BEFORETHEDEPARTMENTOFTRANSPORTATIONWASHINGTON,D.C.)Jointapplicationof))ALASKAAIRLINES,INC.and)DocketDOT-OST-2010-____HORIZONAIRINDUSTRIES,INC.))under14C.F.R.212forstatementsofauthorization)permittingcodeshareservice)_________________________________________________________________________________)JOINTAPPLICATIONFORSTATEMENTSOFAUTHORIZATIONCommunicationswithrespecttothisdocumentshouldbeaddressedto:KyleLevineMarshallS.SinickAssociateGeneralCounselCharlesF.DonleyIICommercialLawandLitigationSquire,Sanders&DempseyL.L.P.DanNye1201PennsylvaniaAvenue,N.W.SeniorCounselWashington.D.C.20004AlaskaAirlines,Inc.(202)626-660019300InternationalBoulevardrnsinickssd.comSeattle.Washington98188cdonleyssd.cornMeganLawrenceCounseltoAlaskaAirlines,Inc.ManagingDirector.GovernmentAffairsandHorizonAirIndustries.Inc.andCommunityRelationsAlaskaAirlines.Inc.19300InternationalBoulevardSeattle.Washington98188DATED:April27,2010BEFORETHEDEPARTMENTOFTRANSPORTATIONWASHINGTON,D.C.)Jointapplicationof))ALASKAAIRLINES,INC.and)DocketDOT-OST-2010-____HORIZONAIRINDUSTRIES,INC.))under14C.F.R.212forstatementsofauthorization)permittingcodeshareservice)JOINTAPPLICATIONFORSTATEMENTSOFAUTHORIZATIONPursuantto14C.F.R.212,AlaskaAirlines,Inc.(“Alaska”)andHorizonAirIndustries,Inc.(“Horizon”)(together,the“JointApplicants”)herebyrequestblanketstatementsofauthorizationofindefinitedurationpermittingthemtoengageincodeshareoperationswithIcelandairehf.(“Icelandair”).TheJointApplicantsrequestauthoritypermittingthemtodisplayIcelandair’stwoletterdesignatorcodeonflightsoperatedbythem(i)betweenpointsintheUnitedStates;and(ii)betweenpointsintheUnitedStatesandCanada,forthepurposeoftransportingIcelandair’sIceland-U.S./Canadatraffic.ThepartiesplantobegincodeshareserviceonJune1,2010andrequesttheDepartmentofTransportation’s(“Department”)promptapprovalofthisapplicationsothatmarketingandsalescanbeginwithoutdelay.1Totheextentnecessary,theJointApplicantsrequestawaiverofthe45-dayadvancefilingrequirementcontainedin14C.FR.2121O(d)(2),AredactedcopyoftheAlaska/Horizon-Icelandaircodeshareagreementisattachedtothisapplication.JointApplicationofAlaskaAirlines,Inc.andHorizonAirIndustries,Inc.DocketDOT-OST-2010April27,2010Infurthersupportofthisapplication,theJointApplicantsstateasfollows:1.Alaska’sheadquartersislocatedat19300InternationalBoulevard,Seattle,Washington.AlaskaisincorporatedunderthelawsoftheStateofAlaskaandisawholly-ownedsubsidiaryofAlaskaAirGroup,Inc.(“AAG”).AAGisincorporatedunderthelawsoftheStateofDelaware.2.Horizonhasitsprincipalheadquarterslocatedat19521InternationalBlvd.,Seattle,Washington.HorizonisincorporatedunderthelawsoftheStateofWashingtonandisawholly-ownedsubsidiaryofAAG.AAGisincorporatedunderthelawsoftheStateofDelaware.3.UnderthecodeshareagreementbetweentheJointApplicantsandIcelandair,Icelandairwillplaceits“FI*”designatorcodeonscheduledflightsoperatedcurrentlybytheJointApplicantsbetweenpointsintheUnitedStates,andbetweentheUnitedStatesandCanada.2TheJointApplicants’flightswillconnectwithIcelandair’sflightsarrivingatIcelandair’sU.S.gatewaysforthepurposeoftransportingIcelandair’sIceland-U.S.andIcelandCanadatraffic.TheJointApplicantsrequestblanketstatementsofauthorizationpermittingthemtodisplayIcelandair’stwo-letterdesignatorcodeonflightsoperatedbythem(i)betweenpointsintheUnitedStates;and(ii)betweenpointsintheUnitedStatesandCanada,forthepurposeof2TheJointApplicantsholdallnecessaryunderlyingauthority,TheJointApplicantshaverepeatedlybeenfoundfit,willingandabletoprovideinterstateandforeignairtransportation.IcelandaircurrentlyholdsfromtheDepartmentanopenskiesforeignaircarrierpermitauthorizingIcelandairtoengageinscheduledforeignairtransportationofpersons,propertyandmail“betweenpointsbehindIceland,viaIcelandandintermediatepoints,andanypointorpointsintheUnitedStates,andbeyond”Order98-6-23.JointApplicationofAlaskaAirlines,Inc.andHorizonAirIndustries,Inc.DocketDOT-OST-2010April27,2010transportingIcelandair’sIceland-U.S./Canadatraffic.CodeshareservicewillbeginonJune1,2010.4.TheproposedcodeshareserviceisconsistentwiththetermsoftheU.S.-IcelandAirTransportAgreement,asamended(“Agreement”).TheAgreementspecificallycontemplatescooperativemarketingarrangementssuchastheAlaska/Horizon-Icelandaircodeshare:Inoperatingorholdingouttheauthorizedservicesontheagreedroutes,anydesignatedairlineofonePartymayenterintocooperativemarketingarrangements,suchasblocked-space,code-sharingorleasingarrangements,withi)anairlineorairlinesofeitherParty[.j4ThecodeshareserviceproposedinthisapplicationisclearlywithinthescopeoftheU.S.IcelandAgreement.55.TheJointApplicantswillcomplywiththerequirementsof14C.F.R.257inoperatingthecodeshareservicedescribedinthisapplication.InresponsetotheDepartment’sJune1,1995,lettertoparticipantsintheCivilReserveAirFleetProgram,theJointApplicantsstatethatthecodesharingarrangementcontemplatedbythisapplicationwillhavenoimpactontheirCRAFcommitments.WHEREFORE,AlaskaAirlines,Inc.andHorizonAirIndustries,Inc.respectfullyrequestthattheDepartmentofTransportationgrantthemblanketstatementsofauthorizationtoInitialcodesharemarketsareidentifiedinExhibitA.Article8(7)(a)See,eg.,DepartmentAetiononApplicationinDocket1)()T-OST-1999-631November12.1999(approvingIcelandair-SAScodesharine).JointApplicationofAlaskaAirlines,Inc.andHorizonAirIndustries.Inc.DocketDOT-OST-2010_______April27,2010engageincodeshareoperationswithIcelandairehf.asmorefullydescribedherein,orgrantsuchotherreliefastheDepartmentdeemsnecessaryandappropriate.Respectfullysubmitted,2MarshallS.SinickCharlesF.DonleyITSquire,Sanders&DempseyL.L.P.1201PennsylvaniaAvenue,N.W.Washington,D.C.20004(202)626-6600msinick)ssd,corncdonleyssd.comCounseltoAlaskaAirlines,Inc.DATED:April27,20104EXHIBITAInitialCodeshareRoutesRouteOperatingCarrierSeattle-SanFranciscoAlaskaLosAngelesAlaskalHorizonPortland,OregonHorizonSanDiegoAlaskaLasVegasAlaskaSacramentoAlaskaSanJoseAlaskaSpokaneHorizonAnchorageAlaskaVancouverAlaska/HorizonCalgaryHorizonVictoriaHorizonCERTIFICATEOFSERVICEIherebycertifythatonecopyoftheforegoingJointApplicationhasthisdaybeenservedoneachofthefollowingindividualsviatelecopier,emailorfirstclassmail,postageprepaid..CharlesF.DonleyIIDATED:April27,2010hkamen(coair.com;dan.weiss@coair.comsascha.vanderbelIen@ide1ta.com;jeff.morgandelta.com;sarnetta.c.harnett@delta.comeffrev.man1ey(d,united.comcarl.nelson@aa.corntcbentdwi:.hg.transcorn.rnilREDACTEDCODESHAREAGREEMENTBETWEENICELANDAIRandALASKAAIRLINES,INC.0-INDEXTOTHECÔDESHAREAGREEMENT1.DefinitionsandInterpretation....,...22.ScopeoftheAgreement..........,,,,,,.-,“..“...,53.RegulatoryApprovals........................,,...64.Charges,SettlementandAccountingProcedures.......75.FlightSchedules..............._...86.CustomerAwarenessofCodeshareServicesandServiceStandards97.Flightoperations...,...,....108.[Intentionallyleftblank)119.Company&EmployeeTravel....,..1210.DelaysorDisruptions.........................................1211.SalesandMarketing1312.ReviewProceduresandAmendmentoftheAgreement1313.Liability,Indemnity&Insurance1314.Worker&CompensationandCommonLaw1615.[Intentionallyleftblank)1616.Taxation1617.ConsumptionTax1718.OtherRelationships1819.TermandTermination1820.RepresentationsandWarranties2021.Confidentiality2022.TradeandCorporateIdentification2123.NoPartnershiporAgency2224.ForceMajeureEvents2225.Notices2326.General24ExhibitACodeshareServicesThisAGREEMENTdatedApril5,2010,isbetweentheseparties:ICELANDAIR:ICELANDAIRehf,acorporationexistingunderthelawsofIcelandandhavingitsheadofficeatIcelandairHeadOffice,ReykjavikAirport,101Reykjavik,Iceland(Icelandair);andALASKA:ALASKAAIRLINES,INC.anAlaskacorporation,onitsownbehalfandasrepresentativeforitsaffiliatedentity,HorizonAirIndustries,aWashingtoncorporation,andhavingitsheadofficeat19300InternationalBoulevard,Seattle,Washington98188,UnitedStatesofAmerica(Alaska);INTRODUCTIONA.Eachpartyoperatesscheduledairlineservicesandsupplementaryservicesasmaybeapprovedfromtimetotimebytheappropriateaeronauticalauthorities.B.AlaskawishestopermitIcelandairtomarketandsellflightcapacityoncertainofAlaska’sscheduledservices(asshowninExhibitA)usingIcelandair’stwoletterairlinedesignatorcoderatherthanthecodeoftheoperatingcarrier.C.ThepartiesagreetoCodeshareonthetermsandconditionsofthisAgreement.AGREEMENT1.DefinitionsandInterpretation1.1,InthisAgreementunlessthecontraryintentionappears:‘Agreement’meansthisdocument,includingitsrecitals,clausesandanyexhibitsandattachments.‘AlaskaTradeMarks’meanstheAlaskanameandanylogoortrademark(whetherregisteredornot)usedbyAlaskainconnectionwithitsbusinessasanairlineoranyotherAlaskabusiness.‘Charges’meansthechargesspecifiedinparagraphBofExhibitA.‘Claim’meansanyaction,claim,demand,suit,judgmentorproceedingofanynatureandkindwhatsoever‘Code’meanstheairlinedesignatorcodeFlinthecaseofIcelandairandASinthecaseofAlaska.‘Codeshare’meanswhereoneairlineassignsitsCodetoaflightoperatedbyanotherairlineandthatotherairlinecontinuestouseitsownCodeonthatflight.2‘Codeshare Procedures’

has the meaning given

to
it In clause ‘Codeshare Services’ means

all flights operated

by an Operating Carrier

on the routes specified

in Exhibit

A, as amended

or replaced from time

to time by agreement

in writing between

the parties. ‘Commencement

Date’ means June

1, 2010,

or such later date

in the event the granting

of all necessary government authorizations

is delayed. ‘Conditions

of Carriage’ means
the applicable tariffs and rules

of carnage governing

the transport

of

a passenger, which are incorporated

by reference in the Ticket

of that passenger. ‘Consumption

Tax’ means

a tax imposed

by legislation

of any jurisdiction

on supplies

of goods, services
and any other things, which

is in the nature

of goods and services

tax or value-added

tax. ‘CR8’ means

a computerized reservations system owned

or operated

by any entity, that contains information about commercial airline schedules, fares, Cargo rates, passenger

and Cargo tariff rules and flight availability,

that

is made available

to travel agents, Cargo agents and other non-airline entities to facilitate their ability

to make reservations

and issue Tickets
and air waybills. ‘Damages’ means liabilities, expenses, losses, damages

and costs (including legal costs

on

a full indemnity basis and whether incurred

by or awarded against

a party), ‘Designated Capacity’ means

the capacity

on an Operating Carrier’s Codeshare Service

as specified

in Exhibit

A, which

is allocated

to the Marketing Carrier

in accordance

with this Agreement. ‘Dispute’ means

a dispute arising
out of this Agreement

and concerning

the validity, construction

and performance

of this Agreement. ‘Force Majeure Event’ means anything outside
the reasonable control

of

a party that prevents
that party from performing

its obligations under this Agreement

and that could not with reasonable diligence

be controlled

or prevented

by the party including strikes, lockouts, labor disputes,
acts
of God, acts
of governments

or their agencies,

fire, flood, war, civil disorder, riots, power shortages

or failures, sabotage,

or inability

to obtain sufficient

fuel
or utilities. ‘IATA’ means
the International

Air Transportation Association. ‘IATA Season’ shall mean

a summer

or winter season,

as established
each year
by IATA. ‘lcelandair Trade Marks’ means
the Icelandair name and any logo
or trade mark (whether registered

or not) used

by Icelandair

in connection

with

its business

as an airline

or any other lcelandair business. ‘Marketing Carrier’ means

I celandair.‘MarketingCarrierTicket’meansaTicketshowingtheMarketingCarrier’sCodeforaCodeshareServiceoperatedbyanOperatingCarrierthatiseitherissuedbytheMarketingCarrier,OperatingCarrierorathirdpartyandisvalidfortravel.‘OfficialAirlineGuides’meanstheprintedandelectronicdataversionsoftheOfficialAirlineGuides’or‘QAG’andtheirrespectivesuccessors.‘OperatingCarrier’meansAlaska.‘PersonalInformation’meansinformationoranopinion(includinginformationoranopinionformingpartofadatabase),whethertrueornot,andwhetherrecordedinamaterialformornot,aboutanindividualwhoseidentityisapparent,orcanreasonablybeascertained,fromtheinformationoropinion.‘Personnel’meansofficers,employees,agentsandcontractorsofaparty.‘ReservationsSystem’meanstheinternalcomputerizedairlinepassengersystemusedbythePersonnelofanairlineoranyotherauthorizednon-airlineorhandlingpersonnelthatcontainsinformationaboutflightschedules,fares,passengertariffrulesandflightavailabilityofthatairlineandothercarriers,andprovidestheabilitytomakereservationsandissueTickets.‘SignificantEvent’meansanemergencyorseriousincidentoraseriousthreatrelatingtoanyofaparty’sflightsincludingCodeshareServices.‘Subsidiary’meansacompanyofwhichmorethanhalfoftheregisteredcapitalbelongstoanothercompany.‘Taxes’meananytaxes,assessments,leviesorfees.‘Term’meansthetermofthisAgreementasdeterminedunderclause19.‘Ticket’meansawritten,printedorelectronicdocumententitlingtheholdertotravelonaparticularairlineserviceinadesignatedclassonaCodeshareService,andincludesanyformofelectronicticketrecognizedbythepartiesfromtimetotimeand,wherethecontextsorequires,includesaticketforasingleflightsector.12.InthisAgreementunlessthecontraryintentionappears:(a)areferencetoaclause,paragraph,exhibit,orattachmentisareferencetoaclauseorparagraphorexhibitorattachmenttothisAgreementandreferencestothisAgreementincludesanyrecital,annexorattachment:(b)areferencetothisAgreementoranotherinstrumentincludesanyvariationorreplacementofeitherofthem;(c>areferencetoastatute.ordinance,orby-lawinciudesregulationsandotherinstrumentsunderitandconsolidations,amendments.reenactmentsorreplacementsofanyofthem:(d)thesingularincludesthepluraland viceversa;(e)thewordpersonincludesafirm,abodycorporate,anunincorporatedassociationoranauthority;4(f)

a reference

to

a party includes lcelandair

or Alaska, successors,

and permitted assigns

of that party; (g)

a reference

to

a right
or obligation

of any two or more persons confers that right

or imposes
that obligation

(as the case may be) jointly and severally; (h)

if a period

of time

is specified

and dates from

a given day
or the day of an act or event,

it is to be calculated exclusive

of that day; (i)

a reference

to

a day

is to be interpreted

as the period

of time commencing

at midnight

at the applicable
local time and ending

24 hours later; (j) ‘include

or ‘including’ means ‘including without limitation’;

and (k) headings

are for ease
of reference
only and do not affect the meaning of this Agreement. 1.3. Terms used but not defined

in this Agreement

will be construed

and interpreted

in
a manner consistent

with the usage

of such terms

in the ‘IATA Interline Traffic Agreement- Passenger’

set out

in IATA Resolution

780 (the ‘IATA Interline Traffic Agreement’)

and any other publications issued

by IATA concerning

the interpretation

of the IATA Interline Traffic Agreement.

It is understood

that accepted international industry procedures

and agreements relating

to the interlining

of passengers

and baggage, including those
set out

in the IATA Interline Traffic Agreement,
apply

to the parties’ cooperative relationship
under this Agreement, except

to the extent inconsistent

or in conflict with the terms

of this Agreement

in which case the terms

of this Agreement prevail. 2. Scope

of the Agreement 2.1. Subject

to the terms

of this Agreement,

the Marketing Carrier
has the right

to market
the Operating Carrier’s Codeshare Services

and sell inventory

or seats

on such Codeshare Services based

on

a freesale mechanism
using the Marketing Carrier’s Code rather than the Operating Carrier’s Code. 12. The Codeshare Services,

as defined

in Exhibit

A, will remain

in effect during the term
of this Agreement; provided, however,
that (a)

the Codeshare Services

set forth

in Exhibit

A may be amended

by the parties

in writing from time

to time, and (b)

If any proposed change

to the Operating Carrier’s schedules

or aircraft type

is not acceptable

to the Marketing Carrier,

in its reasonable discretion,

and the parties cannot agree

to amend
the Codeshare Services pursuant

to clause 2.2(a), then the Marketing Carrier shall have the right

to remove

its code from the flight(s)

to which the disagreement pertains upon five (5) days’ written notice to the Operating Carrier. 2.3 The Operating Carrier

will provide

to the Marketing Carrier nondiscriminatory access

to Operating Carrier’s bookable inventory

on the Codeshare Services and sufficient
hold capacity

to provide

for the free checked baggage allowance granted

to the Marketing Carrier’s passengers. The parties further agree

to map the inventory classes

of the Marketing Carrier

to the inventory classes

of the Operating Carrier

for the Codeshare flights. The parties
will endeavor

to map the average coupon value

of the 5MarketingCarrier’sinventoryclassestocomparableclassesoftheOperatingCarriertoprovidesimilaraccessforbookingsmadebytheMarketingCarrierforpassengersyieldingcomparablerevenuevalues;itbeingunderstood,however,thattheOperatingCarrierretainsultimatecontrolovertheopening,closingandothermanagementofseatinventoryavailabilityonCodeshareServices.EachpartyshallusecommerciallyreasonableeffortstoprovideequalinventoryaccesstoCodesharepassengersininventoryclasseswheresuchpassengersyieldcomparablerevenuesastheOperatingCarrier’spassengers.2.4.ThepoliciesandproceduresapplicabletotheCodeshareServices(‘CodeshareProcedures’)shallbemutuallypreparedbythepartiesbeforethecommencementofCodeshareServices.EachpartymustnotifytheotherofanysignificantchangestoitspoliciesandproceduresanditsConditionsofCarriageinaccordancewithClause25(Notices).2.5.ExceptasotherwisespecifiedinthisAgreement,theOperatingCarrier’srespectivepoliciesandprocedureswillapplyontheCodeshareServices.2.6.Subjecttoclause21,theOperatingCarrierwilldetermine,independentlyandatitssolediscretion,thenumberofseatsonitsflights(includingflightsoperatedasCodeshareflights)thatwillbemadeavailableinaparticularreservationbookingdesignator.WithrespecttoinventorymanagementontheCodeshareflights,thepartiesacknowledgeandagreethattheOperatingCarrierwillmanageitsseatinventoriesinamannerthatprovidesanincentivefortheMarketingCarriertoselltheinventoryoftheOperatingCarrierandfortheOperatingCarriertoaccepttheinventoryrequestsoftheMarketingCarrierwithoutsubjectingtheOperatingCarriertodisproportionateriskofrevenuedilutionandwhilepreservingfortheOperatingCarriertheintegrityofitsinventorymanagementsysteminorderfortheOperatingCarriertomaximizeitsprofitability.2.7.ThisAgreementdoesnotapplytothecarriageofcargo.2.8.ThisAgreementislimitedtothecarriageof:(a)commercialpassengersandtheirbaggage;and(b)companyandemployeetravelasspecifiedinclause9.2.9.BookingsmadebytheMarketingCarrieronafreesalebasiswillbehonoredbytheOperatingCarrierasconfirmedseatsalesexceptthattheOperatingCarriermayrejectaMarketingCarrierbookingwithintwelve(12)hoursafterthatbookingwasreceivedbytheOperatingCarrier,iftheOperatingCarrierhasdeemedthatthebookingclasswasclosedatthetimethebookingwasmade,regardlessofwhethertheCRSortheMarketingCarrier’sReservationsSystemwasshowingopenorclosedforthatflight.3.RegulatoryApprovals3.1.ThisAgreementanditsimplementationaresubjecttoeachpartyobtainingallnecessarygovernmentandotherapplicableregulatoryapprovals.3.2.Eachpartyagreestofilewiththerelevantgovernmentauthorities,andagreestosupportwhereappropriatetheotherparty’sapplicationsfor,any0statements

of authorization, licenses, certifications, exemptions, designations or other governmental approvals

as may
be necessary

to permit
the Codeshare arrangements contemplated

by this Agreement. 3.3,

To the extent permitted

by law, each party must immediately provide

the other with copies

of any correspondence received from any governmental authority including

any reports

of any relevant accident investigation
body, with respect

to the Codeshare Services

or in respect

of any service operated by that party
on which

a serious incident
has occurred
that relates

to: (a) any alleged violation

of aviation

or other rules

or regulations;

or (b) any investigation performed

or proposed

by any governmental authority including

any investigation concerning

the airworthiness

of aircraft used for any
of the Codeshare Services
and compliance

with operational, training

or safety rules and procedures. 3.4. Each party will ensure that
its performance

of this Agreement complies
with the terms and conditions

of all applicable inter-governmental

air services agreements

and any applicable decisions, determinations, licenses, certificates

and approvals

of governmental authorities. 4. Charges, Settlement

and Accounting Procedures 4.1. The Marketing Carrier
will pay the Charge(s)

to the Operating Carrier. 4.2. Unless otherwise agreed

in writing between

the parties,
the Operating Carrier will be responsible

for: (a)

all costs associated

with the operation

of its Codeshare Services;

and (b)

all airport costs, charges
and Taxes incurred

by the Operating Carrier as

a result

of the carriage

of passengers,

and that are not able

to be passed

on to the Marketing Carrier

in accordance

with clause

16 or clause

17, 4.3. Excess baggage charges,

if any, will be collected from
all passengers

by the Operating Carrier

in accordance

with the Operating Carrier’s Conditions

of Carriage.

The Marketing Carrier
has no authority

to waive excess baggage charges

on the Codeshare Services. 4.4. Subject

to clause 4.5, the Operating Carrier
will retain

all revenue accrued

or collected

for excess baggage

on its Codeshare Services. 4.5. Where excess baggage revenue

is accrued

or collected

for carriage

of excess baggage

on Codeshare Services
that connect

to the Marketing Carrier’s flights, then the combined excess baggage revenue

for the Codeshare Services

and the Marketing Carrier’s connecting flights
will be allocated between

the parties

in accordance

with any pro rate agreement between

the parties

in force

at the time
of carriage. 46. Payment

of the Charges

will be made through

the IATA Clearing House

in accordance

with
its rules and regulations. 4.7.

All Tickets (including Marketing Carrier Tickets) used and honored

on the Codeshare Services shall
be uplifted
and retained

by the Operating Carrier, which shall
be responsible

for processing

and billing

of such documents. 748,RequiredTechnicalInterface.RevenuebookingandawardaccrualandredemptionfunctionsassociatedwiththeCodeshareServicesshallbeasseamlessascommerciallypossibleforthebenefitoftheparties’customers.Thepartiesthereforeagreetoestablishafreesaleenvironmentincluding,butnotlimitedto,thefollowingfunctionality:CodeshareIATAOption1,PNRexchange,JATAChapter7SSIMfileexchange,pre-reservedseating,availabilitystatusmessages(AVS),EDIFACTthroughcheck-incapability,passengerreconciliationlists(PRL)anddirectaccesstoaccrualandredemptionfunctionsintheothercarrier’sfrequentflyerprogram.4.9,Solelytosupportinterlinebillingtothirdparties,theMarketingCarrierherebywaivesendorsementrequirementsfortheOperatingCarrierwithrespecttoallcouponsorTicketsissuedbythirdpartieswheretheMarketingCarrier’sCodeisindicated,fortravelontheCodeshareServices.4.10.EachpartyagreestoaffordtheotherpartyreasonableaccessduringnormalbusinesshoursonreasonablepriorwrittennoticetoitsaccountingrecordsforthepurposesofverificationofamountspayableunderthisAgreementandinformationanddataprovidedtoapartyunderthisAgreement.4.11.EachpartymustatalltimesestablishfaresfortheCodeshareServicesindependentlyoftheotherparty.4.12.TheMarketingCarrierwillnotupgradeitspassengersontheCodeshareServicesafterissuingaTicket.4.13.ThepartiesmaysetoffanyCharges(asdefinedinclause4.1)owedtooneanotherunderthisclause4againstanyamountowedbytheotherpartytoitunderthisAgreement.Suchset-offshalloccurviatheIATAClearingHouseprocess.5.FlightSchedules5.1.Eachpartymustusereasonableeffortsto:(a)minimizeschedulechangesaffectinganyoftheCodeshareServices;(b)minimizethegroundtimebetweenflightsforpassengerswhoareconnectingtoorfromaCodeshareServicetootherIcelandairorAlaskaflights;and(c)maximizepassengerconvenienceandservice.5.2.Despiteclause5.1,nothingcontainedinthisAgreementobligatesanypartytooperateaspecificflightorscheduleandeachpartyretainstherighttodeterminethefinalservicescheduleofitsflights.53.TheOperatingCarrierwillusereasonableeffortstonotifytheMarketingCarrierinwritingnotlessthanthirty(30)dayspriortotheeffectivedateofanyproposedchangetoitsschedulesoraircrafttypethataffectsanyofthefhghtsbearingtheFldesignatorcodeaspartoftheCodeshareServices.Ifitisnotpracticabletogivethirty(30)days’notice,theOperatingCarrierwillnotifytheMarketingCarrierassoonaspracticableoftheproposedchangeinordertoenablesynchronizedpublicationofflightdetails.85.4.TheOperatingCarrierwillprovideregular,up-to-datescheduleadviceconcerningtheCodeshareServicesviaSSIM(StandardScheduleInformationManual),emailortelexinstandardIATAformattotheOfficialAirlineGuide,andwillsendacopyofeachadvicetotheMarketingCarrier.5.5.TheOperatingCarrierwillincludetheMarketingCarrier’sflightnumbersinallSSIM(StandardScheduleInformationManual),SSM(StandardScheduleMessage),ASM(AdhocScheduleMessage)andInterAirlineThru-CheckInmessagesrelatingtotheCodeshareServices.5.6Thepassengerre-accommodationprocessinthecaseofschedulechangeswillbeinaccordancewiththeOperatingCarrier’sproceduresoranyotherprocessagreedbetweentheparties,Thepaymentof,andanyliabilityfor,allcostsinconnectionwithschedulechangeswillbegovernedbyclauses10.1and104.6.CustomerAwarenessofCodeshareServicesandServiceStandards6.1.PriortosellingaTicketonaCodeshareService,eachpartywillensurethatitbringstotheattentionofitscustomersandpotentialcustomersinaccordancewithapplicablelegislation,regulations,industrycodesofconductandgovernmentrequirements:(a)thattheflightisaCodeshareService;and(b)thecorporateidentityoftheOperatingCarrier.6.2.Eachpartywilluseallreasonableeffortstoensurethat:(a)allpublicschedules(includingOfficialAirlineGuides,CRSdisplaysandReservationsSystems);(b)alladvertisingcommunicationsandpromotionalmaterialproducedordistributedbyoronbehalfofapartyconcerningtheCodeshareServices;and(c)itsPersonnelsellingseatsontheCodeshareServicesclearlyidentifythecarrieroperatingeachCodeshareServicetocustomersandpotentialcustomers.6.3.TheMarketingCarriermustensureitspassengers’printedTicketsanditinerariesidentifytheOperatingCarrierandtheMarketingCarrier.6,4.TheMarketingCarrierwilladvisepassengersoftheOperatingCarrier’sminimumcheck-intimes.6.5.TheMarketingCarriermay,fromtimetotime,measurecustomerserviceontheCodeshareServicesandtheOperatingCarriermustprovide,uponreasonablerequestfromtheMarketingCarrier,reasonableaccesstoitsrecords,facilitiesandtheCodeshareServicesforthispurpose.6.6.TheOperatingCarrierwillensurethattheMarketingCarrier’spassengersoneachCodeshareServicereceiveservicesandtreatment,includingaccesstolounges,fromtheOperatingCarrierthatareatleastequivalenttotheservicesandtreatmentprovidedtotheOperatingCarrier’spassengerstravelinginthesameclassorcategoryoftravelontheCodeshareService.67.Eachpartywillhandlecustomercomplaintsreceivedbyitinaccordancewith9its own customer complaint handling procedures.

The party that receives

a complaint

will use its best efforts

to resolve
the issue

at first point

of contact However,

any complaint

that relates

to an in-flight injury

or accident sustained aboard

a Codeshare
flight must
be referred

to the Operating Carrier

for handling. 7. Flight operations 7.1. The Operating Carrier
will retain full and exclusive control and authority over its Codeshare Services, including crewing, flight plan clearance, in-flight navigation

of the aircraft
and for ensuring
that the aircraft

is operated

in accordance

with
its certification. 7.2. The Operating Carrier
will be entitled

to conduct

its Codeshare Services
with respect

to the Marketing Carrier’s passengers

in conformity

with the Operating Carrier’s Conditions

of Carriage.
The Operating Carrier agrees

to use commercially practicable efforts

to notify the Marketing Carrier

of any changes

to its Conditions

of Carriage after the date
of this Agreement. 7.3. The parties acknowledge

that, without limiting clause
7.2, the relationship between

the Marketing Carrier
and
its passengers

is governed

by the Marketing Carrier’s Conditions

of Carriage. 7.4. The Operating Carrier

will maintain,

and have the sole responsibility

to maintain,

its leased

or owned aircraft

or other equipment
used

in connection with
its Codeshare Services,

at
a minimum,

to comply with the standards

set by the relevant government authorities, including

the U.S. Federal Aviation Administration,

U.S. Department

of Transportation

and Transport Canada. 7.5. Subject

to any other agreement

in place between

the parties,

the Operating Carrier

will be responsible,

at its cost,
for check-in

and other customer services required

for the on-loading

and off-loading

of the Marketing Carrier’s passengers,

to at least the customer service standards referred

to in clause 6.7. 7.6. Each party will be responsible

for maintaining

the training

of its own Personnel,

at its own expense,

to the extent required

to familiarize

its Personnel

with the other party’s procedures necessary

to carry out
its obligations under this Agreement. 7,7. Arrangements

for services relating

to issued Tickets
and lounge access

for the other party’s passengers

will be as separately agreed between

the parties. 7.8.

A separate

set of Marketing Carrier flight numbers

fl1 be created
and assigned

by the Marketing Carrier

to the Codeshare Services. 7.9.

To the extent permitted

by relevant airport authorities,

the Operating Carrier agrees

to display with the same prominence

the Operating Carrier gives

its other codeshare partners (besides Horizon

Air Industries.

Inc.) flight information showing

the Codes and flight numbers

of the Operating Carrier and the Marketing Carrier

on automated
flight information displays

at airports served

by the Codeshare Services. Where such displays

are not possible

or 10not permitted.

the Operating Carrier
will display flight information showing

the Code

of the Operating Carrier.

To the extent permitted

by relevant airport authorities, public areas utilized

by the Operating Carrier

at each airport that is
a major connecting
point for the Codeshare Services

will be marked with signage identifying

the Marketing Carrier.
The Operating Carrier
will obtain such signage,

at the Marketing Carrier’s expense,
that

is consistent

in design and size with, and displayed

with the same prominence

as, signage identifying

the Operating Carrier’s other codeshare partners (besides

one another).

The Operating Carrier reserves

the right

to alter
or remove signage identifying

its codeshare partners (including

the Marketing Carrier)

at any time and for any reason, provided

all such partners continue

to be given equal prominence. 7.10. The Operating Carrier
and the Marketing Carrier must
be members

of

a reputable, automated, international baggage tracking facility, such

as World Tracer. Except

as may otherwise

be agreed between

the parties,

the Operating Carrier
will initiate tracing action

on behalf

of the Marketing Carrier for any load misdirected

by the Operating Carrier.

If that tracing action

is unsuccessful

and the Marketing Carrier passenger subsequently submits

a claim

in respect

of the load misdirected

by the Operating Carrier,

the claim will be prorated between

the Operating Carrier
and the Marketing Carrier. The Operating Carrier: (a) has responsibility

for processing

the claim; and (b) shall pay the initial expenses

and restoration charges claimed

by that passenger (calculated

in accordance

with the Marketing Carrier’s Conditions

of Carriage). 7.11. Where there

is insufficient capacity

on

a Codeshare Service

to accommodate certain passengers, resulting

in
a passenger off-load

or denied boarding,

the Operating Carrier will: (a)

be responsible

for the handling

of the passengers

and ensure that the passengers

of the Marketing Carrier receive services, compensation and benefits

to at least the minimum standard required

by the Marketing Carrier; (b) bear
the cost

of the compensation, including downgrade compensation,
except that

if the Marketing Carrier caused

the passenger off-load,

the Marketing Carrier must reimburse

the Operating Carrier

for all such costs; and (c) ensure

the Marketing Carrier’s passengers

who hold confirmed reservations

for the flight are not off-loaded

or denied boarding. In the event coupons

are endorsed

to

a third party carrier,

the party that issued
the relevant Ticket
will arrange settlement

with the third party carrier under normal interline procedures.

Need

to state that main body

of agreement takes precedence

over attached exhibits

if any discrepancies 712. The Operating Carrier must ensure that each aircraft flown

on

a Codeshare Service

is operated under the Operating Carrier’s operating certificate. 8. [Intentionally

left blank]

11REDACTED9.Company&EmployeeTravel9.1,AllstaffanddutytravelontheCodeShareServiceswillbeinaccordancewiththeZEDInterlineAgreementforEmployeeReducedFareTraveland(GHP1Jitsappendices,inforcebetweenthepartiesandwillnotbechargedinaccordancewithClause4.110.DelaysorDisruptions101.WherenecessaryinthereasonableopinionoftheOperatingCarrier,andexceptasprovidedforinthisAgreementwithoutliabilitytotheOperatingCarrier,saidOperatingCarriermaydelay,cancel,divert,orinterruptaCodeshareService.InanysucheventtheOperatingCarriermustnotifytheMarketingCarrierimmediately.IfsuchnotificationisreceivedbytheMarketingCarrierlessthanioursbeforethescheduleddeparture,theOperatingCarr1Fust:(a)ensurethatallcustomersarelookedafterappropriatelyinaccordancewiththeOperatingCarrier’sproceduresandapplicableConditionsofCarriageand,inthecaseoftheMarketingCarrier’spassengers,totheminimumstandardrequiredbytheMarketingCarrier;(b)promptlyadvisetheMarketingCarrierofthealternativetravelarrangementsprovidedtotheMarketingCarrier’spassengers;and(c)payforallcostsandexpensesinconnectionwithanydelay,cancellation,diversionordisruptioninrespectoftheMarketingCarrier’spassengersincludingthecostofmeals,accommodation,transfersandalternativetravelarrangementstofinalticketeddestination.10.2.Eachpartywillcomplywithagreedproceduresforandcooperateasfullyaspossibleintheeventofanydelay,cancellation,disruptionordiversionofaCodeshareServicewithaviewto:(a>minimizingdelayandinconveniencetopassengers;(b)minimizingthelossofrevenuetoallparties;and(c)takingallnecessaryactiontoensuretheoperationoftheflightisperformedexpeditiouslyandinaccordancewiththetermsofthisAgreement.10.3.TheOperatingCarrierwillhavethefinaldecisiononarrangementstoalleviateorremedyanydelay,diversion,cancellationordisruptiontoitsflights.10.4.ExceptasmayotherwisebeprovidedinthisAgreement,nopartywillbeliabletoanotherpartyforanylossofprofits,lossofrevenueoranyotherconsequentiallossesthatmayhavebeenincurredbecauseofdelays,cancellations,interruptions,diversionsordisruptionstotheoperationoftheCodeshareServices.11.SalesandMarketing11.1,Allsalesandmarketingactivitiesandpublications(includingelectronicpublications)relatingtotheCodeshareServiceswillbesubjecttoclause22(TradeandCorporateIdentification).12112.Exceptasotherwiseagreedinwritingbetweentheparties,thecostofsalesandmarketingactivitiesandpublicationsinrespectoftheCodeshareServiceswillbebornebythepartycarryingouttheactivityorproducingthepublication.113.ApartycarryingoutsalesandmarketingactivitiesorproducingapublicationabouttheCodeshareServicesmustensurethattheactivityorpublicationcomplieswithallapplicablelawsandregulations.1t4.EachpartywilluseallreasonableeffortstoensurethatitsCRSandReservationsSystemdisplaytheCodeshareServicesinaccordancewithagreedprioritiesandpreferredpositioning.12.ReviewProceduresandAmendmentoftheAgreement12.1EachpartywillcooperatewiththeotherpartiestoinstituteregularmonitoringprocessestoensurethatthisAgreementisbeingimplementedefficientlyandinaccordancewithitsterms.ThepartieswillcooperateingoodfaithtoaddressandremedyanyoperationalissuesaffectingtheCodeshareServices.12.2.Reviewmeetingswillbeheldonanannualbasisunlessotherwiseagreedbytheparties.Inadditiontotheannualreviewmeetings,apartymayonreasonablenoticecallforareviewofthetermsofthisAgreement,oranyoperationalfactoraffectingtheCodeshareServices,atanytimeandtheotherpartieswillcooperateinsuchreview.123.If:(a)AnypartyconsidersthattheAgreementrequiresamendmentinordertoremaininlinewithgeneralmarketconditionsprevailingonroutesservedbytheCodeshareServices;and(b)thatpartygivesnoticetotheotherpartiesspecifyingarequestedamendmenttoExhibitAandareasonabledescriptionofthebasisforthatrequest,thenthepartiesmustnegotiateingoodfaithconcerningtherequestedamendment.13,Liability,Indemnity&InsuranceCarriageperformedpursuanttotheprovisionsofthisAgreementwillbesubjecttoandthePartiesirrevocablyadhereto:13.liTheliabilityruleslaiddownbytheConventionfortheUnificationofcertainRulesrelatingtointernationalcarriagebyair,signedatWarsawonOctober12th,1929orthesaidConventionasmodifiedbytheprotocolsignedattheHagueonSeptember28th,1955andtheConventionsupplementarytotheWarsawConventiondoneatGuadalajaraon18September1961whicheverisapplicabletothepassengercontractofcarriage,togetherwithallinternationalinstrumentsthatsupplement,andareassociatedwith,itandareinforceortheConventionfortheUnificationofCertainRulesrelatingtoInternationalCarriagebyAirdoneatMontrealMay28,1999(theMontrealConvention1999),accordingtowhicheverisapplicable:13REDACTED 131.2 Except

as specifically provided

to the contrary elsewhere

in this Agreement,

all Conditions

of Carriage appearing

in the relevant documentation

as issued

by the Operating Carrier
and

in tariffs filed with governmental bodies and provisions

of applicable
laws. Amendments

or changes

of the provisions concerning limitation

and regulations

of liability shall
be notified

by the Operating Carrier

to the Marketing Carrier

in writing

a reasonable period before
the amendments

or changes take effect. 13.2 Operating Carrier shall procure
and maintain Aircraft
Hull All Risks and Hull War and Allied Perils insurance

for the aircraft operated

by the Operating Carrier and shall cause

its insurers

to waive their rights

of subrogation against
the Marketing Carrier,

its directors, officers, servants, employees

and agents except

in respect

of claims caused

by the gross negligence

or wilful misconduct

of any
of the aforementioned
parties. Operating Carrier shall also procure
and maintain Aircraft Third Party, Passenger, Baggage, Cargo and Mail Legal Liability Insurance

for

a combined single limit (bodily injury/property damage)

of L__ for each occurrence,

and coverage

for Third Party War Risk (which miiFThclude insurance
from the U.S. government). Such minimum
limit shall
be applicable

for any type
of aircraft used and/or operated

by the Operating Carrier. Such Legal Liability Insurance
shall contain
the following provisions: 13.2.1

To include
the Marketing Carrier,

its directors, officers, servants, employees and agents

as additional assured except

in respect

of claims caused

by the gross negligence

or wilful misconduct

of any of the aforementioned
parties (the “Additional Assu reds”). 13.2.2

To provide that the insurance
shall operate

as
if a separate policy had been issued covering each Party insured hereunder. Notwithstanding

the foregoing,

the total liability

of insurers

in respect

of any and all insureds shall not exceed
the limits of liability stated

in the policy. 13.2.3

To provide
that the insurance
shall
be primary
and without right

of contribution

from any other insurance carried

by the Additional Assureds. 13.2.4

To provide
that the Additional Assureds
shall have

no responsibility

for premium

and insurers shall waive any rights

of set-off

or counterclaim against

the Additional Assureds except

in respect

of outstanding premium

in respect

of the aircraft
the subject

of

a claim. 132.5

To provide that the coverage afforded

to each Additional Assured

by the policy shall not be invalidated

by any act or omission (including misrepresentation and non.disclosure)

of any other person

or party that resultsfl a breach

of any term. condition

or warranty

of the policy provided
that the Additional Assured

so protected has not caused contributed

to or knowingly condoned

the said act or omission. 132.6
To provide that, except

in respect

of any provisions

for cancellation

or automatic termination specified

in the policy

or any endorsement thereof.

the cover provided
may only
be cancelled

or materially altered

in

a manner adverse

to the Additional Assureds

by the giving

of not less than thirty (30) days notice

in writing

to the appointed broker except that with respect

to war and allied perils coverage,
such 14period

of notice shall
be seven

(7) days

or such lesser period

as may be customarily available. Notice shall
be deemed

to commence

from the date such notice

is given by Insurers. Such notice
will not, however,

be given

at normal expiry date

of the policy

or any endorsement thereof. 132.7

To contain

a contingency coverage

for liability

in case there

is
a subcontract of the obligations

of carriage. 13,3 The Operating Carrier shall furnish

to the Marketing Carrier

a certificate

of the foregoing insurance
prior

to the initiation

of Codeshare Service

as foreseen

in Exhibit

A and

at each renewal

of the insurance thereafter.
Such Certificate
shall certify that the Operating Carrier’s insurance comply with the provisions

of clauses 13.1 and 13.2 above. 13.4 The Operating Carner agrees

to indemnify

and hold harmless

the Marketing Carrier,

its directors, officers, servants, employees

and agents from

all liabilities, damages, claims including

all costs and expenses incidental thereto (‘Claims’),

that may accrue against,

be charged

to or recoverable

from the Marketing Carrier,

its directors, officers, servants employees

and agents

by reason

of death

or injury

to any person

or damage

to property suffered

by third parties- passengers

and non passengers- including Claims

for any damage

to or loss
of cargo and/or mail covered

by sub manifest

of each Party,

or any delay caused

to passengers, luggage, or cargo arising
out
of or connected

with the Codeshare Services,
save

as specifically agreed

to the contrary elsewhere

in this Agreement

or unless due
to the gross negligence

or wilful misconduct

of the Marketing Carrier,

its directors, officers, servants employees and/or agents. 13.5 Notwithstanding

the provisions

of the Clause 13.4 above, each Party shall assume

the entire responsibility

for the issuance

of its own traffic documents

and the reservation

of space.

In addition, each Party

to this Agreement

shall assume liability for and indemnify

and hold harmless

the other Party,

its officers, agents, servants and employees
from

all costs and expenses

for any injury

to or death

of employees of such Party, except when these are ticketed passengers

of the other Party,

or any damage

to or loss
of property including

the aircraft

of such Party arising
out of or connected

with the Codeshare Services, unless due
to the gross negligence

or wilful misconduct

of the other Party. 13.6 Each Party will promptly notify the other Party

of any claims and legal actions connected

with Codeshare Services
and lodged against such Party and will supply the other Party with any supporting documents

and relevant information. 13.7 The indemnities contained

in clause 13.4 are conditional
upon the Marketing Carrier: (a) Promptly giving the Operating Carrier written notice

of any Indemnity Claim and taking reasonable
steps

in the intertm

to protect
the Operating Carrier’s right

to defend; (b) Consulting

and providing

all reasonable assistance

to the Operating Carrier

in connection

with the conduct

of the claim

at the Operating Carrier’s request, including filing

of pleadings

and other court processes, providing

all relevant documents

and information.

15Moreover,

in case
of death

or of serious damages/injuries
arising
out of the same event during

on

a Codeshare Service
and involving claims from passengers

of both Marketing

and Operating Carriers,

it is agreed that the Operating Carrier shall totally defend and handle these claims provided
that the Marketing Carrier shall
be associated

in the process

of the indemnification. In the event the Operating Carrier fails

to maintain

in full force and effect any of the insurance

and endorsements required hereby,

the Marketing Carrier shalt have the right (but not the obligation>

to procure
and maintain such insurance

or any part thereof. The cost
of such insurance
shall
be payable

by the Operating Carrier

to the Marketing Carrier

at first demand

by the Marketing Carrier. The procurement

of such insurance

or any part thereof

by the Marketing Carrier shall not discharge

or excuse

the Operating Carrier’s obligation

to comply with the provisions

of this clause. 13.8. Except

for the provisions

of clauses

13.1 and 13.4 here above,

for the Codeshare Services,

the Operating Carrier shall apply

its own Conditions

of Carriage to all passengers (except

to the extent that the Conditions

of Carriage

of the Marketing Carrier
are more favorable

to the Codeshare Services passenger

than those

of the Operating Carrier>

as

if such passengers
were ticketed under
the Operating Carrier’s airline designator code, The Operating Carrier shall bear

all costs associated

with the handling

of passenger, baggage

and cargo claims, under such Conditions

of Carriage.

Any additional costs that may occur with respect

to the passengers ticketed under the airline designator
code

of the Marketing Carrier shall be borne

by the Operating Carrier. 14. Workers Compensation

and Common
Law 14.1. Each party must maintain insurance coverage

in accordance

with any applicable workers’ compensation

or similar statutory insurance legislation

in respect

of its legal liability

as an employer under common

law and statutory liability

of any applicable jurisdiction

and must maintain such insurance covering

it for any Claim against

it by any person employed

by

it who provides services

in relation

to this Agreement

and for any amount necessary to cover any potential liability under statute

or at common
law. 15. [Intentionally

left blanki 16, Taxation 161. Except

as provided below, any Taxes

on or measured

by gross receipts from the sale
of air transportation

or Tickets (excluding corporate income taxes measured

by gross

or net income

of the recipient)

will be collected

and paid to the appropriate taxing authority

on

a timely basis

by the party receiving such gross receipts. Unless otherwise agreed, where there are Taxes that are not on or measured

by gross receipts from the sale
of air transportation, but that nevertheless

may be payable

by or recoverable

from the passenger on the sale
of airline Tickets

but that are ultimately

the responsibility

of an Operating Carrier, that Operating Carrier
will bill these Taxes

to the Marketing Carrier through

the interline billing system.
Any party that breaches

its 16obligations under this clause
will also
be responsible

for any interest
and penalties resulting from such breach. 16.2. The parties acknowledge

that the taxation authorities

of their respective countries
may impose withholding
taxes

on certain

of the payments

that the parties

or their agents (‘Payer’)
may
be obligated

to pay

to another party (Payee’), notwithstanding

an exemption
from tax that may be available

to the Payee under

a double taxation agreement (Treaty’)

in force between their respective countries.

In so far as the Payer may be obligated

to withhold taxes due
to the Payee failing

to furnish documentary
proof

or certification

of exemption under the Treaty

(or under such other applicable treaties
and laws or on such other forms required from time

to time
by any taxing authority),

to the satisfaction

of the relevant taxing authority,

the Payer,

in that case, will be entitled

to withhold such tax and consequently

the payments

to the Payee
will be net of such withholding
taxes provided
only that the Payer keeps
the Payee informed

of: (a) any obligation

of the Payer

to withhold; (b) any directive
that may
be given

to the Payer

by such taxation authorities;

and (c)
the amounts from time

to time withheld

by the Payer and paid

to such taxation authorities. 16.3. The Payee must provide such forms

as often

as legally required

to exempt such payments
from any withholding

tax.

If the Payer

is obligated

to withhold taxes

as provided

in this clause

16, the Payer must provide
the Payee

a tax receipt

as may be necessary

to support

a claim for

a foreign
tax credit under the laws
of the country

of the Payee. 16.4. Unless otherwise provided

in this Agreement,

the Marketing Carrier
will be responsible

for and must pay
or reimburse

the Operating Carrier

for and indemnify

the Operating Carrier against

all Taxes, charges,

and other imposts

of whatever
kind (including

any fine
or penalty imposed

in connection therewith) levied, assessed, charged

or collected

in connection

with the Marketing Carrier’s traffic carried

by the Operating Carrier under this Agreement, payments made under this Agreement,

or the services performed by the Operating Carrier

for the Marketing Carrier pursuant

to this Agreement but excluding corporate income taxes measured

by gross

or net income

of the Operating Carrier. 17. Consumption

Tax 17,1. Notwithstanding

any other clause

in this Agreement,

any charge

or other amount payable under this Agreement (‘Base Amount’)

for the supply

of any goods, services

or other things under this Agreement

is stated

as exclusive

of Consumption

Tax. 17.1

If Consumption

Tax

is imposed

on any supply made pursuant

to this Agreement,

the recipient

of the supply (being

a party

to this Agreement)
must pay,

in addition

to the Base Amount

to which the Consumption

Tax relates, an amount calculated

by multiplying

the prevailing Consumption

Tax iate by the Base Amount (without
any deduction

or set-off).
Any amount payable under this clause 17.2

is payable

on the day and

in accordance

with the same payment procedures

that payment

of the Base Amount

(or part
of the 17REDACTEDBaseAmount)forthesupplythathasgivenrisetotheobligationtopayConsumptionTax,isrequiredpursuanttothisAgreement:17.3.WherethisAgreementspecifiesthatapartymustpayforagoodorservicefromathirdparty,thatpartymustalsopayanyConsumptionTaxthatispayabletothethirdpartyorotherwiseinconnectionwiththosegoodsorservices,unlessexpresslystatedotherwise.17.4.ThepartiesagreetousereasonableeffortstoissueataxinvoiceasrequiredbytherelevantConsumptionTaxlegislationoranyrelevantrulingsorguidelines,andtodoanythingelsethatmayberequiredtoenableorassisttheotherpartytoclaimorverifyanyinputtaxcredit,setoff,rebateorrefundinrespectofanyConsumptionTaxpaidorpayableinconnectionwithsuppliesunderthisAgreement.18,OtherRelationships18.1.ThisAgreementisnon-exclusiveanddoesnotprecludeeitherpartyfromenteringintoandmaintainingCodesharerelationshipswithotherairlines.19.TermandTermination19.1.Subjecttoallnecessarygovernmentauthorizationsbeingobtained,thisAgreer”‘“sontheCommencementDateandwillremaininmaythereafterberenewedforadditionaltermso______nnoticeofonepartytotheotherofitsoffertorenewthisAgreementonthatbasisandtheotherparty’swrittenacceptanceofthatoffer,unlessthisAgreementhasterminatedearlierinaccordancewithitsterms.19.2.ThisAgreementmaybeterminatedbyeitherpartyatanytime,bygivingatleast,.riorwrittennoticetotheotherparty.19.3.ApartyhastherighttoimmediatelyterminatethisAgreementbygivingwrittennoticetotheotherparty,if:(a)theAgreementisdisapprovedbyanyofthegovernmentauthoritieshavingsupervisoryjurisdictionoverthisAgreement;suchterminationwillbewithwaiverofanyotherrightorremedythateachpartymayhave;(b)anyoneormoreofthenecessaryrights,licenses,permits,authorizationsnecessaryfortheperformanceoftheCodeshareServicesareatanytimewithdrawn,lapsed,revokedornotobtained;suchterminationwillbewithoutwaiverofanyotherrightorremedythateachpartymayhave;(c)ExceptinthecaseofaForceMajeureEvent,anypartyfailstocomplyinanymaterialrespectwithitstechnicalobligationsunderclause4.8;suchterminationwillbewithwaiverofanyotherrightorremedythateachpartymayhave;(d)thereisachangeinControlofanotherparty.Forthepurposesofthisclause,‘Control’meansthepossession,directlyorindirectly,ofthepower(whetherornothavingstatutory,legalorequitablerights)tocontroleitherdirectlyorindirectlythemembershipoftheboardof18

# REDACTED directors

of the party

or to otherwise directly

or indirectly direct,

or cause
the direction

of, the management

and policies

of the party. including

by means

of trusts, agreements, arrangements, understandings, practices,

the ownership

of shares

or stock

or otherwise;
such termination

will be with waiver

of any other right

or remedy that each party may have;

or (e) another party becomes insolvent,

is unable

to pay
its debts

as they fall due, has

a resolution passed

for its compulsory

or voluntary winding up (except

for the purposes

of amalgamation

or reconstruction),

has

a receiver, manager

or administrator appointed
over

all or part
of its assets,

or

if any scheme

of arrangement

is entered
into with the majority

of its creditors;
such termination

will be with waiver

of any other right
or remedy that each party may have. 19.4. 19.4.1

If there

is any material breach

of this Agreement,

the non-breaching party may send

a notice

of default

to the breaching
party setting

out reasonable details

of the breach.

If the breaching party has not cured such material breach within

following receipt

of such notice, then the non-breaching

party may terminate

this Agreement

with immediate effect by serving

a notice

of termination

to the breaching party, which will be without waiver

of any other right
or remedy that the non-breaching

party may have.

In case

of material breach

of clause
4.8 the provision

of clause 19.3 (c) shall apply. 19.4.2 Either party may terminate

this Agreement

with immediate effect, without prejudice

to any other rights

or remedies available

to

it if the other party has defaulted under any IATA agreement. 19.5. Without prejudice

to any other rights

or remedies available

to it,
a party may terminate

this Agreement

by giving notice

to the other parties with immediate effect without
any obligation

or liability

in relation

to that termination

if (i) the other party fails

to comply with
all applicable safety practices

and regulations, or (ii)

if any aircraft operated

by the other party

is involved

in any Significant Event, provided
that

in either case such failure

or incident must

in the terminating party’s reasonable opinion, materially adversely affect
the terminating
party. 19.6.

If this Agreement

is terminated

for any reason whatsoever,

the Marketing Carrier
will
at the earliest opportunity: (a) remove

its Codes from

all CRS, Reservations Systems, timetables, displays, schedules

and other publications

in relation

to all existing and planned Codeshare Services; (b) notify customers

with Marketing Carrier Tickets
and bookings;

and (C) use
its best efforts

to prevent further Marketing Carrier Tickets from being issued and bookings being made under the relevant Code
for the discontinued Codeshare Services. 19,7. Any termination

of this Agreement

will be without prejudice

to any rights

or obligations

of the parties that may have arisen prior

to such termination. 19.8 The following clauses survive termination

for any reason

of this Agreement: 19(a)
the release
and indemnification provisions

of this Agreement

of clause

15; (b)
the governing

law and dispute resolution

of clause 26.1 and
of clause 26.2; (c)
the confidentiality obligations

of clause

21. 199. Unless otherwise agreed between

the parties,

in the event

of termination, suspension

or expiration

of this Agreement: (a) the Marketing Carrier
will take
all reasonable actions

to confirm
and preserve reservations

for the Codeshare Services
and,
as applicable, will endorse

or otherwise modify

or reissue tickets

to permit use on the Operating Carrier; (b)
the Operating Carrier
will accept passengers traveling

on such tickets as

if such reservations

had been booked through

the Operating Carrier using ordinary interline procedures;

and (c) each party must negotiate

in good faith with the other parties

to deal with confirmed unticketed reservations

for the Codeshare Services and any settlement

will be through ordinary interline procedures. 20. Representations

and Warranties 20,1, Each party represents

and warrants

to the other parties that,

as of the Commencement

Date: (a) subject

to the governmental approvals referred

to in clause

3,

it has the authority

to execute
and perform
this Agreement

in accordance with
its terms; and (b) this Agreement

has been duly executed

and delivered

by

it and, assuming

due authorization, execution

and delivery

by the other party, this Agreement constitutes

the legal, valid and binding obligation

of such party, enforceable against

it in accordance

with
its terms. 21. Confidentiality 21.1. This Agreement,

its subject matter
and
all information regarding

the business, technology, undertakings, customers, suppliers, clients, know-how or activities

of one party (‘owning party’) made available

to or obtained

by the other party (‘non-owning party’) under

or as

a result

of this Agreement or the negotiations leading

up to this Agreement

will at all times
be treated

by the non-owning

party

as confidential (‘Confidential Information’).

Such information
must not be disclosed

by the non-owning
party,

(i) except

to advisers

or consultants acting

on behalf

of the non-owning
party who have agreed

to comply with and be bound

by the obligations

set out
in this clause 21, (ii) except

to the Personnel

of the non-owning
Party who have

a need

to know

it with the prior written consent

of the owning party. 21.2. Despite clause 21,1, the obligations

of the non-owning
party

to preserve

the confidentiality

of the Confidential Information

of the owning party
do not apply to information

that: (a)

at the time

of disclosure

is already

in, or later enters,

the public domain through

no fault
of the non-owning
party; (b)

is disclosed

to the non-owning
party

by

a third party who did not acquire

the information under

a direct

or indirect obligation

of confidentiality

to the owning party;

# REDACTED (c)

is disclosed

as reasonably required

in connection

with

a proceeding

to enforce

a party’s rights under this Agreement; (d)

is independently developed

by or on behalf

of the non-owning
party provided
that such development

was accomplished without
use
of the owning party’s Confidential Information

and without breach

of this Agreement;

or (e)

is required

to be released pursuant

to applicable

Jaw, tax purposes,

or in order

to obtain governmental approvals pursuant

to clause

3; provided
that: (1)
the non-owning
party, subject

to such applicable

law, tax purposes,

or governmental approval procedures,
must take
all reasonable
steps

to preserve

the Confidential Information

of the owning party, including requesting

that the Confidential Information

not be released

to third parties

or the public; (ii)
the non-owning
party,

to the extent legally possible, must use its best efforts

to give the owning party prompt notice

of the pending disclosure

so that the owning party may seek

at its own cost
an appropriate protective order

or pursue such other legal action

as
is necessary

to preserve

the confidentiality

of the Confidential Information;

and (iii)
the non-owning
party provide reasonable assistance

to and cooperates

with the owning party

in its efforts

to preserve

the confidential nature

of such information. 213. Upon expiration

or termination

of this Agreement,

the non-owning
party must, upon request

of the owning party, promptly deliver

to the owning party

at the address specified above

or destroy

(at the option

of the owning party),

all Confidential Information

of the owning party that

is in the non-owning party’s possession

or control, including

all copies and reproductions

of them, and the sections

of any other documents derived from

or containing

any portion

of such Confidential Information, without retaining

any copy
of it. 21.4. The non-owning
party will also upon request

of the owning party provide
the owning party with written confirmation

to the effect that
all Confidential Information

has been returned

or destroyed

in accordance

with this clause 21 21.5. Each party acknowledges

that the Confidential Information

of the owning party

is, and will remain,

the sole and exclusive property

of such owning party, including

all applicable rights

to patents, copyright, trademarks

and trade secrets inherent therein
and pertinent thereto. Each party further agrees that each party’s Confidential Information

is properly considered

to be a trade secret

in that

it involves processes

and compilations

of information that are secret, confidential

and not generally known

to the public, that are the product

of the expenditure

of such party’s time, effort, money
and creative skills and that give the party

a significant competitive advantage. 216, fhe confidentiality obligations

shall survive
the termination

or expiration

of this Agreement

for

a period

o’ 22. Trade and Corporate Identification 22.1. Except

as provided

in this Agreement:

21(a) Alaska must not use the Icelandair Trade Marks; and (b) Icelandair must not use the Alaska Trade Marks, without
first obtaining

the written approval

of the party owning such trade marks, and must comply with any directions

of the owning party

in relation

to any approved
use. 22.2. Alaska acknowledges

and agrees that

it has no right, title
or interest

in the Icelandair Trade Marks

or any part thereof. Icelandair acknowledges

and agrees that

it has no right, title or interest

in the Alaska Trade Marks,

or any part thereof.
The logos, trade marks and trade names

of each party will remain

at all times the applicable party’s exclusive property. 22.3. Each party agrees that should any right, title
to or interest

in the another party’s logo

or any other part thereof,

or in any copyright

or trade mark

of another party become vested

in

it (by operation

of law
or otherwise)

by reason

of this Agreement,

it will hold the same

in trust for the other party and must,

at the request

of the other party, forthwith unconditionally
assign any such right, title
or interest

to the other party,

or as the other party may otherwise direct. 23.
No Partnership

or Agency 23.1. Each party,

in its performance
under this Agreement,

is and will be engaged as an independent contractor

in its own separate business. 23.2. Nothing

in this Agreement

or associated circumstances

will constitute

or be deemed

to constitute

a partnership, agency, joint venture

or employer

and employee between

the parties

or their respective Personnel

for any purpose whatsoever. 23.3. lcelandair

has no authority

or power

to bind Alaska,

to contract

in its name,

or to create

a liability against Alaska

in any way
or for any purpose, other than expressly

set forth under this Agreement. Alaska
has no authority

or power to bind lcelandair,

to contract

in its name,

or to create

a liability against lcelandair

in any way
or for any purpose, other than expressly

set forth under this Agreement. 23,4. Except

as may be agreed

by the parties from time

to time,
no party will have any supervisory power

or control over any Personnel engaged

by the other party

in connection

with

its performance

of its obligations under
this Agreement. 24. Force Majeure Events 24,1 Except

as provided

in clause

13,

a party will not be liable

to another party, and will not be
in default under this Agreement,

for failure

to observe

or perform
any provision

of the Agreement

to the extent that the failure

is due
to a Force Majeure Event. 24.2.

In the case

of
a Force Majeure Event,
the parties agree

to meet

to discuss

in good faith appropriate action

to be taken

to minimize

the effects

of the Force Majeure Event.

22REDACTED24.3.Duringthecourseofanon-performingparty’sfailuretoperformduetoaForceMajeureEvent,anotherpartymayelecttotake,aftergiving_ T_,writtennoticetothenon-performingparty,anyofthefollowingactions:(a)suspendforthedurationoftheForceMajeureEventtheoperationofthisAgreementoranyoftheotherparty’scovenantsandobligationsunderthisAgreement;(b)terminatethisAgreementifthenon-performingparty’snonperformancehascontinuedforaperiodofatleasLor(c)otherwiseperformandcontinuethisAgreement,oranypartthereof,undersuchfurthertermsandconditionsasthepartiesagreeinwriting.25.Notices25.1.Exceptasprovidedinclauses8.3,allnotices,reportsandothercommunicationsrequiredorpermittedunderthisAgreementtobegiventoormadeinwriting,mustbeaddressedasprovidedinthisclauseand:(a)deliveredinperson;(b)sentbyanexpresscourierdeliveryservicethatprovidessignedacknowledgmentsofreceipt;(c)depositedintheUnitedStatesorIcelandmail,certifiedorregisteredmail,postageprepaid,withreturnreceiptrequested;or(d)transmittedbyfacsimile(uponreceiptbysenderthereofofevidencethatacompletetransmissionofsuchacopywasmadetotherecipientthereof)and,ifsentbyfacsimile,confirmedby:(i)telephonecontemporaneouslytothepersonentitledtoreceivesuchnoticeortosuchperson’ssecretary,or(ii)dispatchingahardcopyofsuchnoticebythemethodssetoutinparagraphs(a),(b)or(c)above.Forthepurposesofterminationoranyrelatednoticerequiredunderclausel9,thenoticesshallonlybegivenbyexpresscourierdeliveryservicethatprovidessignedacknowledgmentsofreceipt.25,2,AnoticegiveninaccordancewiththisAgreementisdeemedreceivedandeffective:(a)ifdeliveredinperson,upondelivery;(b)ifsentbyexpresscourier,uponsignatureofthedeliverydocumentbyarepresentativeoftheintendedrecipient;(c)ifposted,five(5)daysafterdepositinthemail:or(d)ifsentbyfacsimile,uponreceiptbythesenderofatransmissionreportconfirmingerror-freetransmissiontotheintendedrecipient.25.3.Theaddressesofthepartiesfornoticeswillbe asset outbelowprovidedthateither partywillhavetherighttochangeitsaddressfornoticebygivingthirty(30)dayspriorwrittennoticetotheotherparty.IftoAlaska:Director,AlliancesAlaskaAirlines,Inc.19300InternationalBoulevardREDACTED Seattle, Washington 98188 United copy
to: General Counsel Facsimile:— If to Icelandair: Senior Vice President, Marketing

& Sales Icelandair Icelandair Head Office 101 Reykjavik Iceland Facsimile: Email: 26. General 26,1. Governing
Law: This Agreement

shall

in all respects

be governed

by and interpreted

in accordance

with the laws
of State

of New York, USA (without regard

to principles

of conflicts

of law) including

all matters

of construction, validity and performance applicable

to contracts made and
to be performed therein. 26.2. DIsputes: Except

as provided

in clause

1, and unless otherwise stated, any Dispute arising
out of this Agreement

and Amendments

(if any),

at the request

of any party, shall
be referred

for resolution

by

a committee made

up of one senior-level representative

from each party. The committee
shall

in good faith endeavor

to settle mutually

and

in
a timely manner
any Dispute referred

to
it.

If the committee

fails

to arrive

at mutually acceptable settlement

of the Dispute within ..J1 [rom the request referred

to it, then either party shall
be entitled

by notice

in writing

to require
the matters

in dispute

to be referred

to binding arbitration

in accordance

with the terms and procedures

of the IATA Arbitration Rules then effective, provided, however, that the seat
of the arbitration

and location

of any hearings shall
be New York, New York, USA,

or another location mutually agreed upon

in writing

by the parties.
The arbitration proceedings

shall
be conducted

in the English language before one arbitrator mutually agreed upon
by the parties

in writing. Each party shall submit

to the arbitrator,

and exchange

with each other

in advance

of the first hearing,

a detailed analysis

of the dispute involved
and

a proposed written resolution.

The arbitrator

will select, based

on the arbitrator’s opinion

of which proposed resolution

is the most appropriate resolution based

on the terms

of this Agreement

and the applicable governing

law, the proposed resolution

of one
of the parties, without
any compromises, alterations

or modifications.

Such proposed resolution

will then constitute

the arbitral decision.

All sums payable pursuant

to an arbitral decision shall
be due

dfter receipt

of the decision,

and the arbitral decision
may
be entered
and enforced

in

a court

of law having jurisdiction over the parties

or their property. Clause

21 (‘Confidentiality

of this Agreement

shall apply

to the arbitration proceeding,

all evidence taken, and the opinion, which shall
be confidential information

of the parties.

No party 24may commence
legal proceedings (except proceedings seeking interlocutory relie1 against another party

in respect

of

a Dispute unless

it has complied with this clause 26.2. 26.3. Laws and Regulations: Without prejudice

to clauses
26.1 and 26.2, each party must comply with all: (a) laws and regulations

of the respective aeronautical authorities

of all relevant countries

with respect

to the operation

of Codeshare Services;

and (b) other applicable requirements

of any relevant regulatory authorities. 264. Priority

or Interpretation:

In the event

of

a conflict between

the terms

of this Agreement,

on the one hand, and the Codeshare Procedures

or any other Exhibit

to this Agreement,

on the other hand,
the terms

of this Agreement

shall prevail. 26.5. Privacy: Where

a party collects
any Personal Information either directly from individuals

or from the other party,

in connection

with this Agreement,

it must: (a) take
all reasonable
steps

to ensure that the Personal Information

is protected against misuse
and loss, and from unauthorized access, modification

or disclosure; (b) not, directly

or indirectly,

use
or disclose

the Personal Information except

to the extent necessary

to perform

its obligations under this Agreement,

or as otherwise authorized

by the individual;

and comply with
all applicable privacy laws and the party’s internal privacy/data security policies. 26.6. Waiver:

If a party: (a) has

a right arising from another party’s failure

to comply with
an obligation under this Agreement;

and (b) delays

in exercising

or does not exercise
that right, that delay

in exercising

or failure

to exercise

is not

a waiver

of that right
or any other right.

A right may only be waived

in writing, signed

by the party waiving

the right. 26.7. Entire Agreement

and Variation:

This Agreement (a) constitutes

the entire agreement between lcelandair

and Alaska

in connection

with the Codeshare

and the Codeshare Services;

and (b)

in relation

to that subject matter,

as of the Commencement

Date, supersedes

any prior understanding

or agreement between

the parties and any prior condition, warranty, indemnity

or representation imposed, given

or made

by

a party; and (c) may only be amended

in writing signed

by the parties’ duly authorized representatives. 26.8, Reading Down:

If pad
or all of any clause

of this Agreement

is illegal, invalid or unenforceable: (a)

it will be read down

to the extent necessary

to ensure that

it is not illegal. invalid

or unenforceable,

but

if that

is not possible (b)

it will be severed from this Agreement

and the remaining provisions

of this Agreement

will continue

to have full force and effect, and the parties

will attempt

to replace
that severed
part with

a legally acceptable alternative clause that meets
the parties’ original intention in relation

to the subject matter severed. 2526.9. Assignment:

No party may assign

or attempt

to assign

or otherwise transfer any right

or obligation arising
out of this Agreement without
the prior written consent

of the other parties. 26.10. Counterparts:

This Agreement

may
be executed

in counterparts,

each

of which will be an original,

but which together

will constitute

one and the same agreement.

The parties may initially execute
this Agreement

by exchange

of signatures transmitted

by facsimile machine,
with original signatures

to follow promptly, Such facsimile signatures

will have the effect

of and be deemed

to be original signatures. 26.11. Further Actions: Each party must: (a> use reasonable efforts

to do all things necessary

or desirable

to give full effect

to this Agreement;

and (b) refrain from doing anything
that might hinder performance

of this Agreement. 26.12. Costs: Unless otherwise agreed, each party will bear

its own costs

in relation to the preparation

of this Agreement

and the establishment

of the operation of the Codeshare Services under this Agreement. [Signature Page Follows] 26IN WITNESS WHEREOF,

the parties hereto have caused
this Agreement

to be executed

by their duly authorized officers.— ICELANDAIR Signature: 

# A4/

/ Name (print): Helgi Mar Bjorgvinsson Title (print): Senior Vice President, Marketing

& Sales ALASKA AIRLINES,

INC. Signature: Name (print): Andrew Harrison Title (print>: Vice President, Planning

& Revenue ManagementREDACTEDA.AlaskaOperatedFlights1)CodeshareServicesTheCodeshareServicesincludeselectedAlaskaflightsonthefollowingroutes:Seattle(SEA)—SanFrancisco(SF0)Seattle(SEA)—LosAngeles(LAX)Seattle(SEA)—Portland(PDX)Seattle(SEA)—SanDiego(SAN)Seattle(SEA)—LasVegas(LAS)Seattle(SEA)—Sacramento(SMF)Seattle(SEA)—SanJose(SJC)Seattle(SEA)—Spokane(GEG)Seattle(SEA)—Anchorage(ANC)Seattle(SEA)—Vancouver(YVR)Seattle(SEA)—Calgary(YYC)Seattle(SEA)—Victoria(YYJ)Otherroutesasmaybemutuallyagreedandpermittedbyapplicablelaw.ii)DesignatedCapacityThewholenumberofavailableseatsontheCodeshareService,onafreesalebasis,iii)CodeshareCommissionTheMarketingCarriershallreceiveacodesharecommissionofwhichiscalculatedonthegrossvalueofrevenuederivedfromtheMarketingCarrier’sticketcoupons,B.Charges(clause4.1)TheOperatingCarrierswi!IchargetheMarketingCarrierfortheCodeshareServicesinaccordancewiththeSpecialProrateAgreement(SPA)inplacebetweenthepartiesatthetimeoftravel28