pp

)

)

ALASKA AIRLINES, INC. and ) Docket DOT-OST-2010-____HORIZON AIR INDUSTRIES, INC. )

)

under 14 C. F.R. 212 for statements of authorization )permitting codeshare service )

JOINT APPLICATION FOR STATEMENTS OF AUTHORIZATION

Communications with respect to this document should be addressed to:

Kyle Levine Marshall S. Sinick

Associate General Counsel Charles F. Donley II

Commercial Law and Litigation Squire, Sanders & Dempsey L.L.P.

Dan Nye 1201 Pennsylvania Avenue, N.W.

Senior Counsel Washington. D.C. 20004

Alaska Airlines, Inc. (202) 626-6600

19300 International Boulevard rnsinickssd.com

Seattle. Washington 981 88 cdonleyssd.corn

Megan Lawrence Counsel to Alaska Airlines, Inc.

Managing Director. Government Affairs and Horizon Air Industries. Inc.

and Community Relations

Alaska Airlines. Inc.

19300 International Boulevard

Seattle. Washington 98188

DATED: April 27, 2010
)

Joint application of )

)

ALASKA AIRLINES, INC. and ) Docket DOT-OST-2010-____HORIZON AIR INDUSTRIES, INC. )

)

under 14 C.F.R. 212 for statements of authorization )

permitting codeshare service )

JOINT APPLICATION FOR STATEMENTS OF AUTHORIZATION

Pursuant to 14 C.F.R. 212, Alaska Airlines, Inc. (“Alaska”) and Horizon Air Industries, Inc.

(“Horizon”) (together, the “Joint Applicants”) hereby request blanket statements of authorization of

indefinite duration permitting them to engage in codeshare operations with Icelandair ehf.

(“Icelandair”). The Joint Applicants request authority permitting them to display Icelandair’s twoletter designator code on flights operated by them (i) between points in the United States; and (ii)

between points in the United States and Canada, for the purpose of transporting Icelandair’sIceland-U.S./Canada traffic. The parties plan to begin codeshare service on June 1, 2010 and

request the Department of Transportation’s (“Department”) prompt approval of this application so

that marketing and sales can begin without delay. 1

To the extent necessary, the Joint Applicants request a waiver ofthe 45-day advance filing requirement contained in 14

C.FR. 2121O(d)(2), A redacted copy of the Alaska/Horizon-Icelandair codeshare agreement is attached to this

application.
Washington. Alaska is incorporated under the laws of the State of Alaska and is a wholly-owned

subsidiary of Alaska Air Group, Inc. (“AAG”). AAG is incorporated under the laws of the State

of Delaware.

2. Horizon has its principal headquarters located at 19521 International Blvd.,

Seattle, Washington. Horizon is incorporated under the laws of the State of Washington and is a

wholly-owned subsidiary of AAG. AAG is incorporated under the laws of the State ofDelaware.

3. Under the codeshare agreement between the Joint Applicants and Icelandair,

Icelandair will place its “FI*” designator code on scheduled flights operated currently by the

Joint Applicants between points in the United States, and between the United States andCanada. 2 The Joint Applicants’ flights will connect with Icelandair’s flights arriving at

Icelandair’s U.S. gateways for the purpose of transporting Icelandair’s Iceland-U.S. and IcelandCanada traffic. The Joint Applicants request blanket statements of authorization permitting them to

display Icelandair’s two-letter designator code on flights operated by them (i) between points in the

United States; and (ii) between points in the United States and Canada, for the purpose of

2 The Joint Applicants hold all necessary underlying authority, The Joint Applicants have repeatedly been found fit,

willing and able to provide interstate and foreign air transportation. Icelandair currently holds from the Departmentan open skies foreign air carrier permit authorizing Icelandair to engage in scheduled foreign air transportation ofpersons, property and mail “between points behind Iceland, via Iceland and intermediate points, and any point or

points in the United States, and beyond” Order 98-6-23.
4. The proposed codeshare service is consistent with the terms of the U.S.-Iceland

Air Transport Agreement, as amended (“Agreement”). The Agreement specifically contemplates

cooperative marketing arrangements such as the Alaska/Horizon-Icelandair codeshare:

In operating or holding out the authorized services on the agreed routes,

any designated airline of one Party may enter into cooperative marketingarrangements, such as blocked-space, code-sharing or leasing

arrangements, with

i) an airline or airlines of either Party[.j 4

The codeshare service proposed in this application is clearly within the scope of the U.S.

Iceland Agreement. 5

5. The Joint Applicants will comply with the requirements of 14 C.F.R. 257 in

operating the codeshare service described in this application. In response to the Department’s

June 1, 1995, letter to participants in the Civil Reserve Air Fleet Program, the Joint Applicants

state that the codesharing arrangement contemplated by this application will have no impact on

their CRAF commitments.

WHEREFORE, Alaska Airlines, Inc. and Horizon Air Industries, Inc. respectfully

request that the Department of Transportation grant them blanket statements of authorization to

Initial codeshare markets are identified in Exhibit A.

Article 8(7)(a)

See, eg., Department A etion on Application in Docket 1)() T-OST-1 999-631 November 12. 1999 (approving

Icelandair-SAS codesharine).
Respectfully submitted,

2

Marshall S. Sinick

Charles F. Donley IT

Squire, Sanders & Dempsey L.L.P.

1201 Pennsylvania Avenue, N.W.

Washington, D.C. 20004(202) 626-6600

msinick)ssd, corn

cdonleyssd.com

Counsel to Alaska Airlines, Inc.

DATED: April 27, 2010

4
Portland, Oregon Horizon

San Diego Alaska

Las Vegas Alaska

Sacramento AlaskaSan Jose AlaskaSpokane Horizon

Anchorage AlaskaVancouver Alaska/Horizon

Calgary Horizon

Victoria Horizon
. Charles F. Donley II

DATED: April 27, 2010

hkamen(coair.com; dan.weiss@coair.com

sascha.vanderbelIen@ide1ta.com; jeff.morgandelta.com; sarnetta.c.harnett@delta.com

effrev.man1ey(d,united.com

carl .nelson@aa.corntcbentdwi:.hg .transcorn.rnil
BETWEEN

ICELANDAIR

and

ALASKA AIRLINES, INC.

0
4. Charges, Settlement and Accounting Procedures.......7

5. Flight Schedules .. .... ... .. ...._...8

6. Customer Awareness of Codeshare Services and Service Standards 9

7. Flight operations . ..,...,.... 10

8. [Intentionally left blank) 119. Company & Employee Travel....,..12

10. Delays or Disruptions .........................................1211. Sales and Marketing 1312. Review Procedures and Amendment of the Agreement 1313. Liability, Indemnity & Insurance 1314. Worker& Compensation and Common Law 16

15. [Intentionally left blank) 1616. Taxation 1617. Consumption Tax 17

18. Other Relationships 18

19. Term and Termination 18

20. Representations and Warranties 2021. Confidentiality 2022. Trade and Corporate Identification 21

23. No Partnership or Agency 2224. Force Majeure Events 2225. Notices 2326. General 24

Exhibit A Codeshare Services
and having its head office at Icelandair Head Office, Reykjavik

Airport, 101 Reykjavik, Iceland (Icelandair); and

ALASKA: ALASKA AIRLINES, INC. an Alaska corporation, on its own behalf

and as representative for its affiliated entity, Horizon Air Industries, aWashington corporation, and having its head office at 19300

International Boulevard, Seattle, Washington 98188, United States

of America (Alaska);

INTRODUCTION

A. Each party operates scheduled airline services and supplementary services as

may be approved from time to time by the appropriate aeronautical authorities.

B. Alaska wishes to permit Icelandair to market and sell flight capacity on certain of

Alaska’s scheduled services (as shown in Exhibit A) using Icelandair’s two letterairline designator code rather than the code of the operating carrier.

C. The parties agree to Codeshare on the terms and conditions of this Agreement.

AGREEMENT

1. Definitions and Interpretation

1.1, In this Agreement unless the contrary intention appears:

‘Agreement’ means this document, including its recitals, clauses and any

exhibits and attachments.

‘Alaska Trade Marks’ means the Alaska name and any logo or trade mark

(whether registered or not) used by Alaska in connection with its business as

an airline or any other Alaska business.

‘Charges’ means the charges specified in paragraph B of Exhibit A.

‘Claim’ means any action, claim, demand, suit, judgment or proceeding of

any nature and kind whatsoever‘Code’ means the airline designator code Fl in the case of Icelandair and AS

in the case of Alaska.

‘Codeshare’ means where one airline assigns its Code to a flight operated

by another airline and that other airline continues to use its own Code on that

flight.

2
‘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.
the Official Airline Guides’ or 

QAG

and their respective successors.

‘Operating Carrier’ means Alaska.

‘Personal Information’ means information or an opinion (including

information or an opinion forming part of a database), whether true or not,

and whether recorded in a material form or not, about an individual whose

identity is apparent, or can reasonably be ascertained, from the information

or opinion.

‘Personnel’ means officers, employees, agents and contractors of a party.

‘Reservations System’ means the internal computerized airline passenger

system used by the Personnel of an airline or any other authorized non-airline

or handling personnel that contains information about flight schedules, fares,

passenger tariff rules and flight availability of that airline and other carriers,

and provides the ability to make reservations and issue Tickets.

‘Significant Event’ means an emergency or serious incident or a serious

threat relating to any of a party’s flights including Codeshare Services.

‘Subsidiary’ means a company of which more than half of the registered

capital belongs to another company.

‘Taxes’ mean any taxes, assessments, levies or fees.

‘Term’ means the term of this Agreement as determined under clause 19.

‘Ticket’ means a written, printed or electronic document entitling the holder

to travel on a particular airline service in a designated class on a Codeshare

Service, and includes any form of electronic ticket recognized by the parties

from time to time and, where the context so requires, includes a ticket for asingle flight sector.

12. In this Agreement unless the contrary intention appears:

(a) a reference to a clause, paragraph, exhibit, or attachment is a

reference to a clause or paragraph or exhibit or attachment to this

Agreement and references to this Agreement includes any recital,

annex or attachment:

(b) a reference to this Agreement or another instrument includes any

variation or replacement of either of them;

(c> a reference to a statute. ordinance, or by-law inciudes regulations and

other instruments under it and consolidations, amendments. re

enactments or replacements of any of them:

(d) the singular includes the plural and vice versa;(e) the word person includes a firm, a body corporate, an unincorporated

association or an authority;

4
(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 baggageallowance 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

5
such passengers yield comparable revenues as the Operating Carrier

s

passengers.

2.4. The policies and procedures applicable to the Codeshare Services

(‘Codeshare Procedures’) shall be mutually prepared by the parties before

the commencement of Codeshare Services. Each party must notify the other

of any significant changes to its policies and procedures and its Conditions of

Carriage in accordance with Clause 25 (Notices).

2.5. Except as otherwise specified in this Agreement, the Operating Carrier’s

respective policies and procedures will apply on the Codeshare Services.

2.6. Subject to clause 21, the Operating Carrier will determine, independently

and at its sole discretion, the number of seats on its flights (including flightsoperated as Codeshare flights) that will be made available in a particular

reservation booking designator. With respect to inventory management on

the Codeshare flights, the parties acknowledge and agree that the Operating

Carrier will manage its seat inventories in a manner that provides an incentive

for the Marketing Carrier to sell the inventory of the Operating Carrier and for

the Operating Carrier to accept the inventory requests of the Marketing

Carrier without subjecting the Operating Carrier to disproportionate risk of

revenue dilution and while preserving for the Operating Carrier the integrity ofits inventory management system in order for the Operating Carrier to

maximize its profitability.

2.7. This Agreement does not apply to the carriage of cargo.

2.8. This Agreement is limited to the carriage of:

(a) commercial passengers and their baggage; and

(b) company and employee travel as specified in clause 9.

2.9. Bookings made by the Marketing Carrier on a freesale basis will be honored

by the Operating Carrier as confirmed seat sales except that the Operating

Carrier may reject a Marketing Carrier booking within twelve (12) hours after

that booking was received by the Operating Carrier, if the Operating Carrier

has deemed that the booking class was closed at the time the booking was

made, regardless of whether the CRS or the Marketing Carrier’sReservations System was showing open or closed for that flight.

3. Regulatory Approvals

3.1. This Agreement and its implementation are subject to each party obtaining all

necessary government and other applicable regulatory approvals.

3.2. Each party agrees to file with the relevant government authorities, and

agrees to support where appropriate the other party’s applications for, any

0
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 MarketingCarrier’s flights, then the combined excess baggage revenue for the

Codeshare Services and the Marketing Carrier’s connecting flights will beallocated 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.

7
availability status messages (AVS), EDIFACT through check-in capability,

passenger reconciliation lists (PRL) and direct access to accrual andredemption functions in the other carrier’s frequent flyer program.

4.9, Solely to support interline billing to third parties, the Marketing Carrier hereby

waives endorsement requirements for the Operating Carrier with respect toall coupons or Tickets issued by third parties where the Marketing Carrier’s

Code is indicated, for travel on the Codeshare Services.

4.10. Each party agrees to afford the other party reasonable access during normal

business hours on reasonable prior written notice to its accounting records

for the purposes of verification of amounts payable under this Agreement and

information and data provided to a party under this Agreement.

4.11. Each party must at all times establish fares for the Codeshare Services

independently of the other party.

4.12. The Marketing Carrier will not upgrade its passengers on the Codeshare

Services after issuing a Ticket.

4.13. The parties may set off any Charges (as defined in clause 4.1) owed to one

another under this clause 4 against any amount owed by the other party to it

under this Agreement. Such set-off shall occur via the IATA Clearing Houseprocess.

5. Flight Schedules5.1. Each party must use reasonable efforts to:

(a) minimize schedule changes affecting any of the Codeshare Services;

(b) minimize the ground time between flights for passengers who are

connecting to or from a Codeshare Service to other Icelandair or

Alaska flights; and

(c) maximize passenger convenience and service.

5.2. Despite clause 5.1, nothing contained in this Agreement obligates any party

to operate a specific flight or schedule and each party retains the right to

determine the final service schedule of its flights.

53. The Operating Carrier will use reasonable efforts to notify the Marketing

Carrier in writing not less than thirty (30) days prior to the effective date of

any proposed change to its schedules or aircraft type that affects any of the

fhghts bearing the Fl designator code as part of the Codeshare Services. If it

is not practicable to give thirty (30) days’ notice, the Operating Carrier willnotify the Marketing Carrier as soon as practicable of the proposed change in

order to enable synchronized publication of flight details.

8
Message), ASM (Ad hoc Schedule Message) and Inter Airline Thru-Check Inmessages relating to the Codeshare Services.

5.6 The passenger re-accommodation process in the case of schedule changes

will be in accordance with the Operating Carrier’s procedures or any other

process agreed between the parties, The payment of, and any liability for, all

costs in connection with schedule changes will be governed by clauses 10.1

and 104.

6. Customer Awareness of Codeshare Services and Service Standards6.1. Prior to selling a Ticket on a Codeshare Service, each party will ensure that it

brings to the attention of its customers and potential customers in accordance

with applicable legislation, regulations, industry codes of conduct andgovernment requirements:

(a) that the flight is a Codeshare Service; and(b) the corporate identity of the Operating Carrier.

6.2. Each party will use all reasonable efforts to ensure that:

(a) all public schedules (including Official Airline Guides, CRS displays

and Reservations Systems);

(b) all advertising communications and promotional material produced or

distributed by or on behalf of a party concerning the Codeshare

Services; and

(c) its Personnel selling seats on the Codeshare Services clearly identify

the carrier operating each Codeshare Service to customers and

potential customers.

6.3. The Marketing Carrier must ensure its passengers’ printed Tickets and

itineraries identify the Operating Carrier and the Marketing Carrier.

6,4. The Marketing Carrier will advise passengers of the Operating Carrier’s

minimum check-in times.

6.5. The Marketing Carrier may, from time to time, measure customer service on

the Codeshare Services and the Operating Carrier must provide, upon

reasonable request from the Marketing Carrier, reasonable access to its

records, facilities and the Codeshare Services for this purpose.

6.6. The Operating Carrier will ensure that the Marketing Carrier’s passengers on

each Codeshare Service receive services and treatment, including access to

lounges, from the Operating Carrier that are at least equivalent to the

services and treatment provided to the Operating Carrier’s passengers

traveling in the same class or category of travel on the Codeshare Service.

6 7. Each party will handle customer complaints received by it in accordance with

9
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 touse 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

10
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]

11
10. Delays or Disruptions

101. Where necessary in the reasonable opinion of the Operating Carrier, and

except as provided for in this Agreement without liability to the Operating

Carrier, said Operating Carrier may delay, cancel, divert, or interrupt a

Codeshare Service. In any such event the Operating Carrier must notify the

Marketing Carrier immediately. If such notification is received by theMarketing Carrier less than iours before the scheduled

departure, the Operating Carr1Fust:

(a) ensure that all customers are looked after appropriately in accordance

with the Operating Carrier’s procedures and applicable Conditions of

Carriage and, in the case of the Marketing Carrier’s passengers, tothe minimum standard required by the Marketing Carrier;

(b) promptly advise the Marketing Carrier of the alternative travel

arrangements provided to the Marketing Carrier’s passengers; and

(c) pay for all costs and expenses in connection with any delay,

cancellation, diversion or disruption in respect of the Marketing

Carrier’s passengers including the cost of meals, accommodation,

transfers and alternative travel arrangements to final ticketed

destination.

10.2. Each party will comply with agreed procedures for and cooperate as fully as

possible in the event of any delay, cancellation, disruption or diversion of a

Codeshare Service with a view to:

(a> minimizing delay and inconvenience to passengers;

(b) minimizing the loss of revenue to all parties; and

(c) taking all necessary action to ensure the operation of the flight is

performed expeditiously and in accordance with the terms of this

Agreement.

10.3. The Operating Carrier will have the final decision on arrangements to

alleviate or remedy any delay, diversion, cancellation or disruption to its

flights.

10.4. Except as may otherwise be provided in this Agreement, no party will be

liable to another party for any loss of profits, loss of revenue or any other

consequential losses that may have been incurred because of delays,

cancellations, interruptions, diversions or disruptions to the operation of theCodeshare Services.

11. Sales and Marketing

11.1, All sales and marketing activities and publications (including electronic

publications) relating to the Codeshare Services will be subject to clause 22

(Trade and Corporate Identification).

12
about the Codeshare Services must ensure that the activity or publicationcomplies with all applicable laws and regulations.

1t4. Each party will use all reasonable efforts to ensure that its CRS and

Reservations System display the Codeshare Services in accordance with

agreed priorities and preferred positioning.

12. Review Procedures and Amendment of the Agreement

12.1 Each party will cooperate with the other parties to institute regular monitoring

processes to ensure that this Agreement is being implemented efficiently and

in accordance with its terms. The parties will cooperate in good faith to

address and remedy any operational issues affecting the Codeshare

Services.

12.2. Review meetings will be held on an annual basis unless otherwise agreed by

the parties. In addition to the annual review meetings, a party may on

reasonable notice call for a review of the terms of this Agreement, or any

operational factor affecting the Codeshare Services, at any time and theother parties will cooperate in such review.

123. If:

(a) Any party considers that the Agreement requires amendment in order to

remain in line with general market conditions prevailing on routes served

by the Codeshare Services; and

(b) that party gives notice to the other parties specifying a requested

amendment to Exhibit A and a reasonable description of the basis for

that request,

then the parties must negotiate in good faith concerning the requestedamendment.

13, Liability, Indemnity & Insurance

Carriage performed pursuant to the provisions of this Agreement will be subject to

and the Parties irrevocably adhere to:

13.li The liability rules laid down by the Convention for the Unification of

certain Rules relating to international carriage by air, signed at Warsaw on October

12th, 1929 or the said Convention as modified by the protocol signed at the Hague

on September 28th, 1955 and the Convention supplementary to the WarsawConvention done at Guadalajara on 18 September 1961 whichever is applicable to

the passenger contract of carriage, together with all international instruments that

supplement, and are associated with, it and are in force or the Convention for the

Unification of Certain Rules relating to International Carriage by Air done at MontrealMay 28, 1999 (the Montreal Convention 1999), according to whichever is applicable:

13
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 inrespect of claims caused by the gross negligence or wilful misconduct of any of the

aforementioned parties. Operating Carrier shall also procure and maintain AircraftThird 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 misrepresentationand non.disclosure) of any other person or party that results fl 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

14
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 toany 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 asspecifically 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, servantsand 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 anydamage 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.

15
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

16
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

17
17.4. The parties agree to use reasonable efforts to issue a tax invoice as required

by the relevant Consumption Tax legislation or any relevant rulings or

guidelines, and to do anything else that may be required to enable or assist

the other party to claim or verify any input tax credit, set off, rebate or refund

in respect of any Consumption Tax paid or payable in connection with

supplies under this Agreement.

18, Other Relationships

18.1. This Agreement is non-exclusive and does not preclude either party from

entering into and maintaining Codeshare relationships with other airlines.

19. Term and Termination

19.1. Subject to all necessary government authorizations being obtained, this

Agreer” ‘“s on the Commencement Date and will remain in

may thereafter be renewed for additional terms

o

n notice of one party to the other of its offer to renew

this Agreement on that basis and the other party’s written acceptance of that

offer, unless this Agreement has terminated earlier in accordance with its

terms.

19.2. This Agreement may be terminated by either party at any time, by giving at

least ,.rior written notice to the other party.

19.3. A party has the right to immediately terminate this Agreement by giving

written notice to the other party, if:

(a) the Agreement is disapproved by any of the government authorities

having supervisory jurisdiction over this Agreement; such termination

will be with waiver of any other right or remedy that each party may

have;

(b) any one or more of the necessary rights, licenses, permits,

authorizations necessary for the performance of the Codeshare

Services are at any time withdrawn, lapsed, revoked or not obtained;

such termination will be without waiver of any other right or remedy

that each party may have;

(c) Except in the case of a Force Majeure Event, any party fails to comply

in any material respect with its technical obligations under clause 4.8;

such termination will be with waiver of any other right or remedy that

each party may have;

(d) there is a change in Control of another party. For the purposes of this

clause, ‘Control’ means the possession, directly or indirectly, of thepower (whether or not having statutory, legal or equitable rights) to

control either directly or indirectly the membership of the board of

18
due, has a resolution passed for its compulsory or voluntary w

g

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
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;
in order to obtain governmental approvals pu

;

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 Identification22.1. Except as provided in this Agreement:

21
Icelandair Trade Marks or any part thereof. 

g

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 Events24,1 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.

22
under this Agreement;

(b) terminate this Agreement if the non-performing party’s nonperformance has continued for a period of at leasL or

(c) otherwise perform and continue this Agreement, or any part thereof,

under such further terms and conditions as the parties agree in

writing.

25. Notices

25.1. Except as provided in clauses 8.3, all notices, reports and other

communications required or permitted under this Agreement to be given to or

made in writing, must be addressed as provided in this clause and:

(a) delivered in person;

(b) sent by an express courier delivery service that provides signed

acknowledgments of receipt;

(c) deposited in the United States or Iceland mail, certified or registered

mail, postage prepaid, with return receipt requested; or

(d) transmitted by facsimile (upon receipt by sender thereof of evidence

that a complete transmission of such a copy was made to the

recipient thereof) and, if sent by facsimile, confirmed by:

(i) telephone contemporaneously to the person entitled to receive

such notice or to such person’s secretary, or

(ii) dispatching a hard copy of such notice by the methods set out

in paragraphs (a), (b) or (c) above.

For the purposes of termination or any related notice required under

clausel9, the notices shall only be given by express courier delivery service

that provides signed acknowledgments of receipt.

25,2, A notice given in accordance with this Agreement is deemed received and

effective:

(a) if delivered in person, upon delivery;

(b) if sent by express courier, upon signature of the delivery document by

a representative of the intended recipient;

(c) if posted, five (5) days after deposit in the mail: or

(d) if sent by facsimile, upon receipt by the sender of a transmission

report confirming error-free transmission to the intended recipient.

25.3. The addresses of the parties for notices will be as set out below provided that

either party will have the right to change its address for notice by giving thirty

(30) days prior written notice to the other party.

If to Alaska:

Director, Alliances

Alaska Airlines, Inc.

19300 International Boulevard
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 (withoutregard 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 indispute 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 aproposed 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 anycompromises, 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

24
relevant countries with respect to the operation of Code

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.

25
agreement. The parties may initially execute this Agreeme

y 

g

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]

26
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 Management
1) Codes

a

e Services

The Codeshare Services include selected Alaska flights on the

following routes:

Seattle (SEA) — San Francisco (SF0)

Seattle (SEA) — Los Angeles (LAX)Seattle (SEA) — Portland (PDX)

Seattle (SEA) — San Diego (SAN)Seattle (SEA) — Las Vegas (LAS)Seattle (SEA) — Sacramento (SMF)

Seattle (SEA) — San Jose (SJC)Seattle (SEA) — Spokane (GEG)

Seattle (SEA) — Anchorage (ANC)Seattle (SEA) — Vancouver (YVR)

Seattle (SEA) — Calgary (YYC)

Seattle (SEA) — Victoria (YYJ)

Other routes as may be mutually agreed and permitted by applicable

law.

ii) Designated Capacity

The whole number of available seats on the Codeshare Service, on a

freesale basis,

iii) Codeshare Commission

The Marketing Carrier shall receive a codeshare commission of which is

calculated on the gross value of revenue derived from the Marketing Carrier’s ticketcoupons,

B. Charges (clause 4.1)

The Operating Carriers wi!I charge the Marketing Carrier for the Codeshare

Services in accordance with the Special Prorate Agreement (SPA) in placebetween the parties at the time of travel

28