Lease Agreement; and the records of the Lessee
          concerning the Aircraft are maintained at such chief executive office
          or at the Habitual Base of the Aircraft.

     (j)  CERTIFICATED AIR CARRIER: Lessee is a Certificated Air Carrier and
          Lessor, as lessor of the Aircraft to Lessee, is entitled to the
          benefits of Section 1110 of Title 11 of the U.S.C. with respect to the
          Aircraft.

     (k)  CITIZEN OF THE UNITED STATES: Lessee is a "citizen of the United
          States" as defined in Section 40102 of Title 49 of the U.S.C.

     (l)  ERISA: Lessee is not engaged in any transaction in connection with
          which it could be subjected to either a civil penalty assessed
          pursuant to Section 502 of ERISA or any tax imposed by Section 4975 of
          the Internal Revenue Code; no material liability to the Pension
          Benefit Guaranty Corporation has been or is expected by Lessee to be
          incurred with respect to any employee pension benefit plan (as defined
          in Section 3 of ERISA) maintained by Lessee or by any trade or
          business (whether or not incorporated) which together with Lessee
          would be treated as a single employer under Section 4001 of ERISA and
          Section 414 of the Internal Revenue Code; there has been no reportable
          event (as defined in Section 4043(b) of ERISA) with respect to any
          such employee pension benefit plan; no notice of intent to terminate
          any such employee pension benefit plan has been filed or is expected
          to be filed, nor has any such employee pension benefit been
          terminated; no circumstance exists or is anticipated that constitutes
          or would constitute grounds under Section 4042 of ERISA for the
          Pension Benefit Guaranty Corporation to institute proceedings to
          terminate, or to appoint a trustee to manage the administration of,
          such an employee pension benefit plan; and no accumulated funding
          deficiency (as defined in Section 302 of ERISA or Section 412 of the
          Internal Revenue Code), whether or not waived, exists with respect to
          any such employee pension benefit plan.

     (m)  MATERIAL ADVERSE CHANGE: there has been no material adverse change in
          the financial condition or operations of Lessee and Lessee Affiliates
          or in the ability of Lessee to comply with its obligations under the
          Lease since the date of the financial statements most recently
          provided to Lessor on or prior to the date of the Aircraft Lease
          Agreement.

1.2  LESSOR'S REPRESENTATIONS AND WARRANTIES

Lessor's representations and warranties to Lessee as of the date of execution of
the Lease and the Delivery Date are as follows:

     (a)  STATUS: It is duly organized, validly existing and in good standing in
          its State of Incorporation.


                                       2-2
<PAGE>

     (b)  NON-CONFLICT: Execution, delivery and performance of the Lease do not
          contravene or breach any Regulation applicable to Lessor.

     (c)  POWER AND AUTHORITY: It has all corporate and other power and
          authority to execute, deliver and perform the Lease, and the Lease has
          been duly authorized, executed and delivered by Lessor.

     (d)  LEGAL VALIDITY: The Lease is its legal, valid and binding obligation,
          enforceable against Lessor in accordance with its terms.

     (e)  CITIZEN OF THE UNITED STATES: Lessor is a "citizen of the United
          States" as defined in Section 40102 of Title 49 of the U.S.C. and the
          FAR.


                                       2-3

<PAGE>


                                   SCHEDULE 3
                              CONDITIONS PRECEDENT

 PART A - LESSOR CONDITIONS PRECEDENT

 The conditions  precedent to Lessor's obligation to deliver and to commence the
 leasing of the  Aircraft  are as follows.  All  documents  delivered  to Lessor
 pursuant to this Schedule 3 will be in English:

 1.1  PRELIMINARY CONDITIONS

 Lessor will receive from Lessee,  not later than two Business Days prior to the
 Scheduled  Delivery  Date,  each of the  following,  satisfactory  in form  and
 substance to Lessor:

          (a)     OPINION(S): forms of the opinion(s) substantially in the form
                  of Schedule 8 that will be issued on the  Delivery  Date by
                  legal counsel(s) reasonably acceptable to Lessor with respect
                  to the laws of the State of New York, the state of the
                  location of Lessee's chief executive offices and the general
                  corporate laws of the State of Incorporation;

          (b)     APPROVALS: evidence of the issue of each approval, license and
                  consent, if any, which is required in relation to, or in
                  connection with the performance by Lessee of any of its
                  obligations under the Lease;

          (c)     IMPORT: evidence that any required license, and all customs
                  formalities, relating to the import of the Aircraft into the
                  Habitual Base have been obtained or complied with, and that
                  the import of the Aircraft into the Habitual Base is exempt
                  from Taxes;

          (d)     PROCESS AGENT: a letter from the process agent appointed by
                  Lessee in the Lease accepting that appointment;

          (e)     LICENSES: copies of Lessee's air transport license, air
                  carrier operating certificate, air operator's certificates,
                  including authority to operate the Aircraft under FAR Part
                  121, and a Certificate of Public Convenience and Necessity
                  issued under Section 40102 of Title 49 of U.S.C.;

          (f)     UCC: Financing Statements with respect to the Lease and the
                  Aircraft in a form reasonably acceptable to Lessor shall have
                  been executed and delivered by Lessee to Lessor and duly filed
                  in each junisdiction reasonably requested by Lessor;

          (g)      Letter of Credit (if applicable): the form of the Letter of
                   Credit;

          (h)      General: such other documents as Lessor may reasonably
                   request.


                                                3-1


<PAGE>


1.2  FINAL CONDITIONS

          (a)      Final Documents: Lessor shall receive on or before the
                   Delivery Date each of the following:

                   (i)      CERTIFICATE OF TECHNICAL ACCEPTANCE AND LEASE
                            SUPPLEMENT NO. 1: each of the Certificate of
                            Technical Acceptance and Lease Supplement No. 1,
                            dated and fully completed, and executed by Lessee,
                            and, in the case of Lease Supplement No. 1, filed
                            for recording at the FAA (together with the CTA);

                   (ii)     OPINIONS: a signed original (or facsimile
                            transmission thereof) of each of the opinions
                            referred to in Section 1.1(a) of this  Schedule,
                            dated the Delivery Date;

                   (iii)    PAYMENTS:  all sums due to Lessor under the Lease on
                            or before the  Delivery  Date,  including  the first
                            payment of Rent and, if  applicable,  the balance of
                            the Deposit;

                   (iv)     INSURANCE: certificates of insurance, an opinion and
                            undertaking from Lessee's insurance broker and other
                            evidence reasonably satisfactory to Lessor that
                            Lessee is taking the required steps to ensure due
                            compliance with the provisions of the Agreement as
                            to Insurance with effect on and after the Delivery
                            Date;

                   (v)      FINANCIAL INFORMATION: the latest Financial
                            Information of Lessee requested by Lessor;

                   (vi)     LETTER OF CREDIT (if applicable): the Letter of
                            Credit;

                   (vii)    GUARANTEE  (if  applicable):   the  Guarantee,  duly
                            executed  and  delivered  by the  Guarantor,  and an
                            opinion  of legal  counsel  acceptable  to Lessor in
                            respect of the Guarantee in form and substance
                            acceptable to Lessor and its legal counsel;

                   (viii)   LESSEE'S MAINTENANCE PROGRAM: such information and
                            documents relating to the Lessee's Maintenance
                            Program as Lessor may reasonably require;

                   (ix)     FILINGS:  evidence  that on the  Delivery  Date  all
                            filings, registrations, recordings and other actions
                            have been or will be taken  which are  necessary  or
                            advisable to ensure the validity,  effectiveness and
                            enforceability  of  the  Lease  and to  protect  the
                            interests of Owner and, if applicable, the Financing
                            Parties in the Aircraft,  any Engine or any Part and
                            in the Lease;

                   (x)      FAA OPINION:  evidence  that there will be issued an
                            opinion of ___________ or other counsel reasonably
                            acceptable to Lessor who are recognized specialists
                            with regard to FAA registration matters in a form
                            reasonably acceptable to Lessor as


                                               3-2


<PAGE>


                           to the due filing for recordation of the Lease and,
                           if applicable, the Financing Documents, (the costs
                           for which shall be paid by Lessee);

                   (xi)    CERTIFICATE OF LEASE TERMINATION: a certificate of
                           lease termination executed by a duly authorized
                           officer of Lessee substantially in the form of
                           Schedule 11 acknowledging that the Lease is no
                           longer in effect with  respect to the  Aircraft
                           and Engines,  which  certificate  Lessor will hold in
                           escrow to be filed at the FAA upon the  expiration or
                           other termination of the Lease;

                  (xii)    ACKNOWLEDGEMENT  AND  AGREEMENT  RE  ASSIGNMENT  (if
                           applicable):   an  acknowledgement  of  and  certain
                           agreements  with respect to the assignment by Lessor
                           of  this  Lease  to  Owner  and  Financing  Parties'
                           Representative  in the form  previously  provided to
                           Lessee   or   as   Owner   or   Financing   Parties'
                           Representative may otherwise reasonably request; and

                  (xiii)   GENERAL: such other documents as Lessor may
                           reasonably request;

          (c)     REPRESENTATIONS/WARRANTIES: the representations and warranties
                  of Lessee in Schedule 2 shall be true and correct in all
                  material respects, and would be true and correct in all
                  material respects if repeated on Delivery; and

          (d)      NO DEFAULT: no Default shall have occurred and be continuing
                   on Delivery or could reasonably be expected to result from
                   the leasing of the Aircraft to Lessee under the Lease.

 PART B - LESSEE CONDITIONS PRECEDENT

 The conditions  precedent to Lessee's  obligation to accept and to commence the
 leasing of the  Aircraft  are as follows.  All  documents  delivered  to Lessee
 pursuant to this Schedule 3 will be in English.

          (a)      FINAL DOCUMENTS:  Lessee shall receive on or before the
                   Delivery Date for the Aircraft each of the following:

                   (i)     LEASE  SUPPLEMENT  NO. 1: Lease  Supplement  No. 1,
                           dated and executed by Lessor and filed for recording
                           at the FAA (together with the CTA); and

                  (ii)     Acknowledgement re Quiet Enjoyment: if Lessee is
                           required to deliver an acknowledgement of or
                           agreement with respect to the assignment by Lessor
                           of the Lease to Owner or Financing Parties'
                           Representative, an agreement by each such Person
                           (Owner, Financing Parties' Representative or both,
                           as the case may be) as to itself to the effect set
                           forth in Section 7.1;


                                                    3-3


<PAGE>


                  (iii)     REPRESENTATIONS/WARRANTIES:  the representations and
                            warranties of Lessor in Schedule 2 shall be true and
                            correct in all material respects,  and would be true
                            and correct in all material  respects if repeated on
                            Delivery; and

                   (iv)     Delivery Condition Requirements: tender by Lessor of
                            delivery of the Aircraft in compliance with the
                            Delivery Condition Requirements.


                                                 3-4


<PAGE>


                                   SCHEDULE 4
                 PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                         REQUIREMENTS - PART 1 (NEW AIRCRAFT)

 1.       LICENSES

          (a)      It is the  responsibility  of Lessee to obtain all  licenses,
                   permits or approvals  necessary  to export or  transport  the
                   Aircraft from the Delivery Location.

          (b)      Lessor  will  provide  Lessee  with  any  required  data  and
                   information  for the purposes of obtaining any such licenses,
                   permits or approvals.

 2.       INSPECTION

          Except as otherwise provided in the Aircraft Lease Agreement:

          (a)     Subject to any applicable purchase agreement, Lessee may
                  inspect the Aircraft (including such  rights as Lessor has
                  to be present and inspect, on an ongoing basis, the
                  manufacture of the Aircraft and including a demonstration
                  flight at no expense to Lessee with up to two (2)
                  representatives of Lessee on the Aircraft as observers) to
                  ensure that the Aircraft fulfils the Delivery Condition
                  Requirements.

          (b)     If Lessee's inspection of the Aircraft shows that the Aircraft
                  does not fulfil the Delivery Condition Requirements, Lessor
                  will correct any defects and make the Aircraft available for
                  re-inspection by Lessee provided that, in Lessor's reasonable
                  opinion, it is not impracticable or prohibitively expensive
                  to  correct the defect.

          (c)     If Lessor notifies Lessee that it does not intend to correct
                  the defect, either party may terminate the Lease, and upon
                  such termination neither party shall have any further
                  liability to any party under this Lease, except that Lessor
                  shall promptly return to Lessee the Deposit and/or the Letter
                  of Credit, if any, to Lessor.

3.   INDEMNITY

         Lessee is responsible  for and will indemnify each  Indemnitee  against
         all Losses arising from death or injury to any observer or any employee
         of Lessee in connection with the inspection of the Aircraft.


                                         4-1


<PAGE>


                                      SCHEDULE4
                   PRE-DELIVERY PROCEDURES AND DELIVERY CONDITION

                         REQUIREMENTS - PART 2 (USED AIRCRAFT)

1.         LICENSES

           (a)      It is the  responsibility  of Lessee to obtain all licenses,
                    permits or approvals  necessary  to export or transport  the
                    Aircraft from the Delivery Location.

           (b)      Lessor  will  provide  Lessee  with  any  required  data and
                    information for the purposes of obtaining any such licenses,
                    permits or approvals.

2.        INSPECTION

          Except as otherwise provided in the Aircraft Lease Agreement:

          (a)      Subject to any applicable purchase agreement or prior lease,
                   Lessee may inspect the Aircraft (including a demonstration
                   flight at no expense to Lessee with up to two (2)
                   representatives of Lessee on the Aircraft as observers)
                   to ensure that the Aircraft fulfils the Delivery Condition
                   Requirements.

           (b)     If Lessee's inspection of the Aircraft shows that the
                   Aircraft does not fulfil the Delivery Condition Requirements,
                   Lessor will correct any defects and make the Aircraft
                   available for re-inspection by Lessee provided that, in
                   Lessor's reasonable opinion, it is not impracticable or
                   prohibitively expensive to correct the defect.

          (c)      If Lessor notifies Lessee that it does not intend to correct
                   the defect, either party may terminate the Lease, and upon
                   such termination neither party shall have any further
                   liability to any party under this Lease, except that Lessor
                   shall promptly return to Lessee the Deposit and/or the Letter
                   of Credit, if any, to Lessor.

3.        INDEMNITY

          Lessee is responsible for and will indemnify each  Indemnitee  against
          all  Losses  arising  from  death or  injury  to any  observer  or any
          employee of Lessee in connection with the inspection of the Aircraft.


                                         4-2


<PAGE>


                                  SCHEDULE 5

           CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 1 (NEW AIRCRAFT)

  This Certificate of Technical Acceptance is delivered, on the date set out
  below by _________ ("Lessee") to ____________ ("Lessor") pursuant to the
  Aircraft Lease Agreement dated _______________ between Lessor and Lessee
  (the "Lease"). The capitalized terms used in this Certificate shall have the
  meaning given to such terms in the Lease.

  DETAILS OF ACCEPTANCE

  Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
  _______ day of __________, at ___________, technically accepted the following,
  in accordance with the provisions of the Lease:

  ____________ Aircraft, Manufacturer's Serial Number ______________;

  ____________ Engines:

  Engine Number       Manufacturer's Serial Number

  [To be completed at Delivery]

  (each of which has 750 or more rated take off horsepower or the equivalent of
  such horsepower)

  Fuel Status:      Kilos/lbs _____________; and

  Loose Equipment Check List: in accordance with the list signed by Lessor and
  Lessee and attached hereto.

  Aircraft Documents and Records: in accordance with the list signed by Lessor
  and Lessee and attached hereto.

  LOPA drawing attached.

  HOURS AND CYCLES DATA (AS OF DELIVERY DATE)

  Airframe:

  Time Since New:______________              Cycles Since New: ___________

  Landing Gear (Main and Nose)

  Time Since New: [, Center]                  Cycles Since New ___________

  Engines

  Position:                                   Time Since New: ____________

                                              Cycles Since New:___________

-------------------------------

  Auxiliary Power Unit:

  Number of Flight Hours/APU Hours

  (as applicable) since New:___________________


                                        5-1


<PAGE>


 ACCEPTANCE:

 Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
 and Records  are  technically  acceptable  to it,  satisfy all of the  Delivery
 Condition Requirements and are in the condition for delivery and acceptance as
 required under the Lease.

 IN WITNESS WHEREOF, Lessee and  Lessor  have,  by  their  duly  authorized
 representative,  executed this Certificate of Technical  Acceptance on the date
 in paragraph 1 above.

 LESSEE:_________________________________

 By: ____________________________________

 Title: _________________________________

 LESSOR:_________________________________

 By: ____________________________________

 Title: _________________________________



                                          5-2


<PAGE>


                                        SCHEDULE 5

                 CERTIFICATE OF TECHNICAL ACCEPTANCE - PART 2 (USED AIRCRAFT)

 This  Certificate  of Technical  Acceptance is  delivered,  on the date set out
 below by ___________ ("Lessee") to ____________("Lessor") pursuant to the
 Aircraft Lease Agreement dated between Lessor and Lessee (the "Lease").  The
 capitalized  terms used in  this Certificate shall have the meaning given to
 such terms in the Lease.

 DETAILS OF ACCEPTANCE

 Lessee hereby confirms to Lessor that Lessee has at [ ] o'clock on this
 __________ day of ________, at ____________, technically accepted the
 following, in accordance with the provisions of the Lease:

 ___________ Aircraft, Manufacturer's Serial Number ____________;

 ___________ Engines:

 Engine Number         Manufacturer's Serial Number

 [to be completed at Delivery]

 (each of which has 750 or more rated take off horsepower or the equivalent of
 such horsepower)

 Fuel Status:   Kilos/lbs _______; and

 Loose Equipment Check List: in accordance with the list signed by Lessor and
 Lessee and attached hereto.

 Aircraft Documents and Records: in accordance with the list signed by Lessor
 and Lessee and attached hereto.

 HOURS AND CYCLES DATA (as of Delivery Date)

 Airframe:

 Number of Hours since last Airframe Structural Check: _________ hours

 "C" Check (or Equivalent)

 Interval: ___________________________

 Time Since: _________________________

 Landing Gear Overhaul:

 Number of Cycles Since Last Overhaul:



                                        5-3


<PAGE>


 [__] Gear _________________________________ cycles

 Interval: _______________________________

 Engines:

 Number of Hours Since Last Engine Refurbishment:

 SIN _____________:______________ hours

 Hot Section Inspection:

 Interval: ________________________________

 Time Since (S/N ____________):_____________

 Time Remaining to First Restriction:

 Engine S/N:

 Hours:________________ Restriction: _________________

 Cycles: ______________ Restriction: _________________

 Average Cycles in Life Limited Parts (see attached Schedule): _______________

 Auxiliary Power Unit:

 Number of APU Hours since Last Heavy Shop Visit:

 _______________ hours     Date accomplished ______________

 Hot Section Inspection:

 Interval: _____________________________

 Time Since: ___________________________

 Interior Equipment:

 LOPA - attached _______________________

 Emergency drawing - attached ________________________

 Galley Equipment _________________________


                                         5-4


<PAGE>


 ACCEPTANCE:

 Lessee hereby confirms that the Aircraft, Engines, Parts and Aircraft Documents
 and Records  are  technically  acceptable  to it,  satisfy all of the  Delivery
 Condition  Requirements and are in the condition for delivery and acceptance as
 required under the Lease.

 IN  WITNESS  WHEREOF,   Lessee  and  Lessor  have,  by  their  duly  authorized
 representative,  executed this Certificate of Technical  Acceptance on the date
 in paragraph 1 above.

 LESSEE:

 By: ________________________________

 Title: _____________________________

 LESSOR:

 By: ________________________________

 Title: _____________________________

 By: ________________________________

 Title: _____________________________


                                           5-5


<PAGE>


                                    SCHEDULE 6

                                 [NOT APPLICABLE]






                                        6-1


<PAGE>


                                   SCHEDULE 7
                             INSURANCE REQUIREMENTS

1.1  TYPES OF INSURANCE

 The Insurances required to be maintained are as follows:

          (a)     HULL ALL RISKS of loss or damage while flying, taxiing and on
                  the ground with respect to the Aircraft on an agreed value
                  basis for not less than the Agreed Value and not more than
                  110% of the Agreed Value and with a deductible not exceeding
                  the Deductible Amount;

          (b)     HULL WAR AND ALLIED PERILS, being such risks excluded from the
                  Hull All Risks Policy, to the fullest extent available from
                  the leading international insurance markets for the Agreed
                  Value; provided that, when the Aircraft is being operated in
                  or over the Untied States or Canada, coverage may be limited
                  to such  coverage as is usual and customary for comparable
                  airlines, operating similar equipment in similar
                  circumstances, namely subject to the North American buy-back;

          (c)     ALL RISKS (including War and Allied Risk except when on the
                  ground or in transit other than by air) property insurance on
                  all Engines and Parts when not installed on the Aircraft for
                  like kind and quality value and including engine test and
                  running risks; and

          (d)     COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                  PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                  PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                  single limit (bodily injury/property damage) of an amount not
                  less than the Minimum Liability Coverage for the time being
                  for any one occurrence (but in respect of products and
                  personal injury liability, this limit may be an aggregate
                  limit for any and all losses occurring during the currency of
                  the policy).  War and Allied Risks are also to be covered
                  under the policy in line with prudent market practice for
                  comparable airlines, operating similar equipment in similar
                  circumstances.

1.2  TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

          (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                   Lessor any obligation imposed on the insured, including the
                   liability to pay any calls, commissions or premiums);

          (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to
                   Lessor for all amounts up to the Agreed Value and to Lessee
                   for any excess above the Agreed Value (which excess shall
                   not exceed 10% of the Agreed Value), except where the
                   insurance payment does not


                                               7-1

<PAGE>


                   exceed the Damage Notification  Threshold,  and no Default is
                   in existence, in which case the loss will be settled with and
                   paid to Lessee;

          (c)      50150 PROVISION: if separate Hull "all risks" and "war risks"
                   insurances are arranged, include a 50150 provision in
                   accordance with market practice (AVS. 103 is the current
                   London market language); and

          (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                   entitled to replace the Aircraft in the event of an insured
                   Event of Loss and are not entitled to replace any Engine in
                   the event of an Engine Event of Loss with respect to such
                   Engine.

1.3  TERMS OF LIABILITY INSURANCE

 All required liability insurances will:

          (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                   insureds for its respective rights and interests, warranted,
                   each as to itself only, no operational interest (without
                   imposing on any such Person any obligation imposed on the
                   insured, including the liability to pay any calls,
                   commissions or premiums);

          (b)      SEVERABILITY: include a severability of interests clause
                   which provides that the insurance, except for the limit of
                   liability, will operate to give each insured the same
                   protection as if there were a separate policy issued to each
                   insured; and

          (c)      PRIMARY POLICY: contain a provision confirming that the
                   policy is primary without right of contribution and the
                   liability of the insurers will not be affected by any other
                   insurance of which Lessor, any Indemnitee or Lessee has the
                   benefit so as to reduce the amount payable to the additional
                   insureds under such policies.

1.4  TERMS OF ALL INSURANCES

 All Insurances will:

          (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                   practice for airlines operating similar aircraft in similar
                   circumstances;

          (b)      DOLLARS: provide cover denominated in Dollars;

          (c)      WORLDWIDE: operate on a worldwide basis subject to such
                   limitations and exclusions as are in line with industry
                   practice obtained by prudent United States-based
                   international air carriers;

          (d)      BREACH OF WARRANTY: provide that, in relation to the
                   interests of each of the additional assureds, the Insurances
                   will not be invalidated by any act or omission by Lessee,
                   or any other Person other than the respective additional
                   assureds seeking protection and shall



                                              7-2


<PAGE>


                   insure  the  interests  of  each of the  additional  assureds
                   regardless of any breach or violation by Lessee, or any other
                   Person other than the respective  additional  assured seeking
                   protection  of  any  warranty,   declaration   or  condition,
                   contained in such Insurances;

          (e)      SUBROGATION: provide that the insurers will hold harmless and
                   waive any  rights of  recourse  or  subrogation  against  the
                   additional insureds to the extent Lessee has waived its
                   rights against the additional insureds in the Lease;

          (f)      PREMIUMS:  provide that the additional  insureds will have no
                   obligation or responsibility  for the payment of any premiums
                   due (but reserve the right to pay the same should any of
                   them elect so to do) and that the insurers  will not exercise
                   any right of set-off,  counter claim or other  deduction,  by
                   attachment  or  otherwise,  in  respect of any  premium  due
                   against the respective  interests of the additional  insureds
                   other than outstanding premiums relating to the Aircraft, any
                   Engine or Part the subject of the relevant claim;

          (g)      Cancellation/Change:   provide  that  the   Insurances   will
                   continue unaltered for the benefit of the additional insureds
                   for at least 30 days after written notice by registered  mail
                   or telex of any cancellation, change, event of non-payment of
                   premium or installment thereof has been sent by insurer(s) to
                   Lessor, or where an insurance broker is appointed to the
                   insurance broker who shall promptly send on such notice to
                   Lessor, except in the case of war risks for which 7 days (or
                   such lesser period as is or may be customarily available in
                   respect of war risks or allied perils) will be given, or in
                   the case of war between the 5 great powers or nuclear peril
                   for which termination is automatic; and

          (h)      [NOT APPLICABLE]

          (i)      [INTENTIONALLY OMITTED.]

          (j)      INDEMNITIES: accept and insure the indemnity provisions of
                   the Lease to the extent of the risks covered by the policies.

1.5  DEDUCTIBLES

 Lessee shall be responsible for any and all deductibles under the Insurances.

1.6  APPLICATION OF INSURANCE PROCEEDS

 The Insurances will be endorsed to provide for payment of proceeds as follows:

          (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                   received as the result of an Event of Loss occurring during
                   the Term will be paid to Lessor as loss payee and any amount
                   in excess of the Agreed Value (which excess shall not exceed
                   10% of the Agreed Value) shall be paid to Lessee;



                                        7-3


<PAGE>


          (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                   proceeds of any damage or loss to the Aircraft, any Engine or
                   any Part occurring during the Term not constituting an Event
                   of Loss and in excess of the Damage Notification Threshold
                   will be paid to the appropriate repair facility, and applied
                   in payment (or paid to Lessee and/or Lessor as reimbursement)
                   for repairs or replacement property upon Lessor being
                   satisfied that the repairs or replacement have been effected
                   in accordance with the Lease.

          (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                   amounts below the Damage Notification Threshold shall be paid
                   by the insurer directly to Lessee;

          (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of
                   third party liability will be paid by the insurers to the
                   relevant third party in satisfaction of the relevant
                   liability or to Owner, Lessor, Financing Partners'
                   Representative or Lessee, as the case may be, in
                   reimbursement of any payment so made;

          (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                   at the time of the payment of any such insurance proceeds a
                   Default has occurred and is continuing, all such proceeds
                   will be paid to Lessor, Owner or Financing Parties'
                   Representative, as the case may be, or retained to be applied
                   toward payment of any amounts which may be or become payable
                   by Lessee in such order as Lessor or Owner, as the case may
                   be, may elect until such time as no Default is continuing and
                   then applied as described above; and to the extent that
                   insurance proceeds are paid to Lessee, Lessee agrees to hold
                   such proceeds in trust and comply with the foregoing
                   provisions and apply or pay over such proceeds as so
                   required.

1.7  UNITED STATES GOVERNMENTAL INDEMNITY

          Notwithstanding  any of the  foregoing  paragraphs,  in the event of a
          Permitted  Sub-Lease to, or a requisition of use by, the United States
          or any Governmental  Entity whose  obligations have the full faith and
          credit of the federal  Government of the United States,  Lessor agrees
          to accept in lieu of insurance required  hereunder  indemnification or
          insurance  from the United States or such a  Governmental  Entity in a
          form reasonably  acceptable to Lessor and Owner and against such risks
          and in such  amounts  and on such  terms  such that when  added to the
          Insurance maintained by Lessee,  Lessee is in full compliance with the
          requirements of Section 9 and this Schedule.



                                          7-4


<PAGE>


                                      SCHEDULE 8

                     FORM OF LESSEE'S AND GUARANTOR'S LEGAL OPINION

 [Lessor]

 [Owner]

 [Financing Parties' Representative]

 Ladies and Gentlemen:

 1.       You have asked us to render an opinion in connection with the
          transaction governed by or subject to, inter alia, the following
          documents.

          (a)     the Lease as defined below;

          (b)     the [Articles/Certificate of Incorporation and By-laws]* of
                  Lessee; and

                  [*Counsel should amend this reference as necessary to describe
                  the actual constitutional documents of Lessee].

          (c)     all other documents, approvals and consents of whatever nature
                  and wherever kept which it was, in our judgement and to our
                  knowledge, necessary or appropriate to examine to enable us
                  to give the opinion expressed below.

         Words and expressions used and not otherwise defined herein will bear
         the same meanings as defined in an Aircraft Lease Agreement dated,
         ___________, _________ between ____________ ("Lessor")  and __________
         ("Lessee")  in respect of one ____________ aircraft with manufacturer's
         serial number ____________ together with the installed ______________
         engines (the "Aircraft").  As used herein the term "Lease" means and
         includes the Aircraft Lease Agreement which incorporates the Common
         Terms  Agreement (as defined therein) and Lease Supplement No.____ .
         Also, for the purposes of this opinion, the term "Lease" includes the
         Acknowledgment and Agreement dated as of the date hereof executed by
         Lessee in favor of Owner and Financing Parties' Representative.

2.       Having considered the documents listed in paragraph 1 above, and having
         regard to the relevant laws of __________, we are pleased to advise
         that in our opinion:-

         (a)     Lessee is a company duly incorporated and in good standing
                 under the laws _______of and is qualified to do business as a
                 foreign corporation in each jurisdiction where failure to so
                 qualify would have a materially adverse effect on Lessee's
                 business or its ability to perform its obligations under the
                 Lease;

         (b)     Lessee has the corporate power to enter into and perform, and
                 has taken all necessary corporate action to authorize the entry
                 into, and the execution, delivery and performance by it of, the
                 Lease and the transactions contemplated by the Lease;


                                              8-1

<PAGE>


          (c)      the entry into and performance by Lessee of, and the
                   transactions contemplated by, the Lease do not and will not
                   (x) conflict with any laws binding on Lessee, (y) conflict
                   with the  [Articles/Certificate  of Incorporation or By-laws]
                   of Lessee; or (z) conflict with or result in default under
                   any agreement or instrument which is binding upon Lessee or
                   any of its assets or result in the creation of any Security
                   Interest on any of its assets;

          (d)      no authorizations, consents, licenses, approvals and
                   registrations (other than those which have been obtained and
                   of which copies are attached hereto) are necessary or
                   desirable to be obtained from any governmental or other
                   regulatory authorities in the United States or any other
                   jurisdiction  having  jurisdiction over Lessee, its
                   operations or its properties to enable Lessee (x) to enter
                   into and perform the transactions  contemplated by the Lease,
                   (y) to  operate the Aircraft in the United States and on
                   international flights for the transport of fare-paying
                   passengers, or (z) to make the payments provided for in
                   the Lease;

          (e)      except for the filing and  recordation of [a bill of sale in
                   favor of the Owner,] the  Financing  Documents  and the Lease
                   with the FAA (which filing has been duly made on or before
                   this date) and the filing of Financing Statements in _______,
                   it is  not  necessary  or  desirable,  to  ensure  the
                   priority,  validity and enforceability of all the obligations
                   of Lessee  under the Lease,  as against  Lessee and all third
                   parties, or to perfect the interests of Lessor, Owner or
                   Financing Parties' Representative in and to the Aircraft or
                   the Lease, that the Lease be filed, registered, recorded or
                   notarized in any public office or elsewhere or that any other
                   instrument be signed, delivered, filed, registered or
                   recorded, that any tax or duty be paid or that any other
                   action whatsoever be taken;

          (f)      the Lease has been duly executed and delivered on behalf of
                   Lessee  and constitutes the legal, valid and binding
                   obligation of Lessee, enforceable against Lessee in
                   accordance with its terms;

          (g)      [NOT APPLICABLE];

          (h)      there is no applicable usury or interest limitation law in
                   ______________ applicable to payments in accordance with the
                   Lease;

          (i)      there are no registration,  stamp or other taxes or duties of
                   any kind payable in __________ in  connection with the
                   execution, performance or enforcement by legal proceedings
                   of the Lease or the Guaranty;

          (j)      the choice of New York law to govern the Lease will be upheld
                   as a valid choice of law in any action in the courts of.

          (k)      the consent to the jurisdiction by Lessee contained in the
                   Lease is valid and binding on Lessee;


                                              8-2


<PAGE>


          (l)      Lessee is a Certificated Air Carrier;

          (m)      Lessee is a "citizen of the United States" as defined in
                   49 U.S.C. Section 40102(a)(15);

          (n)      Lessee's "chief executive office" (as referenced in the
                   Uniform Commercial Code adopted in the State of
                   ______________) is _____________________;

          (o)      Lessor will not violate any law or regulation of the States
                   of _______________ or New York or any federal laws or
                   regulations of the  United States of America and Lessor will
                   not become  liable to income tax in the State of ________
                   solely by reason of Lessor entering into the Lease with
                   Lessee or performing its obligations thereunder or
                   enforcement of its rights thereunder;

          (p)      It is not necessary for Lessor to establish a place of
                   business or be licensed or qualified to do business in the
                   State of _____________ or New York in order for Lessor to
                   enforce any provisions of the Lease; and

          (q)      Lessor is entitled to the benefits of Section 1110 of
                   Title 11 of the U.S.C. with respect to the Aircraft and
                   the Lease.


                                                         Very truly yours,





  [If there is a Guarantor/Guarantee the opinion must also include paragraphs
  (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k), (o) and (p) revised to
  be applicable to the Guarantor/Guarantee]



                                       8-3


<PAGE>


                                   SCHEDULE 9
                               EVENTS OF DEFAULT

 Each of the following events or conditions constitutes an Event of Default:

          (a)      NON-PAYMENT: Lessee fails to make any payment of Rent,
                   Supplemental Rent or any other amount payable under the Lease
                   on the due date and such failure continues for three (3)
                   Business Days or more; or

          (b)      INSURANCE:  Lessee fails to comply with any provision of
                   Section 9 (other than the requirement to provide Lessor with
                   evidence of renewal of any policy on or before the renewal
                   date where the policy has actually been renewed on or prior
                   to such date) or Schedule 7, or any insurance required to be
                   maintained under the Lease is cancelled or terminated, or a
                   notice of cancellation is given in respect of any such
                   insurance; or

          (c)      BREACH: (i) Lessee fails to provide Lessor with evidence of
                   renewal of any insurance policy on or before the renewal date
                   for that policy where the policy has actually been renewed on
                   or prior to such date and such failure continues for 24 hours
                   after notice from Lessor to Lessee of such  failure to
                   comply; or (ii) Lessee fails to comply with any other
                   provision of the Lease not referenced in this Schedule 9
                   and, if such failure is in the opinion of Lessor capable of
                   remedy, such failure continues for 30 days after notice from
                   Lessor to Lessee; or

          (d)      REPRESENTATION: any representation or warranty made (or
                   deemed to be repeated) by Lessee in or pursuant to the Lease
                   or in any document executed by Lessee in connection with or
                   pursuant to the Lease or in any document or in any
                   certificate is or proves to have been incorrect in any
                   material respect when made or deemed to be repeated; or

          (e)      CROSS-DEFAULT:

                   (i)      any amount in respect of Financial  Indebtedness  of
                            Lessee or any Lessee  Affiliate  having a  principal
                            amount in excess of Five Hundred Thousand  Dollars
                            ($500,000) is not paid when due;

                  (ii)      any such  Financial  Indebtedness  becomes  due  or
                            capable of being declared due prior to the date when
                            it would  otherwise  have become due; or becomes due
                            as a result of an event of default or termination
                            event, howsoever described, on the part of Lessee
                            or any other Person prior to the date when it would
                            otherwise have become due; or

                  (iii)    the security for any such Financial Indebtedness
                           becomes enforceable; or


                                            9-1


<PAGE>


                   (iv)     any event of default or termination event, howsoever
                            described,  occurs under any Other Agreement, or any
                            other  lease,  hire  purchase,  conditional  sale or
                            credit  sale  agreement  of  Lessee  or  any  Lessee
                            Affiliate; or

          (f)     APPROVALS: any consent, authorization, license, certificate or
                  approval  of  or  registration  with  or  declaration  to  any
                  Government  Entity  required to be obtained or  maintained  by
                  Lessee in  connection  with the Lease and/or the  operation of
                  the Aircraft  (including any airline  license or air transport
                  license including authority to operate the Aircraft under Part
                  121 of the FARs, a Certificate  of  Convenience  and Necessity
                  issued under the Act and any air carrier operating certificate
                  issued under the Act) is modified in a materially  prejudicial
                  manner or is withheld,  or is revoked,  suspended,  cancelled,
                  withdrawn,  terminated or not renewed,  or otherwise ceases to
                  be in full force; or

          (g)      BANKRUPTCY, ETC:

                   (i)      Lessee or any Lessee Affiliate consents to the
                            appointment of a custodian, receiver, trustee or
                            liquidator of itself or all or a material part of
                            its property or its  consolidated property, or
                            Lessee or any Lessee Affiliate admits in writing its
                            inability to, or is unable to, or does not, pay its
                            debts generally as they come due, or makes a general
                            assignment for the  benefit  of creditors, or Lessee
                            or any Lessee Affiliate files a voluntary  petition
                            in  bankruptcy  or  voluntary petition seeking
                            reorganization in a proceeding under any  bankruptcy
                            or insolvency laws (as now or hereafter  in effect),
                            or an answer admitting  the material allegations of
                            a petition filed against Lessee in any such
                            proceeding, or Lessee or any Lessee Affiliate by
                            voluntary petition, answer or consent seeks relief
                            under the provisions of any other bankruptcy,
                            insolvency  or other similar law providing  for the
                            reorganization or winding-up of debtors, or provides
                            for an agreement, composition, extension or
                            adjustment with its creditors, or any board of
                            directors or shareholder action is taken by Lessee
                            or any Lessee Affiliate in furtherance of any
                            of the foregoing,  whether or not the same is fully-
                            effected or accomplished; or

                   (ii)     An order, judgement or decree is entered by any
                            court appointing, without the consent of  Lessee or
                            any Lessee Affiliate, a custodian, receiver, trustee
                            or liquidator of or sequestering any of Lessee's or
                            any Lessee Affiliate's property, and any such order,
                            judgement or decree of appointment or sequestration
                            remains in effect, undismissed, unstayed or
                            unvacated for a period of 30 days after the date of
                            entry thereof or at any time an order for relief is
                            granted; or

                  (iii)     An involuntary petition against Lessee or any Lessee
                            Affiliate or other proceeding under the United
                            States Federal Bankruptcy laws or other insolvency
                            laws (as now or hereafter in effect) is filed and is
                            not withdrawn or dismissed



                                             9-2


<PAGE>


                           within 30 days thereafter or at any time an order for
                           relief is granted in such  proceeding,  or if,  under
                           the    provisions    of   any   law   providing   for
                           reorganization  or  winding-up  of debtors  which may
                           apply to Lessee or any Lessee Affiliate, any court of
                           competent  jurisdiction assumes jurisdiction over, or
                           custody or control of, Lessee or any Lessee Affiliate
                           or of all or any material  part of Lessee's or Lessee
                           Affiliates' property, and such jurisdiction,  custody
                           or  control   remains   in  effect,   unrelinquished,
                           unstayed or  unterminated  for a period of 30 days or
                           at any time an order for  relief is  granted  in such
                           proceeding; or

          (h)      SUSPENSION OF BUSINESS: Lessee suspends or ceases or takes
                   substantive steps to suspend or cease to carry on all or a
                   material part of its business as a Certificated Air Carrier
                   (other than as a result of a labor dispute with Lessee's
                   employees); or

          (i)      RIGHTS AND REMEDIES: Lessee or any other Person claiming by
                   or through Lessee challenges  the  existence, validity,
                   enforceability or priority of the Lease or the rights of
                   Lessor as lessor or of Owner as owner in respect of the
                   Aircraft or Financing Parties' Representative as holder of
                   a first priority Security Interest in the Aircraft and the
                   Lease; or Change of Control: any single person or group of
                   persons acquire control of Lessee or Guarantor without the
                   previous consent in writing of Lessor; or

          (k)      DELIVERY: Lessee fails to comply with its obligation under
                   Section 4 to accept delivery of the Aircraft or Lessee fails
                   to comply with its obligations under Section 2 of Part III
                   of Schedule A to the  Aircraft Lease Agreement; or

          (l)      ADVERSE CHANGE: any event or series of events occurs which,
                   in the reasonable opinion of Lessor, could be expected to
                   have a material adverse effect on the financial condition or
                   operations of Lessee or Guarantor or on the ability of Lessee
                   to comply with its obligations under the Lease or on the
                   ability of Guarantor to comply with its obligations under the
                   Guarantee; or

          (m)      Letter of Credit:

                   (i)      the issuer of the Letter of Credit (if any) fails to
                            make any  payment  under that  Letter of Credit when
                            due; or

                   (ii)     any such Letter of Credit is not in full force or,
                            for any reason ceases to constitute the legal, valid
                            and binding obligation of the issuer; or

                   (iii)    any of the events listed in paragraph (g) above
                            applies to such issuer (references in those sub-
                            paragraphs to Lessee being deemed to be to the
                            issuer); or


                                           9-3


<PAGE>


                   (iv)     where applicable, any Letter of Credit is not
                            renewed, extended or reissued within the time, or
                            replaced when, required by Section 5.14; or

                    (v)     any consent, authorization, license, certificate or
                            approval of or registration with or declaration to
                            any Governmental Entity required to be obtained or
                            maintained by the issuer of the Letter of Credit in
                            connection with the Letter of Credit is modified in
                            a materially prejudicial manner or is withheld,
                            revoked, suspended, cancelled, withdrawn, terminated
                            or not renewed, or otherwise ceases to be in full
                            force; or

                   (vi)     and each reference in this paragraph (m) to "the
                            issuer" shall include a reference to any confirming
                            bank for the Letter of Credit

          (n)      REDELIVERY: Lessee fails to return the Aircraft to Lessor on
                   the Expiry Date in accordance with Section 12; or

          (o)      LITIGATION: a judgement for the payment of money not covered
                   by insurance in excess of Six Hundred Fifty Thousand Dollars
                   ($650,000) (or the equivalent thereof in other currencies)
                   shall be rendered against Lessee or any Lessee Affiliate and
                   the same shall remain undischarged for a period of 30 days,
                   unless during such period, execution of such judgement shall
                   have been effectively stayed by agreement of the parties
                   involved or by court order or such judgement shall have been
                   adequately bonded; or

           (p)     GUARANTEE:

                    (i)     any  representation or warranty made by Guarantor is
                            or  proves to have been  incorrect  in any  material
                            respect  when  made  or  deemed  to be  repeated  or
                            Guarantor fails to make any payment or comply with
                            any other obligation under the Guarantee when due;
                            or

                    (ii)    the Guarantor repudiates,  revokes or claims that it
                            has no further  obligations  under the  Guarantee or
                            the Guarantee ceases to be in full force or, for any
                            reason, ceases to be the legal, valid and binding
                            obligation of Guarantor; or

                   (iii)    any of the events listed in paragraph (f)(i) or (g)
                            above  occurs  in  respect  of  Guarantor  (and for
                            purposes of this paragraph(s),  references in those
                            paragraphs   to  Lessee   shall  be  deemed  to  be
                            references to Guarantor); or

           (q)      UNLAWFUL: it becomes unlawful for Lessee to perform any of
                    its obligations under the Lease or the Lease becomes wholly
                    or partly invalid or unenforceable; or

           (r)      TRANSFER/LESSEE REQUIREMENTS: Lessee makes or permits any
                    assignment or transfer of the Lease, or any interest herein,
                    or of the right to possession of the Aircraft, the


                                               9-4


<PAGE>


                   Airframe,  or any Engine, or any obligations under the Lease,
                   or  Lessee  subleases  the  Aircraft,  in any case  except as
                   expressly  permitted  in the Lease;  or Lessee  breaches  any
                   provision of Section 8.7; or

          (s)      ENGINE LOSS: Lessee falls to timely comply with its
                   obligations under Sections 8.11(a) and 8.11(b) with respect
                   to an Engine Event of Loss.

          (t)      OTHER:  Such other events, if any, as may be specified in the
                   Aircraft Lease Agreement.



                                                9-5


<PAGE>


                                            SCREDULE10

                                          [NOT APPLICABLE]







                                                10-1


<PAGE>


                                        SCHEDULE 11

                           FORM OF LEASE TERMINATION CERTIFICATE

 The  undersigned  hereby certify that the Aircraft Lease  Agreement dated as of
 ____________, ______ between the undersigned Lessor and undersigned Lessee, and
 as further described in the Appendix attached hereto, has terminated (except as
 described in Section 15.1 of the Common Terms Agreement incorporated therein)
 and the aircraft and aircraft engines covered thereby are no longer subject to
 the terms thereof. This certificate may be executed in one or more counterparts
 each of which when taken together shall constitute one and the same instrument.




          DATED this __________ day of ______________, _____________



 LESSOR                                                       LESSEE



 [ INSERT LESSOR'S NAME ]                       [  INSERT LESSEE'S NAME ]



 By:_______________________________         By:________________________________

 Title:____________________________         Title:_____________________________



                                       11-1


<PAGE>


                                     SCHEDULE 12

                            FORM OF LEASE SUPPLEMENT NO. I


              LEASE SUPPLEMENT NO. 1, dated __________, __________,   between
     ________________________________, [a corporation organized under the laws
     of ____________________] [, not in its individual capacity, but solely as
     owner trustee] ("Lessor"), and ___________________________, a corporation
     organized under the laws of the _______________________ ("Lessee").

              Lessor and Lessee have previously entered into that certain
     Aircraft Lease Agreement dated as of ___________________, including the
     Common Terms Agreement as defined therein (collectively, herein referred
     to as the "Agreement" and the defined terms therein being hereinafter used
     with the same meaning). The Agreement provides for the execution and
     delivery from time to time of a Lease Supplement substantially in the form
     hereof for the purpose of leasing the aircraft described below under the
     Agreement as and when delivered by Lessor to Lessee in accordance with the
    terms thereof.

              The  Agreement and this Lease  Supplement  relate to the Aircraft,
     Engines and Parts as more precisely  described below and in the Certificate
     of Technical Acceptance.  A counterpart of the Agreement is attached hereto
     and this Lease Supplement and the Agreement shall form one document.

              In  consideration  of the premises  and other good and  sufficient
     consideration, Lessor and Lessee hereby agree as follows:

     1.       Lessor hereby delivers and leases to Lessee under and pursuant to
     the Agreement and Lessee hereby accepts, acknowledges receipt of possession
     and leases from Lessor under and pursuant to the  Agreement, that certain
     ___________ aircraft, and the ____________ (___) _________________________
     Engines  (each of which  Engines has 750 or more rated takeoff horsepower
     or the equivalent of such horsepower) described in Schedule 1 hereto,
     together with the Aircraft Documents and Records described in the Agreement
     (the "Delivered Aircraft").

     2.       The Delivery Date of the Delivered Aircraft is the date of this
     Lease Supplement set forth in the opening paragraph hereof.

     3.       The Term for the Delivered Aircraft shall commence on the Delivery
     Date and shall end on the Expiry Date, with respect to which the Scheduled
     Expiry Date shall be [insert date].

     4.       The amount of Rent for the Delivered Aircraft is set forth in
     Schedule B to the Agreement.



                                          12-1


<PAGE>


     5. Lessee  hereby  confirms to Lessor that (i) the  Delivered  Aircraft and
     each delivered Engine have been duly marked in accordance with the terms of
     Section 8.6(a) of the  Agreement,  (ii) the Aircraft is insured as required
     by the  Agreement,  (iii)  the  representations  and  warranties  of Lessee
     referred to in Section 2.1 of the Agreement are hereby repeated with effect
     as of the date first above  written,  (iv) having  inspected  the Delivered
     Aircraft,  Lessee  acknowledges that the Delivered  Aircraft  satisfies all
     conditions required for Lessee's acceptance of delivery as set forth in the
     Agreement,  and (v) the  execution  and  delivery of this Lease  Supplement
     signifies  absolute and  irrevocable  acceptance by Lessee of the Delivered
     Aircraft for all purposes hereof and of the Agreement.

     6. All of the terms and provisions of the Agreement are hereby incorporated
     by  reference in this Lease  Supplement  to the same extent as if fully set
     forth herein.

     7. This Lease  Supplement  may be executed  in any number of  counterparts;
     each of such  counterparts,  shall  for all  purposes  be  deemed  to be an
     original;  and all such counterparts shall together  constitute but one and
     the same Lease Supplement.

              IN  WITNESS  WHEREOF,  Lessor and Lessee  have  caused  this Lease
     Supplement  No. 1 to be duly  executed  as of the day and year first  above
     written.



     LESSOR,                             LESSEE,

     [INSERT LESSOR'S NAME]              [INSERT LESSEE'S NAME]

     By:________________________         By: __________________________

     Name:______________________         Name:_________________________

     Title:_____________________         Title:________________________



                                     12-2


<PAGE>


                                   SCHEDULE 13

                            FORM OF LETTER OF CREDIT

                        IRREVOCABLE STANDBY LETTER OF CREDIT

     BENEFICIARY:
     Aviation Financial Services, Inc.
     Attention:_________________
     201 High Ridge Road
     Stamford, CT 06927

     Gentlemen:

              We hereby establish our irrevocable Standby Letter of Credit
     No. S/B ____________ dated February ___, 2000 (this "Letter of Credit")
     in your favor in connection with the leasing of one Boeing 737-700
     aircraft by Aviation Financial Services Inc. ("Beneficiary") to Aloha
     Airlines, Inc. ("Customer"). All bank charges relating to this Letter of
     Credit are for the account of Customer.

              At the request of Customer for account of same, we hereby
     establish this Irrevocable Standby Letter of Credit No. S/B ______ (this
     "Letter of Credit") to authorise you to draw on First Hawaiian Bank,
     Honolulu, Hawaii an amount or amounts not exceeding in aggregate
     US$____________ (__________ United  States Dollars) upon receipt by us of
     the following demand certificate from Beneficiary, accompanied by a copy
     of this Letter of Credit (which certificate and copy may be presented to
     us by telecopy at telecopy no. ________):

             "The undersigned are two authorised signatories of Aviation
             Financial Services Inc ("Beneficiary"). Beneficiary hereby draws
             upon the Irrevocable Standby Letter of Credit No. S/B____________
             of first Hawaiian Bank Honolulu, Hawaii dated____________.
             Beneficiary hereby instructs you to transfer US$_______________
             (____________ United States Dollars) to Bankers Trust Company,
             New York, ABA 021 001 033, For the account of: Aviation Financial
             Services Inc., Account Number: 50-259-862, immediately, with telex
             confirmation to us of such payment."

              We  hereby  agree  with  you  that  drawings  drawn  under  and in
     compliance  with the terms of this Letter of Credit received on or prior to
     the first anniversary of the date of this Letter of Credit (as the same may
     be extended  pursuant to the terms hereof,  the "Expiration  Date") will be
     duly  honoured  upon  receipt by us of such a demand  certificate.  Partial
     drawings  are  permitted.  This  Letter  of Credit  shall be  automatically
     renewed for  successive  one year periods  until at least _______________,
     unless at least thirty (30) business days prior to the then current
     Expiration Date, we notify you in writing by certified mail, return receipt
     requested, at the address set forth above or such other address as
     Beneficiary may have notified to us in writing, of our election not to
     renew this Letter of Credit beyond the then current Expiration Date. In
     the event of such non-



                                           13-1


<PAGE>


     renewal, the full amount of this  Letter of Credit may be drawn down upon
     presentation of a demand certificate as provided above.

              If a drawing by you hereunder  does not, in any instance,  conform
     to the provisions of this Letter of Credit, we shall give you prompt notice
     that the  purported  drawing  was not  effected  in  accordance  with  such
     provisions,  stating  the  reasons  therefor,  and that we are  holding any
     documents  presented  in  connection  therewith  at  your  disposal  or are
     returning the same to you, as we may elect.

              This  Letter  of  Credit  is   transferable   and  constitutes  an
     obligation  to make  payment  against  documents.  Except to the extent the
     express provisions hereof conflict, this Letter of Credit is issued subject
     to the Uniform Customs and Practice for Documentary Credits (1993 Revision)
     International Chamber of Commerce Publication No. 500 ("Uniform Customs").

                                           Sincerely,

                                           FIRST HAWAIIAN BANK





    ______________________________         ____________________________
     Authorised Signature                  Authorised Signature



                                     13-2


<PAGE>


                                   SCHEDULE 14

                              MAINTENANCE PERFORMERS


     Air New Zealand Limited
     Repair Station #ANZZ188C
     Christchurch

     Aviation Management Systems
     Repair Station #ZM7R567Y
     Sky Harbor Int'l Airport

     Aviation Management Systems
     Repair Station #D8LR566Y
     Goodyear, AZ

     BFGoodrich Aerospace MRO
     Repair Station #HN6R593N
     Everett, WA

     Conair Aviation Ltd.
     Repair Station #AMO 10-75
     Abbotsford, B.C.

     Spar Aerospace Limited
     Repair Station #AMO 03-57
     Canada



                                           14-1




<PAGE>

                             AIRCRAFT LEASE NOVATION
                             AND AMENDMENT AGREEMENT

                          DATED AS OF FEBRUARY 28, 2001

                        AVIATION FINANCIAL SERVICES INC.
                               AS EXISTING LESSOR

                              ALOHA AIRLINES, INC.
                                    AS LESSEE

                           CASTLE HARBOUR LEASING INC.
                                  AS NEW LESSOR

                                  IN RESPECT OF
                AIRCRAFT LEASE AGREEMENT DATED AS OF MAY 12, 2000
              RELATING TO BOEING 737-700 AIRCRAFT BEARING msn 30830


<PAGE>


2.3   PRE-EFFECTIVE TIME RIGHTS AND REMEDIES: Without prejudice to the rights of
      New Lessor under the Novated Lease and in consideration of the payment by
      Existing Lessor to Lessee of US$5 (receipt and sufficiency of which are
      hereby acknowledged), New Lessor, Lessee and Existing Lessor agree that
      Existing Lessor and Lessee shall have the same rights and remedies against
      each other pursuant to this Clause 2.3 as each would have had under the
      Lease in respect of any losses, liabilities or claims suffered or incurred
      or brought against or payments due to each other in respect of or
      attributable to the period of the Term prior to the Effective Time as if
      Existing Lessor had remained the Lessor under the Lease, and New Lessor
      shall not be responsible to Lessee in respect of any such losses,
      liabilities or claims, nor shall Lessee exercise any set-off or
      counterclaim in respect of any such losses, liabilities or claims against
      New Lessor.

3.    LEASE AMENDMENTS

3.1   AMENDMENTS: As of, and with effect from, the Effective Time the Lease
      shall be (and it is hereby) amended as follows:

      (a)   the expressions THIS LEASE and THE LEASE shall be construed,
            wherever they appear in the Lease and wherever the context so
            permits, as if they referred to the Novated Lease;

      (b)   the expression LESSOR shall be construed, wherever it appears in the
            Lease, as if it referred to New Lessor in place of Existing Lessor
            (other than Recital B to the Aircraft Lease Agreement, in which case
            the expression LESSOR shall be construed to mean General Electric
            Capital Corporation, a New York corporation);

      (c)   Clause 3.4 of the Aircraft Lease Agreement shall be amended and
            restated in its entirety as follows:

            LESSOR'S BANK ACCOUNT: For the purposes of Clause 5.5 of the Common
            Terms Agreement, Lessor's bank account and wire transfer
            particulars, to which all payments to Lessor shall be made, are at
            the date hereof

                  Bankers Trust Company
                  New York
                  ABA 021001033

                  For the account of
                  Castle Harbour Leasing Inc
                  Account Number: 50-263-968

      3.2   REFERENCES IN OTHER DOCUMENTS: With effect from the Effective Time,
            all references to the Lease contained in any documents delivered
            under or pursuant to the Lease shall be construed as references to
            the Novated Lease (as it may be further amended from time to time).

      4.    DEPOSIT

            As of the Effective Time the portion of the Deposit actually paid by
            Lessee as of the date hereof ($286,400) shall be transferred by
            Existing Lessor to New Lessor, and:


<PAGE>


            (a)   New Lessor acknowledges and agrees with Lessee, with effect
                  from the Effective Time, that such moneys have been paid by
                  Lessee in accordance with the Novated Lease and further
                  acknowledges and agrees that Lessee shall have no further
                  obligation to make any payment in respect of the Deposit which
                  have become due and payable before the Effective Time and in
                  respect of which Lessee has made payment in favour of Existing
                  Lessor;

            (b)   each of New Lessor, Lessee and Existing Lessor agrees that any
                  amounts in respect of the Deposit which become due and payable
                  at or after the Effective Time shall be payable by Lessee to
                  New Lessor in accordance with the Novated Lease;

            (c)   Existing Lessor acknowledges that it has released and has no
                  continuing security or other interest in the moneys and
                  amounts transferred to New Lessor under this clause.

      5.    EFFECTIVE TIME

            This Agreement shall become effective at the time (the "EFFECTIVE
            TIME") at which this Agreement shall have been executed by all of
            the parties hereto, and such signatures shall have been delivered to
            New Lessor. New Lessor shall notify each of Existing Lessor and
            Lessee in writing of the Effective Time promptly upon its
            determination of the same. Filing of this Agreement with the FAA
            shall evidence that the Effective Time has occurred.

      6.    MISCELLANEOUS

      6.1   CONTINUING EFFECT: Save as provided for herein, the Novated Lease
            and all provisions thereof shall continue in full force and effect
            as the legal, valid and binding rights and obligations of each of
            New Lessor and Lessee enforceable in accordance with their
            respective terms. All representations, warranties and agreements
            contained in this Agreement shall continue in full force and effect
            after the Effective Time.

      6.2   VARIATION: The provisions of this Agreement shall not be varied
            otherwise than by an instrument in writing executed by or on behalf
            of all the parties; provided that New Lessor and Lessee shall be
            entitled to amend, modify or vary the terms of the Novated Lease
            after the Effective Time without reference to Existing Lessor.

      6.3   NOTICES: Every notice, request, demand or other communication under
            this Agreement shall be made in accordance with Clause 15.7 of the
            Novated Lease and shall be sent to Existing Lessor and Lessee to the
            addresses for notices set forth in Clause 6 of the Aircraft Lease
            Agreement and every notice, request, demand or other communication
            to New Lessor under this Agreement and the Novated Lease shall be
            sent to:

                             c/o GE Capital Aviation Services, Inc.
                             201 High Ridge Road
                             Stamford, CT 06927

           Attention:        Contracts Leader
           Facsimile:        203-357-3201
           Telephone:        203-357-3776


<PAGE>


6.4   COUNTERPARTS: This Agreement may be executed in any number of counterparts
      and by any party hereto in separate counterparts, each of which when so
      executed shall be deemed to be an original and all of which, when taken
      together, shall constitute one and the same agreement.

6.5   LEASE PROVISIONS: The provisions of Clauses 14 (Assignment), 15.2
      (Waivers, Remedies Cumulative), 15.4 (Severability), and 15.8 (Governing
      Law; Jurisdiction; WAIVER OF JURY TRIAL) of the Lease shall apply to this
      Agreement as if set out in full herein.

6.6   NAMEPLATES: New Lessor hereby advises Lessee that the Nameplate
      Inscription on the Nameplates installed on the Aircraft in accordance with
      the requirements of Clause 8.6(a) shall read as follows:

      "This Aircraft/Engine is owned by Castle Harbour Leasing Inc., and is
      leased to Aloha Airlines, Inc. and may not be operated by any other
      person without the prior written consent of Castle Harbour Leasing Inc."

6.7   EXPENSES: New Lessor hereby agrees that it will, upon written request from
      Lessee accompanied by written evidence as to the amount of such fees and
      expenses reasonably satisfactory to New Lessor, reimburse Lessee, or cause
      Lessee to be reimbursed, for the reasonable fees and disbursements of
      Lessee's outside legal counsel relating to the review, negotiation and
      execution of this Agreement.

6.8   ENTIRE AGREEMENT: The Novated Lease and this Agreement together constitute
      the sole and entire agreement between Lessee and New Lessor in relation to
      the leasing of the Aircraft, and supersede all previous agreements in
      relation to that leasing.




<PAGE>


   IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day
   and year first herein written.

   SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.

   By:   /s/  Charles H. Meyer
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------


   SIGNED for and on behalf of ALOHA AIRLINES, INC.

   By:
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------

   By:
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------

   SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,

   By:   /s/  Charles H. Meyer
      -------------------------------
   Name:
        -----------------------------
   Title:
         ----------------------------


<PAGE>


IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first herein written.

SIGNED for and on behalf of AVIATION FINANCIAL SERVICES INC.

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------

SIGNED for and on behalf of ALOHA AIRLINES, INC.

By:  /s/ G.R. Zander
   -------------------------------
Name:   Glenn R. Zander
     -----------------------------
Title:  President & CEO
      ----------------------------

By:  /s/ James M. King
   -------------------------------
Name:   James M. King
     -----------------------------
Title:  SR VP Planning &
        Business Day
      ----------------------------

SIGNED for and on behalf of CASTLE HARBOUR LEASING INC.,

By:
   -------------------------------
Name:
     -----------------------------
Title:
      ----------------------------



<PAGE>


                             LEASE SUPPLEMENT NO. 1

          LEASE SUPPLEMENT NO. 1, dated May 25, 2001 between Castle Harbour
 Leasing Inc., a corporation organized under the laws of the State of Delaware,
 as successor in interest to Aviation Financial Services, Inc. ("Lessor"), and
 Aloha Airlines, Inc., a corporation organized under the laws of the State of
 Delaware ("Lessee").

          Lessor's predecessor in interest and Lessee have previously entered
 into that certain Aircraft Lease Agreement dated as of May 12, 2000, which
 incorporates the Common Terms Agreement as defined therein (collectively,
 herein referred to as the "Agreement" and the defined terms therein being
 hereinafter used with the same meaning). The Agreement provides for the
 execution and delivery from time to time of a Lease Supplement substantially in
 the form hereof for the purpose of leasing the aircraft described below under
 the Agreement as and when delivered by Lessor to Lessee in accordance with the
 terms thereof.

          The Agreement and this Lease Supplement relate to the Aircraft,
 Engines and Parts as more precisely described below and in the Certificate of
 Technical Acceptance. A counterpart of the Agreement is attached hereto and
 this Lease Supplement and the Agreement shall form one document.

          In consideration of the premises and other good and sufficient
 consideration, Lessor and Lessee hereby agree as follows:

          1 . Lessor hereby delivers and leases to Lessee under and pursuant to
 the Agreement and Lessee hereby accepts, acknowledges receipt of possession and
 leases from Lessor under and pursuant to the Agreement, that certain Boeing
 737-76N aircraft, and the two (2) CFM56-7B26 Engines (each of which Engines has
 750 or more rated takeoff horsepower or the equivalent of such horsepower)
 described in Schedule 1 hereto, together with the Aircraft Documents and
 Records described in the Agreement (the "Delivered Aircraft").

          2. The Delivery Date of the Delivered Aircraft is the date of this
 Lease Supplement set forth in the opening paragraph hereof.

          3. The Term for the Delivered Aircraft shall commence on the Delivery
 Date and shall end on the Expiry Date, with respect to which the Scheduled
 Expiry Date shall be May 24, 2016.

          4. The amount of Rent for the Delivered Aircraft is set forth in
 Schedule B to the Agreement.

          5. Lessee hereby confirms to Lessor that (i) the Delivered Aircraft
 and each delivered Engine have been duly marked in accordance with the terms of
 Section 8.6(a) of the Agreement, (ii) the Aircraft is insured as required by
 the Agreement, (iii) the representations and warranties of Lessee referred to
 in Section 2.1 of the Agreement are hereby repeated with effect as of the date
 first above written, (iv) having inspected the Delivered Aircraft, Lessee
 acknowledges that the Delivered Aircraft satisfies all conditions required for
 Lessee's acceptance of delivery as set forth in the Agreement, and (v) the
 execution and delivery of this Lease Supplement signifies absolute


<PAGE>


 and irrevocable acceptance by Lessee of the Delivered Aircraft for all purposes
 hereof and of the Agreement.

          6. All of the terms and provisions of the Agreement are hereby
 incorporated by reference in this Lease Supplement to the same extent as if
 fully set forth herein.

          7. This Lease Supplement may be executed in any number of
 counterparts; each of such counterparts, shall for all purposes be deemed to be
 an original; and all such counterparts shall together constitute but one and
 the same Lease Supplement.


<PAGE>


               IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
      Supplement No. 1 to be duly executed as of the day and year first above
      written.

      LESSOR,                           LESSEE,

      CASTLE HARBOUR LEASING INC.       ALOHA AIRLINES, INC.




      By: /s/ Charles H. Meyer          By:___________________________
         ------------------------

      Name: Charles H. Meyer            Name:_________________________
           ----------------------

      Title:     Vice President         Title:________________________
           ----------------------

                                        By:___________________________

                                        Name:_________________________

                                        Title:________________________


<PAGE>


           IN WITNESS WHEREOF, Lessor and Lessee have caused this Lease
   Supplement No. 1 to be duly executed as of the day and year first above
   written.

  LESSOR,                             LESSEE,

  CASTLE HARBOUR LEASING INC.         ALOHA AIRLINES, INC.


  By:______________________________   By:  /s/ Brenda F. Cutwright
                                           --------------------------------
  Name:____________________________   Name:   Brenda F. Cutwright
                                           --------------------------------

  Title:___________________________   Title:  Exec. Vice President & CFO
                                            -------------------------------



                                      By:   /s/ James M. King
                                         ----------------------------------

                                      Name:     James M. King
                                           --------------------------------

                                      Title:   Sr. Vice President Planning
                                               and Business Development
                                            -------------------------------


<PAGE>


                                   SCHEDULE 1

 Aircraft Manufacturer:                      Boeing
 Aircraft Model and Series:                  737-76N
 Registration Mark:                          N741AL
 Manufacturer's Serial Number:               30830
 Engine Manufacturer and Model:              CFMI Model CFM56-7B26
 Engine Serial Numbers:                      _________ and __________



<PAGE>



                                                             EXECUTION VERSION


             AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT

                           DATED DECEMBER 14,2001

                                   BETWEEN

                         CASTLE HARBOUR LEASING INC.

                                  AS LESSOR

                                     AND

                            ALOHA AIRLINES, INC.

                                  AS LESSEE

             AGREEMENT AND AMENDMENT TO AIRCRAFT LEASE AGREEMENT

                                in respect of
              Aircraft Lease Agreement dated as of May 12, 2000
relating to Boeing Model 737-700 aircraft manufacturer's serial number 30830


<PAGE>


THIS AGREEMENT is made on December 14,2001 ("AGREEMENT")

BETWEEN:

CASTLE HARBOUR LEASING INC., a company incorporated under the laws of Delaware
whose principal office is at c/o GE Capital Aviation Services, Inc., 201 High
Ridge Road, Stamford, CT 06927, U.S.A. ("LESSOR"); and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("LESSEE").

WHEREAS:

(A)     By an Aircraft Lease Agreement dated as of May 12, 2000 ("ORIGINAL
        LEASE") between Lessee, as lessee, and Aviation Financial Services Inc.
        ("AFSI"), as lessor, which incorporates by reference that certain
        Aircraft Lease Common Terms Agreement dated as of May 12, 2000
        executed by General Electric Capital Corporation and Lessee (the
        "CIA"), as the same has been amended by (i) that certain letter
        agreement dated May 12, 2000 entered into between AFSI and Lessee, (ii)
        that certain Aircraft Lease Novation and Amendment Agreement dated as
        of February 28, 2001 (the "NOVATION AGREEMENT") among AFSI, as existing
        lessor, Lessor, as new lessor and Lessee, (iii) that certain letter
        agreement dated March 20, 2001 entered into between Lessor and Lessee,
        (iv) that certain letter agreement dated May 24, 2001 entered into
        between Lessor and Lessee, (v) Lease Supplement No. 1 dated May 24,
        2001 entered into between Lessor and Lessee, and (vi) that certain
        letter agreement dated August 15, 2001 entered into between Lessor and
        Lessee (collectively, and. as amended or supplemented from time to
        time, the "LEASE") Lessor leased to Lessee and Lessee took on lease one
        Boeing model 737-700 aircraft with manufacturer's serial number 30830
        (the "Aircraft") on the terms and subject to the conditions contained
        therein.

(B)     The Original Lease, together with the Novation Agreement and Lease
        Supplement No. 1 thereto, have been recorded by the FAA and assigned
        conveyance numbers by the FAA as set forth on' Schedule 1 hereto.

(C)     Lessee has requested Lessor to permit Lessee to defer the payment of a
        portion of the Rent and to amend the Lease to change certain provisions
        therein subject to the terms and conditions of this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: Capitalised terms used herein but not defined shall have
         the respective meanings ascribed to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein. From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement.


                                       1


<PAGE>


2.       REPRESENTATIONS AND WARRANTIES

         Lessee hereby repeats the representations and warranties in Clause 2.1
         of the CTA as if made with reference to the facts and circumstances
         existing as at the date hereof and as if the references in such
         representations and warranties to the "Lease" referred to the Lease as
         amended by this Agreement.

3.       DEFERRAL OF RENT

3.1      DEFINITION OF DEFERRED AMOUNT: The term "Deferred Amount" is defined in
         Clause 2 of Schedule 2 hereto.

3.2      TERMS OF RENT DEFERRAL: Each Deferred Amount shall be deferred as set
         forth in Clause 3 of Schedule 2 hereto.

4.       LETTER OF CREDIT

4.1      DEFINITION OF LETTER OF CREDIT PROCEEDS: The term "Letter of Credit
         Proceeds" is defined in Clause 2 of Schedule 2 hereto.

4.2      APPLICATION OF LETTER OF CREDIT PROCEEDS: The Letter of Credit Proceeds
         shall be applied as set forth in Clause 4.1 of Schedule 2 hereto.

4.3      RESTORATION OF LETTER OF CREDIT: The Letter of Credit shall be restored
         by Lessee as set forth in Clause 4.2 of Schedule 2 hereto.

4.4      REMAINING AMOUNTS AVAILABLE UNDER LETTER OF CREDIT: Lessor shall
         continue to hold the Letter of Credit and shall be entitled to draw the
         remaining amounts available for drawing in accordance with the Lease,
         and Lessee shall ensure that the Letter of Credit complies with all
         requirements of Section 5.14 of the CTA and Section 3.1 of the Lease,
         except as set forth in Clause 4.2 of Schedule 2 hereto.

5.       AMENDMENTS TO LEASE

5.1      AMENDMENT TO CLAUSE 1.1: The following new definition is hereby added
         to Clause 1.1 of the Lease:

         Deferred Amount has the meaning assigned to it in the Agreement and
         Amendment to Aircraft Lease Agreement dated December 14,2001 between
         Lessor and Lessee.

5.2      EVENTS OF DEFAULT

         (a)      In lieu of paragraph (a) (Non-payment) of Schedule 9 to the
                  CTA, the following shall constitute an Event of Default:

                           NON-PAYMENT: Lessee fails to make any payment of
                           Rent, Supplemental Rent or any other amount payable
                           under the Lease (including, without limitation, any
                           repayment of a Deferred Amount due under the
                           Agreement and Amendment to Aircraft Lease Agreement
                           dated December 14, 2001 between Lessor and Lessee) on
                           the due date and such failure continues for three (3)
                           Business Days or more.


                                       2


<PAGE>


         (b)      In addition to the Events of Default set forth in paragraph
                  (m) of Schedule 9 to the CTA, the following shall constitute
                  an Event of Default:

                           the Letter of Credit is not restored as set forth in
                           Clause 4.3 of the Agreement and Amendment to Aircraft
                           Lease Agreement dated December 14, 2001 between
                           Lessor and Lessee.

5.3      RIGHTS AND REMEDIES ON DEFAULT: In addition to the rights and remedies
         set forth in Clause 13.2 of the CTA, the following shall be an
         additional right of Lessor:

                           Upon the occurrence of an Event of Default, the
                           entire outstanding Deferred Amounts, together with
                           interest thereon at the Interest Rate, shall
                           become immediately due and payable by Lessee.

5.4      AMENDMENT TO THE CTA: Lessor and Lessee hereby acknowledge and agree
         that (i) the Amendment of Aircraft Lease Common Terms Agreement
         attached hereto as Schedule 3 is hereby incorporated by this reference
         and made an integral part of the Lease, and (ii) all references in the
         Lease to the "CTA" or "Common Terms Agreement" shall mean the CTA as
         amended by such amendment.

6.       CONDITIONS PRECEDENT

6.1      CONDITIONS: This Agreement shall take effect upon issuance by Lessor of
         a notice to Lessee (the "NOTICE") confirming the satisfaction of each
         of the following conditions and receipt of the following documents by
         Lessor on or prior to December 31, 2001:

         (a)      RESOLUTIONS: a copy of a resolution of the board of directors
                  of Lessee approving the terms of, and transactions
                  contemplated by, this Agreement, resolving that it enter into
                  this Agreement, and authorising a specified person or persons
                  to execute this Agreement;

         (b)      LEGAL OPINION: a legal opinion from Lessee's counsel in a form
                  reasonably satisfactory to Lessor; and

         (c)      OTHER: such other documents as Lessor may reasonably request.

6.2      FURTHER CONDITIONS PRECEDENT: Lessor's obligations under this Agreement
         are subject to the further conditions precedent that as of the date of
         issuance of the Notice:

         (a)      the representations and warranties of Lessee under Clause 2 of
                  this Agreement and under Clause 2.1 of the CTA shall be true
                  and correct; and

         (b)      no Default shall have occurred and be continuing or might
                  result from the leasing of the Aircraft to Lessee under the
                  Lease as amended hereby.

6.3      WAIVER: The conditions specified in Clauses 6.1 and 6.2 are for the
         sole benefit of Lessor and may be waived or deferred (in whole or in
         part and with or without conditions) by Lessor.

7.       MISCELLANEOUS

7.1      FURTHER ASSURANCES: Lessee agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or


                                       3


<PAGE>


         reasonably requested by Lessor to establish, maintain and protect the
         rights and remedies of Lessor and to carry out and effect the intent
         and purpose of this Agreement.

7.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

7.3      GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
         jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

7.4      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         Lessor and Lessee.

7.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

7.6      COSTS AND EXPENSES: Whether or not the conditions specified in Clause 6
         are fulfilled, Lessee shall pay to Lessor on demand all fees, costs and
         expenses incurred or payable by Lessor in connection with the
         preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

8.       CONTINUATION OF LEASE

         Save as expressly amended by this Agreement, the Lease shall continue
         in full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of Lessor and Lessee enforceable in
         accordance with their respective terms.


                                       4


<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.


Signed for and on behalf of
CASTLE HARBOUR LEASING INC.

By: /s/ Charles H. Meyer
   ------------------------------------
Name: CHARLES H. MEYER
   ------------------------------------
Title: VICE PRESIDENT
   ------------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
CASTLE HARBOUR LEASING INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


Signed for and on behalf of
ALOHA AIRLINES INC.

By: /s/ Brenda F. Cutwright
   ------------------------------------
Name: Brenda F. Cutwright
   ------------------------------------
Title: Exec. Vice President & CFO
   ------------------------------------


By: /s/ James M. King
   ------------------------------------
Name: JAMES M. KING
   ------------------------------------
Title: SENIOR VICE PRESIDENT
       PLANNING & BUSINESS DEVELOPMENT
   ------------------------------------


<PAGE>


                                   SCHEDULE 1

        Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
Financial Services Inc., as lessor, and Aloha Airlines, Inc., as lessee,
which was recorded by the Federal Aviation Administration on June 19, 2001
and assigned Conveyance No. YY031223, as assigned and supplemented by the
following described instruments:


DOCUMENT                               FAA RECORDING DATE   FAA CONVEYANCE NO.
--------                               ------------------   ------------------
Aircraft Lease Novation and                 06/19/01             YY031223
Amendment Agreement among
Aviation Financial Services Inc.,
as existing lessor, Aloha Airlines,
Inc., as lessee, and Castle Harbour
Leasing Inc., as new lessor
Lease Supplement No. 1                      06/19/01             YY031223



                              Schedule 1-1


<PAGE>


                                  SCHEDULE 2

                            CERTAIN FINANCIAL TERMS

1.       CONFIDENTIALITY

Lessor and Lessee understand that the commercial and financial information
contained in this Schedule 2 to this Agreement are considered by Lessor and
Lessee as proprietary and confidential. Lessor and Lessee each hereby agree,
and any of their assignees, upon becoming such shall agree that it will treat
this Schedule 2 as proprietary and confidential and will not without the prior
written-consent of the other, disclose or cause to be disclosed, the terms
hereof to any person or entity/ except to its employees, counsel, underwriters
and auditors as necessary or appropriate for the leasing transaction which is
the subject hereof, or except (a) as may be required by applicable law or
pursuant to an order, or a valid and binding request, issued by any court or
other Government Entity having jurisdiction over Lessor, Lessee or the assignee
of either of them, as the case may be, or (b) as necessary to enable Lessor or
its assignee to make transfers, assignments or other dispositions to potential
transferees, assignees or participants of its interest in and to the Lease and
this Agreement. In connection with any such disclosure or any filing of the
information contained herein pursuant to any such applicable law, Lessor,
Lessee or the assignee of either of them, as the case may be, shall request and
use its best reasonable efforts to obtain confidential treatment of this
Schedule 2 and the other party will cooperate in making and supporting any such
request for confidential treatment.

2.      DEFINITIONS OF CERTAIN TERMS

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]

3.      TERMS OF RENT DEFERRAL

Provided that each of the conditions precedent set forth in Section 6 of this
Agreement are satisfied and that no Event of Default has occurred and is
continuing under the Lease on any Rent Date, Lessee and Lessor agree that
effective as of the Rent Date on which each Deferred Amount would otherwise
be due under the Lease, each Deferred Amount shall be deferred as follows:

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]


                                 Schedule 2-1


<PAGE>



4.       LETTER OF CREDIT

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]


                                  Schedule 2-2


<PAGE>


                                   SCHEDULE 3

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT




                                  Schedule 2-4


<PAGE>


                                                               EXECUTION VERSION


                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT

                             DATED DECEMBER 14, 2001

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE



<PAGE>


THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on December 14,
2001 (this "AGREEMENT")

BETWEEN:

GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at 201 Long Ridge Road, Stamford, CT 06927,
U.S.A. ("GE CAPITAL") and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("ALOHA").

WHEREAS:

(A)      GE Capital and Aloha have previously entered into that certain Aircraft
         Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");

(B)      GE Capital and Aloha desire to amend the CTA on the terms set forth in
         this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references herein to
         the "Lease" mean the integrated agreement consisting of the various
         documents comprising the Lease as defined in Schedule 1 to the CTA as
         the same is amended by this Agreement and all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement. Capitalized terms
         used herein but not defined shall have the respective meanings ascribed
         to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein.

2.       AMENDMENT TO CTA

2.1      Schedule 7 to the CTA is hereby amended to read in its entirety as set
         forth on Schedule 7 attached to this Agreement.

3.       MISCELLANEOUS

3.1      FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or reasonably requested by
         GE Capital to establish, maintain and protect the rights and remedies
         of GE Capital and to carry out and effect the intent and purpose of
         this Agreement and of any Lease in which the CTA as amended by this
         Agreement may be incorporated.


                                        1


<PAGE>


3.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

3.3      GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
         Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

3.4      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         GE Capital and Aloha.

3.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

3.6      COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
         costs and expenses incurred or payable by GE Capital in connection with
         the preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

4.       CONTINUATION OF COMMON TERMS AGREEMENT

         Save as expressly amended by this Agreement, the CTA shall continue in
         full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of GE Capital and Aloha enforceable in
         accordance with their respective terms.


                                        2


<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Norman Liu
   ------------------------------------
Name: NORMAN LIU
   ------------------------------------
Title: VICE PRESIDENT
   ------------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.

By: /s/ Brenda F. Cutwright
   ------------------------------------
Name: Brenda F. Cutwright
   ------------------------------------
Title: Exec. Vice President & CFO
   ------------------------------------


By: /s/ James M. King
   ------------------------------------
Name: JAMES M. KING
   ------------------------------------
Title: SENIOR VICE PRESIDENT
       PLANNING & BUSINESS DEVELOPMENT
   ------------------------------------


<PAGE>


                                  SCHEDULE 7

                            INSURANCE REQUIREMENTS

1.1     TYPES OF INSURANCE

The Insurances required to be maintained are as follows:

        (a)      HULL ALL RISKS of loss or damage while flying, taxiing and on
                 the ground with respect to the Aircraft on an agreed value
                 basis for not less than the Agreed Value and not more than
                 110% of the Agreed Value and with a deductible not exceeding
                 the Deductible Amount;

        (b)      HULL WAR RISKS AND ALLIED PERILS in accordance with LSW555B or
                 its equivalent form reasonably acceptable to Lessor (or an
                 agreement of the United States Government to insure against or
                 indemnify for substantially the same risks) in an amount not
                 less than the Agreed Value;

        (c)      ALL RISKS (including War and Allied Risk except when on the
                 ground or in transit other than by air) property insurance on
                 all Engines and Parts when not installed on the Aircraft for
                 like kind and quality value and including engine test and
                 running risks; and

        (d)      COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                 PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                 PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                 single limit (bodily injury/property damage) of an amount not
                 less than the Minimum Liability Coverage for the time being
                 for any one occurrence (but in respect of products and
                 personal injury liability, this limit may be an aggregate
                 limit for any and all losses occurring during the currency of
                 the policy). War and Allied Risks are also to be covered under
                 the policy in line with prudent market practice for comparable
                 airlines, operating similar equipment in similar
                 circumstances. In addition, without limitation of the
                 requirements of the preceding sentence (and notwithstanding
                 anything to the contrary contained in the preceding sentence),
                 the Lessee shall in all events maintain war risk and allied
                 perils liability insurance in accordance with London form
                 AVN52C (as in effect on September 1, 2001) or its equivalent
                 form reasonably acceptable to Lessor (or an agreement of the
                 United States Government to insure against or indemnify for
                 substantially the same risks), from time to time, with respect
                 to the Aircraft in an amount not less than the Minimum
                 Liability Coverage.

1.2      TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

        (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                 Lessor any obligation imposed on the insured, including the
                 liability to pay any calls, commissions or premiums);

        (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
                 for all amounts up to the Agreed Value and to Lessee for any
                 excess above the Agreed Value


                                       4


<PAGE>


                 (which excess shall not exceed 10% of the Agreed Value),
                 except where the insurance payment does not exceed the Damage
                 Notification Threshold, and no Default is in existence, in
                 which case the loss will be settled with and paid to Lessee;

        (c)      50/50 PROVISION: if separate Hull "all risks" and "war risks"
                 insurances are arranged, include a 50/50 provision in
                 accordance with market practice (AVS. 103 is the current
                 London market language); and

        (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                 entitled to replace the Aircraft in the event of an insured
                 Event of Loss and are not entitled to replace any Engine in
                 the event of an Engine Event of Loss with respect to such
                 Engine.

1.3      TERMS OF LIABILITY INSURANCE

All required liability insurances will:

        (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                 insureds for its respective rights and interests, warranted,
                 each as to itself only, no operational interest (without
                 imposing on any such Person any obligation imposed on the
                 insured, including the liability to pay any calls, commissions
                 or premiums);

        (b)      SEVERABILITY: include a severability of interests clause which
                 provides that the insurance, except for the limit of
                 liability, will operate to give each insured the same
                 protection as if there were a separate policy issued to each
                 insured; and

        (c)      PRIMARY POLICY: contain a provision confirming that the policy
                 is primary without right of contribution and the liability of
                 the insurers will not be affected by any other insurance of
                 which Lessor, any Indemnitee or Lessee has the benefit so as
                 to reduce the amount payable to the additional insureds under
                 such policies.

1.4      TERMS OF ALL INSURANCES

All Insurances will:

        (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                 practice for airlines operating similar aircraft in similar
                 circumstances;

        (b)      DOLLARS: provide cover denominated in Dollars;

        (c)      WORLDWIDE: operate on a worldwide basis subject to such
                 limitations and exclusions as are in line with industry
                 practice obtained by prudent United States based international
                 air carriers;

        (d)      BREACH OF WARRANTY: provide that, in relation to the interests
                 of each of the additional assureds, the Insurances will not be
                 invalidated by any act or omission by Lessee, or any other
                 Person other than the respective additional assureds seeking
                 protection and shall insure the interests of each of the
                 additional assureds regardless of any breach or violation by
                 Lessee, or any other Person other than the respective
                 additional assured seeking protection of any warranty,
                 declaration or condition, contained in such Insurances;


                                      5


<PAGE>


        (e)      SUBROGATION: provide that the insurers will hold harmless and
                 waive any rights of recourse or subrogation against the
                 additional insureds to the extent Lessee has waived its rights
                 against the additional insureds in the Lease;

        (f)      PREMIUMS: provide that the additional insureds will have no
                 obligation or responsibility for the payment of any premiums
                 due (but reserve the right to pay the same should any of them
                 elect so to do) and that the insurers will not exercise any
                 right of set-off, counter-claim or other deduction, by
                 attachment or otherwise, in respect of any premium due against
                 the respective interests of the additional insureds other than
                 outstanding premiums relating to the Aircraft, any Engine or
                 Part the subject of the relevant claim;

        (g)      CANCELLATION/CHANGE: provide that the Insurances will
                 continue unaltered for the benefit of the additional insureds
                 for at least 30 days after written notice by registered mail
                 or telex of any cancellation, change, event of non-payment of
                 premium or installment thereof has been sent by insurer(s) to
                 Lessor, or where an insurance broker is appointed to the
                 insurance broker who shall promptly send on such notice to
                 Lessor, except in the case of war risks for which 7 days (or
                 such lesser period as is or may be customarily available in
                 respect of war risks or allied perils) will be given, or in
                 the case of war between the 5 great powers or nuclear peril
                 for which termination is automatic; and

        (h)      [NOT APPLICABLE]

        (i)      [INTENTIONALLY OMITTED.]

        (j)      INDEMNITIES: accept and insure the indemnity provisions of the
                 Lease to the extent of the risks covered by the policies.

1.5      DEDUCTIBLES

Lessee shall be responsible for any and all deductibles under the Insurances.

1.6      APPLICATION OF INSURANCE PROCEEDS

The Insurances will be endorsed to provide for payment of proceeds as follows:

        (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                 received as the result of an Event of Loss occurring during
                 the Term will be paid to Lessor as loss payee and any amount
                 in excess of the Agreed Value (which excess shall not exceed
                 10% of the Agreed Value) shall be paid to Lessee;

        (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                 proceeds of any damage or loss to the Aircraft, any Engine or
                 any Part occurring during the Term not constituting an Event
                 of Loss and in excess of the Damage Notification Threshold
                 will be paid to the appropriate repair facility, and applied
                 in payment (or paid to Lessee and/or Lessor as reimbursement)
                 for repairs or replacement property upon Lessor being
                 satisfied that the repairs or replacement have been effected
                 in accordance with the Lease.

        (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                 amounts below


                                       6


<PAGE>


                 the Damage Notification Threshold shall be paid by the insurer
                 directly to Lessee;

        (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of third
                 party liability will be paid by the insurers to the relevant
                 third party in satisfaction of the relevant liability or to
                 Owner, Lessor, Financing Partners' Representative or Lessee,
                 as the case may be, in reimbursement of any payment so made;

        (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                 at the time of the payment of any such insurance proceeds a
                 Default has occurred and is continuing, all such proceeds will
                 be paid to Lessor, Owner or Financing Parties' Representative,
                 as the case may be, or retained to be applied toward payment
                 of any amounts which may be or become payable by Lessee in
                 such order as Lessor or Owner, as the case may be, may elect
                 until such time as no Default is continuing and then applied
                 as described above; and to the extent that insurance proceeds
                 are paid to Lessee, Lessee agrees to hold such proceeds in
                 trust and comply with the foregoing provisions and apply or
                 pay over such proceeds as so required.

1.7      UNITED STATES GOVERNMENTAL INDEMNITY

Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such
a Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added
to the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.


                                        7


<PAGE>


                                                             EXECUTION VERSION

                                  AMENDMENT TO

                      AIRCRAFT LEASE COMMON TERMS AGREEMENT

                             DATED DECEMBER 14, 2001

                                     BETWEEN

                      GENERAL ELECTRIC CAPITAL CORPORATION

                                    AS LESSOR

                                       AND

                              ALOHA AIRLINES, INC.

                                    AS LESSEE


<PAGE>


THIS AMENDMENT TO AIRCRAFT LEASE COMMON TERMS AGREEMENT is made on December
14, 2001 (this "AGREEMENT")

BETWEEN:

GENERAL ELECTRIC CAPITAL CORPORATION, a company incorporated under the laws of
Delaware whose principal office is at 201 Long Ridge Road, Stamford, CT 06927,
U.S.A. ("GE CAPITAL"); and

ALOHA AIRLINES, INC., a company incorporated under the laws of Delaware whose
principal place of business is at 371 Aokea Street, Honolulu, HI 96819, U.S.A.
and its chief executive office at 500 Ala Moana Blvd., Two Waterfront Tower,
Suite 500, Honolulu, HI 96813, U.S.A. ("ALOHA").

WHEREAS:

(A)      GE Capital and Aloha have previously entered into that certain Aircraft
         Lease Common Terms Agreement dated as of May 12, 2000 (the "CTA");

(B)      GE Capital and Aloha desire to amend the CTA on the terms set forth in
         this Agreement.

IT IS AGREED as follows:

1.       INTERPRETATION

1.1      DEFINITIONS: From and after the effective date of this Agreement (as
         notified to Lessee pursuant to the Notice), all references herein to
         the "Lease" mean the integrated agreement consisting of the various
         documents comprising the Lease as defined in Schedule 1 to the CTA as
         the same is amended by this Agreement and all references in the Lease
         to "the Lease," the "Aircraft Lease Agreement," "hereunder" or the like
         shall mean the Lease as amended by this Agreement. Capitalized terms
         used herein but not defined shall have the respective meanings ascribed
         to such terms in the Lease.

1.2      CONSTRUCTION: The provisions of Clause 1.2 (Construction) of the CTA
         shall apply to this Agreement as if the same were set out in full
         herein.

2.       AMENDMENT TO CTA

2.1      Schedule 7 to the CTA is hereby amended to read in its entirety as set
         forth on Schedule 7 attached to this Agreement.

3.       MISCELLANEOUS

3.1      FURTHER ASSURANCES: Aloha agrees from time to time to do and perform
         such other and further acts and execute and deliver any and all such
         other instruments as may be required by law or reasonably requested by
         GE Capital to establish, maintain and protect the rights and remedies
         of GE Capital and to carry out and effect the intent and purpose of
         this Agreement and of any Lease in which the CTA as amended by this
         Agreement may be incorporated.


                                        1


<PAGE>


3.2      COUNTERPARTS: This Agreement may be executed in any number of separate
         counterparts, and each counterpart shall when executed and delivered be
         an original document, but all counterparts shall together constitute
         one and the same instrument.

3.3      GOVERNING LAW: The provisions of Clause 15.8 (Governing Law;
         Jurisdiction; WAIVER OF JURY TRIAL) of the CTA shall apply to this
         Agreement as if the same were set out in full herein.

3.4      VARIATION: The provisions of this Agreement shall not be varied
         otherwise than by an instrument in writing executed by or on behalf of
         GE Capital and Aloha.

3.5      INVALIDITY OF ANY PROVISION: If any provision of this Agreement becomes
         invalid, illegal or unenforceable in any respect under any law, the
         validity, legality and enforceability of the remaining provisions shall
         not in any way be affected or impaired.

3.6      COSTS AND EXPENSES: Aloha shall pay to GE Capital on demand all fees,
         costs and expenses incurred or payable by GE Capital in connection with
         the preparation, negotiation and completion of this Agreement and
         performance of the transactions contemplated hereby.

4.       CONTINUATION OF COMMON TERMS AGREEMENT

         Save as expressly amended by this Agreement, the CTA shall continue in
         full and unvaried force and effect as the legal, valid and binding
         rights and obligations of each of GE Capital and Aloha enforceable in
         accordance with their respective terms.


                                        2


<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By: /s/ Norman Liu
   ------------------------------------
Name: NORMAN LIU
   ------------------------------------
Title: VICE PRESIDENT
   ------------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


<PAGE>


IN WITNESS WHEREOF the parties hereto have executed this Agreement the day
and year first above written.

Signed for and on behalf of
GENERAL ELECTRIC CAPITAL CORPORATION

By:
   ------------------------------------
Name:
   ------------------------------------
Title:
   ------------------------------------


Signed for and on behalf of
ALOHA AIRLINES, INC.

By: /s/ Brenda F. Cutwright
   ------------------------------------
Name: Brenda F. Cutwright
   ------------------------------------
Title: Exec. Vice President & CFO
   ------------------------------------


By: /s/ James M. King
   ------------------------------------
Name: JAMES M. KING
   ------------------------------------
Title: SENIOR VICE PRESIDENT
       PLANNING & BUSINESS DEVELOPMENT
   ------------------------------------


<PAGE>


                                   SCHEDULE 7

                             INSURANCE REQUIREMENTS

1.1     TYPES OF INSURANCE

The Insurances required to be maintained are as follows:

         (a)      HULL ALL RISKS of loss or damage while flying, taxiing and on
                  the ground with respect to the Aircraft on an agreed value
                  basis for not less than the Agreed Value and not more than
                  110% of the Agreed Value and with a deductible not exceeding
                  the Deductible Amount;

         (b)      HULL WAR Risks AND ALLIED PERILS in accordance with LSW555B or
                  its equivalent form reasonably acceptable to Lessor (or an
                  agreement of the United States Government to insure against or
                  indemnify for substantially the same risks) in an amount not
                  less than the Agreed Value;

         (c)      All RISKS (including War and Allied Risk except when on the
                  ground or in transit other than by air) property insurance on
                  all Engines and Parts when not installed on the Aircraft for
                  like kind and quality value and including engine test and
                  running risks; and

         (d)      COMPREHENSIVE AIRCRAFT THIRD PARTY, PROPERTY DAMAGE,
                  PASSENGER, BAGGAGE, CARGO AND MAIL AND AIRLINE GENERAL THIRD
                  PARTY (INCLUDING PRODUCTS) LEGAL LIABILITY for a combined
                  single limit (bodily injury/property damage) of an amount not
                  less than the Minimum Liability Coverage for the time being
                  for any one occurrence (but in respect of products and
                  personal injury liability, this limit may be an aggregate
                  limit for any and all losses occurring during the currency of
                  the policy). War and Allied Risks are also to be covered
                  under the policy in line with prudent market practice for
                  comparable airlines, operating similar equipment in similar
                  circumstances. In addition, without limitation of the
                  requirements of the preceding sentence (and notwithstanding
                  anything to the contrary contained in the preceding sentence),
                  the Lessee shall in all events maintain war risk and allied
                  perils liability insurance in accordance with London form
                  AVN52C (as in effect on September 1, 2001) or its equivalent
                  form reaonsably acceptable to Lessor (or an agreement of the
                  United States Government to insure against or indemnify for
                  substantially the same risks), from time to time, with respect
                  to the Aircraft in an amount not less than the Minimum
                  Liability Coverage.

1.2      TERMS OF HULL AND SPARES INSURANCE

All required hull and spares insurance, so far as it relates to the Aircraft,
will:

         (a)      LOSS PAYEE: name Lessor, as loss payee (without imposing on
                  Lessor any obligation imposed on the insured, including the
                  liability to pay any calls, commissions or premiums);

         (b)      PAYMENT OF LOSSES: Losses will be payable in Dollars to Lessor
                  for all amounts up to the Agreed Value and to Lessee for any
                  excess above the Agreed Value


                                        4


<PAGE>


                  (which excess shall not exceed 10% of the Agreed Value),
                  except where the insurance payment does not exceed the Damage
                  Notification Threshold, and no Default is in existence, in
                  which case the loss will be settled with and paid to Lessee;

         (c)      50/50 PROVISION: if separate Hull "all risks" and "war risks"
                  insurances are arranged, include a 50/50 provision in
                  accordance with market practice (AVS. 103 is the current
                  London market language); and

         (d)      NO OPTION TO REPLACE: confirm that the insurers are not
                  entitled to replace the Aircraft in the event of an insured
                  Event of Loss and are not entitled to replace any Engine in
                  the event of an Engine Event of Loss with respect to such
                  Engine.

1.3      TERMS OF LIABILITY INSURANCE

All required liability insurances will:

         (a)      ADDITIONAL INSUREDS: include each Indemnitee, as additional
                  insureds for its respective rights and interests, warranted,
                  each as to itself only, no operational interest (without
                  imposing on any such Person any obligation imposed on the
                  insured, including the liability to pay any calls, commissions
                  or premiums);

         (b)      SEVERABILITY: include a severability of interests clause which
                  provides that the insurance, except for the limit of
                  liability, will operate to give each insured the same
                  protection as if there were a separate policy issued to each
                  insured; and

         (c)      PRIMARY POLICY: contain a provision confirming that the policy
                  is primary without right of contribution and the liability of
                  the insurers will not be affected by any other insurance of
                  which Lessor, any Indemnitee or Lessee has the benefit so as
                  to reduce the amount payable to the additional insureds under
                  such policies.

1.4      TERMS OF ALL INSURANCES

All Insurances will:

         (a)      INDUSTRY PRACTICE: be in accordance with standard industry
                  practice for airlines operating similar aircraft in similar
                  circumstances;

         (b)      DOLLARS: provide cover denominated in Dollars;

         (c)      WORLDWIDE: operate on a worldwide basis subject to such
                  limitations and exclusions as are in line with industry
                  practice obtained by prudent United States based international
                  air carriers;

         (d)      BREACH OF WARRANTY: provide that, in relation to the interests
                  of each of the additional assureds, the Insurances will not be
                  invalidated by any act or omission by Lessee, or any other
                  Person other than the respective additional assureds seeking
                  protection and shall insure the interests of each of the
                  additional assureds regardless of any breach or violation by
                  Lessee, or any other Person other than the respective
                  additional assured seeking protection of any warranty,
                  declaration or condition, contained in such Insurances;


                                        5


<PAGE>


         (e)      SUBROGATION: provide that the insurers will hold harmless and
                  waive any rights of recourse or subrogation against the
                  additional insureds to the extent Lessee has waived its rights
                  against the additional insureds in the Lease;

         (f)      PREMIUMS: provide that the additional insureds will have no
                  obligation or responsibility for the payment of any premiums
                  due (but reserve the right to pay the same should any of them
                  elect so to do) and that the insurers will not exercise any
                  right of set-off, counter-claim or other deduction, by
                  attachment or otherwise, in respect of any premium due against
                  the respective interests of the additional insureds other than
                  outstanding premiums relating to the Aircraft, any Engine or
                  Part the subject of the relevant claim;

         (g)      Cancellation/Change: provide that the Insurances will
                  continue unaltered for the benefit of the additional insureds
                  for at least 30 days after written notice by registered mail
                  or telex of any cancellation, change, event of non-payment of
                  premium or installment thereof has been sent by insurer(s) to
                  Lessor, or where an insurance broker is appointed to the
                  insurance broker who shall promptly send on such notice to
                  Lessor, except in the case of war risks for which 7 days (or
                  such lesser period as is or may be customarily available in
                  respect of war risks or allied perils) will be given, or in
                  the case of war between the 5 great powers or nuclear peril
                  for which termination is automatic; and

         (h)      [NOT APPLICABLE]

         (i)      [INTENTIONALLY OMITTED.]

         (j)      INDEMNITIES: accept and insure the indemnity provisions of the
                  Lease to the extent of the risks covered by the policies.

1.5      DEDUCTIBLES

Lessee shall be responsible for any and all deductibles under the Insurances.

1.6      APPLICATION OF INSURANCE PROCEEDS

The Insurances will be endorsed to provide for payment of proceeds as follows:

         (a)      EVENT OF LOSS: all insurance payments up to the Agreed Value
                  received as the result of an Event of Loss occurring during
                  the Term will be paid to Lessor as loss payee and any amount
                  in excess of the Agreed Value (which excess shall not exceed
                  10% of the Agreed Value) shall be paid to Lessee;

         (b)      EXCEEDING DAMAGE NOTIFICATION THRESHOLD: all insurance
                  proceeds of any damage or loss to the Aircraft, any Engine or
                  any Part occurring during the Term not constituting an Event
                  of Loss and in excess of the Damage Notification Threshold
                  will be paid to the appropriate repair facility, and applied
                  in payment (or paid to Lessee and/or Lessor as reimbursement)
                  for repairs or replacement property upon Lessor being
                  satisfied that the repairs or replacement have been effected
                  in accordance with the Lease.

         (c)      BELOW DAMAGE NOTIFICATION THRESHOLD: insurance proceeds in
                  amounts below


                                        6


<PAGE>


                  the Damage Notification Threshold shall be paid by the insurer
                  directly to Lessee;

         (d)      LIABILITY PROCEEDS: all insurance proceeds in respect of third
                  party liability will be paid by the insurers to the relevant
                  third party in satisfaction of the relevant liability or to
                  Owner, Lessor, Financing Partners' Representative or Lessee,
                  as the case may be, in reimbursement of any payment so made;

         (e)      DEFAULT: notwithstanding any of the foregoing paragraphs, if
                  at the time of the payment of any such insurance proceeds a
                  Default has occurred and is continuing, all such proceeds will
                  be paid to Lessor, Owner or Financing Parties' Representative,
                  as the case may be, or retained to be applied toward payment
                  of any amounts which may be or become payable by Lessee in
                  such order as Lessor or Owner, as the case may be, may elect
                  until such time as no Default is continuing and then applied
                  as described above; and to the extent that insurance proceeds
                  are paid to Lessee, Lessee agrees to hold such proceeds in
                  trust and comply with the foregoing provisions and apply or
                  pay over such proceeds as so required.

1.7      UNITED STATES GOVERNMENTAL INDEMNITY

Notwithstanding any of the foregoing paragraphs, in the event of a Permitted
Sub-Lease to, or a requisition of use by, the United States or any Governmental
Entity whose obligations have the full faith and credit of the federal
Government of the United States, Lessor agrees to accept in lieu of insurance
required hereunder indemnification or insurance from the United States or such a
Governmental Entity in a form reasonably acceptable to Lessor and Owner and
against such risks and in such amounts and on such terms such that when added to
the Insurance maintained by Lessee, Lessee is in full compliance with the
requirements of Section 9 and this Schedule.


                                        7



<PAGE>

                                                   May 12, 2000

Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

     Re:  Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
          Financial Services, Inc., as Lessor, and Aloha Airlines, Inc., as
          Lessee, in respect of One Boeing 737-700 Aircraft Bearing MSN 30830,
          incorporating the terms of that certain Common Terms Agreement dated
          as of May 12, 2000 (the "CTA") between General Electric Capital
          Corporation and Aloha Airlines, Inc. (collectively, the "Lease")

Ladies and Gentlemen:

We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. This letter
will serve as the acknowledgment of Aviation Financial Services, Inc., as lessor
("Lessor") under the Lease, that neither of the following situations shall
constitute an "Event of Default" under the Lease pursuant to Section (h) of
Schedule 9 to the CTA:

     1.   Cessation or temporary suspension of Lessee's trans-Pacific route
          between Hawaii and California (or any other location within the
          continental United States); or

     2.   Cessation or temporary suspension of any segment of Lessee's business
          which accounted for ten percent (10%) or less of the gross revenues of
          Lessee over the last three fiscal years immediately preceding the date
          of suspension or cessation (which calculation shall be made on a
          cumulative basis taking into account any and all segments of Lessee's
          business suspended or ceased within such three-year period).

For the avoidance of doubt, Lessor and Lessee expressly acknowledge and agree
that nothing in this letter agreement shall be deemed to derogate from or modify
any other provisions of the Lease. Without limiting the foregoing, Lessee
expressly acknowledges and agrees that, in the event that Lessee's utilization
of the Aircraft results in an operational ratio of less than one Flight Hour per
Cycle for a period of twelve (12) consecutive months, an "Event of Default"
shall arise pursuant to Part VIII of Schedule B to the Lease, regardless of
whether or not such operation arises out of or as a result of any suspension of
Lessee's trans-Pacific route.

<PAGE>

Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one fully-executed
counterpart of this letter to Lessor.


                                         Very truly yours,

                                         AVIATION FINANCIAL SERVICES, INC.

                                         By:      /s/ Norm Liu
                                             -----------------------------------
                                         Name:        Norm Liu
                                               ---------------------------------
                                         Title:       Vice President
                                                --------------------------------


ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

<PAGE>

Please indicate your acceptance of and agreement with the terms set forth in
this letter by signing in the space provided below and return one fully-executed
counterpart of this letter to Lessor.


                                         Very truly yours,

                                         AVIATION FINANCIAL SERVICES, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------


ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:      /s/ Brenda F. Cutwright
    -----------------------------------
Name:  Brenda F. Cutwright
      ---------------------------------
Title: Executive Vice President & CFO
       --------------------------------

By:      /s/ James M. King
    -----------------------------------
Name:  James M. King
      ---------------------------------
Title: VP Planning & Development
       --------------------------------

<PAGE>

                                                               EXECUTION VERSION

                                                   March 20, 2001

Aloha Airlines, Inc.
371 Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

     Re:  Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
          Financial Services Inc. ("AFSI"), as lessor, and Aloha Airlines, Inc.,
          as Lessee ("LESSEE"), in respect of One Boeing 737-700 Aircraft
          Bearing MSN 30830 and U.S. Reg. No. N742AL, which incorporates the
          terms of that certain Common Terms Agreement dated as of May 12, 2000
          between General Electric Capital Corporation and Aloha Airlines, Inc.
          (i) as modified by that certain Letter Agreement dated May 12, 2000
          between AFSI and Lessee, and (ii) as assigned and novated by that
          certain Aircraft Lease Novation and Amendment Agreement among AFSI, as
          existing lessor, Castle Harbour Leasing Inc., as new lessor
          ("Lessor"), and Lessee (collectively, and as amended or supplemented
          from time to time, the "LEASE")

Ladies and Gentlemen:

     We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. Lessor and
Lessee desire to enter into this Letter Agreement in order to document their
mutual understanding in respect of certain additional changes in the
specifications for the Aircraft to be completed prior to Delivery.

     1. SCOPE OF CHANGES TO DELIVERY CONDITIONS. Lessor and Lessee hereby
acknowledge and agree that, notwithstanding anything to the contrary set forth
in the Lease, at Delivery under the Lease, (i) the engine thrust capacity of the
Aircraft shall have been modified from the level currently specified in the
GECAS Detail Specification D6-38808-34 (Revision D) as incorporated in the
Purchase Agreement No. 1905 dated as of April 1996 (the "PURCHASE AGREEMENT")
between General Electric Capital Corporation, as buyer, and The Boeing Company,
as seller, to include 26,000 lbs. Engine thrust bump option (the "ENGINE THRUST
BUMP UPGRADE"), and (ii) the Aircraft shall be modified to include partial
provisions for the installation of the Honeywell SATCOM system (the "SATCOM
PROVISIONS"). Completion of the Engine Thrust Bump Upgrade and the installation
of the


<PAGE>


SATCOM Provisions shall each be deemed one of the "Delivery Condition
Requirements" for all purposes of the Lease.

     2.   COST OF CHANGES AND EFFECT ON RENT.

[This provision has been omitted as confidential information, and is
separately filed with the Commission.]

     3. LIMITATION ON AMENDMENT. Except as expressly modified by this Letter
Agreement, all of the terms and provisions of the Lease remain in full force and
effect and are hereby ratified and confirmed by the parties.

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.


                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------


ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:      /s/ Brenda F. Cutwright
    -----------------------------------
Name:  Brenda F. Cutwright
      ---------------------------------
         EXECUTIVE VICE PRESIDENT AND
Title:     CHIEF FINANCIAL OFFICER
       --------------------------------

By:      /s/ James M. King
    -----------------------------------
Name:  James M. King
      ---------------------------------
            SENIOR VICE PRESIDENT
Title:  PLANNING & BUSINESS DEVELOPMENT
       --------------------------------


<PAGE>


     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.


                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:        /s/ Charles H. Meyer
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------


ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

<PAGE>

                                                   May 24, 2001

Aloha Airlines, Inc.
37l Aokea Street
Honolulu, Hawaii 96819
Attn: Executive Vice President and Chief Financial Officer

     Re:  Aircraft Lease Agreement dated as of May 12, 2000 between Aviation
          Financial Services Inc. ("AFSI"), as lessor, and Aloha Airlines, Inc.,
          as Lessee ("LESSEE"), in respect of One Boeing 737-700 Aircraft
          Bearing MSN 30830 and U.S. Reg. No. N742AL, which incorporates the
          terms of that certain Common Terms Agreement dated as of May 12, 2000
          between General Electric Capital Corporation and Aloha Airlines, Inc.
          (i) as modified by that certain Letter Agreement dated May 12, 2000
          between AFSI and Lessee, (ii) as assigned and novated by that certain
          Aircraft Lease Novation and Amendment Agreement among AFSI, as
          existing lessor, Castle Harbour Leasing Inc., as new lessor
          ("Lessor"), and Lessee, (iii) as modified by that certain Letter
          Agreement dated March 20, 2001 (collectively, and as amended or
          supplemented from time to time, the "LEASE")

Ladies and Gentlemen:

     We refer to the Lease, as defined above, and capitalized terms used without
definition herein have the meanings assigned to them in the Lease. Lessor and
Lessee desire to enter into this Letter Agreement in order to document their
mutual understanding in respect of the determination of the actual amount of
Rent pursuant to Part III of Schedule B to the Lease.

     1. RENT. [This provision has been omitted as confidential information, and
is separately filed with the Commission.]


     2. LIMITATION ON AMENDMENT. Except as expressly modified by this Letter
Agreement, all of the terms and provisions of the Lease remain in full force and
effect and are hereby ratified and confirmed by the parties.

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.


                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:        /s/ Charles H. Meyer
                                             -----------------------------------
                                         Name:        Charles H. Meyer
                                               ---------------------------------
                                         Title:        Vice President
                                                --------------------------------


ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

By:
    -----------------------------------
Name:
      ---------------------------------
Title:
       --------------------------------

<PAGE>

     Please indicate your acceptance of and agreement with the terms set forth
in this Letter Agreement by signing in the space provided below and return one
fully-executed counterpart of this Letter Agreement to Lessor.



                                         Very truly yours,

                                         CASTLE HARBOUR LEASING, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------


ACKNOWLEDGED AND AGREED.

ALOHA AIRLINES, INC.

By:      /s/ Glenn R. Zander
    -----------------------------------
Name:  Glenn R. Zander
      ---------------------------------
Title: President & CEO
       --------------------------------

By:      /s/ James M. King
    -----------------------------------
Name:  James M. King
      ---------------------------------
Title: SR VP Planning & Business Dev.
       --------------------------------