<PAGE>   1


                                                                ORDER 2000-11-11

                                                       SERVED: NOVEMBER 16, 2000

[DEPARTMENT OF              UNITED STATES OF AMERICA
TRANSPORTATION            DEPARTMENT OF TRANSPORTATION
UNITED STATES OF           OFFICE OF THE SECRETARY
AMERICA LOGO]                  WASHINGTON, D.C.


                   Issued by the Department of Transportation
                       on the 13TH DAY OF NOVEMBER, 2000

-------------------------------
Essential air service at

GLASGOW, MONTANA
GLENDIVE, MONTANA
HAVRE, MONTANA                                            DOCKET 0ST-1997-2605-5
LEWISTOWN, MONTANA
MILES CITY, MONTANA
SIDNEY, MONTANA
WOLF POINT, MONTANA

under 49 U.S.C. 41731 et seq.
-------------------------------

                     ORDER TENTATIVELY RESELECTING CARRIER
                         AND ESTABLISHING SUBSIDY RATE

SUMMARY

By this order, the Department is tentatively reselecting Big Sky Transportation
Co., d/b/a Big Sky Airlines, to provide essential air service at the seven
Montana communities named above for the two-year period beginning December 1,
2000, at an annual subsidy rate of $4,952,234, and providing for objections or
competing proposals from other interested carriers.

BACKGROUND

By Order 98-9-12, September 14, 1998, the Department selected Big Sky to provide
subsidized service at the seven Montana communities named above by operating 12
round trips a week from Sidney to Billings, 5 round trips from Sidney to
Bismarck, and 12 round trips a week from the other six communities to Billings
with 19-seat Fairchild Metro III aircraft for the two-year period through
November 30, 2000, at an annual subsidy rate of $4,697,222.(1)

Under normal procedures when nearing the end of a subsidy rate term, we contact
the incumbent carrier to determine whether it is interested in continuing
service and whether it will continue to require subsidy. We usually negotiate a
new subsidy rate with the carrier, issue an order


----------
(1) See Appendix A for a map. Order 98-9-12 authorized Big Sky to operate the
    Sidney-Bismarck flights in lieu of some of the community's service to
    Billings, but provided for Big Sky to return to operating all of Sidney's
    service to Billings if it later chose to do so. Big Sky has continued to
    operate the authorized Sidney-Bismarck flights.


<PAGE>   2



tentatively reselecting it for a new rate term at the agreed rate, and direct
other parties to show cause why we should not finalize our tentative decision.
Other carriers wishing to submit competing proposals are invited to do so in
response to the show-cause order: if any such proposals are filed, we process
them as a competitive case. Consistent with this practice, we invited Big Sky to
submit a proposal for the continuation of its essential air service at the seven
communities beginning December 1, 2000.

CARRIER PROPOSAL

Big Sky submitted a proposal in response to our request. As a result of
discussions with Department staff, Big Sky has agreed to continue providing the
communities with same service patterns at a new annual subsidy rate of
$4,952,234 for the two-year period beginning December 1, 2000.(2)

DECISION

After a thorough review of Big Sky's proposal and its recent service history, we
have tentatively decided to reselect Big Sky to serve the seven Montana
communities for the two-year period beginning December 1, 2000, as proposed. The
rate appears reasonable for the service to be provided, and Big Sky's
performance continues to be satisfactory. In that context, we note that total
passenger traffic at the seven communities for the year ended March 31, 2000,
increased by 15.8 percent over the previous 12-month period.(3)

CARRIER FITNESS

49 U.S.C. 41737(b) and 41738 require that we find an air carrier fit, willing
and able to provide reliable service before we compensate it for providing
essential air service. We last found Big Sky fit by Order 99-12-28, December 29,
1999, in connection with its essential air service at El Dorado/Camden,
Jonesboro, Harrison and Hot Springs, Arkansas, Enid and Ponca City, Oklahoma,
and Brownwood, Texas. Since then, the Department has routinely monitored the
carrier's continuing fitness, and no information has come to our attention that
would lead us to question its ability to operate in a reliable manner. Based on
our review of its most recent submissions, we find that Big Sky continues to
have available adequate financial and managerial resources to provide quality
service at the communities at issue here, and that it continues to possess a
favorable compliance disposition. The Federal Aviation Administration has
advised us that the carrier is conducting its operations in accordance with 14
CFR Part 121, and knows of no reason why we should not find that Big Sky remains
fit.

RESPONSES TO TENTATIVE DECISION

As usual, we will allow interested parties 20 days from the date of this order
to object to our decision or to file competing proposals. If no timely
objections or competing proposals are filed.



----------
(2) Appendix B contains details of Big Sky's compensation requirement.

(3) See Appendix C for historical traffic data. Enplanements represent one-half
    of total origin-and-destination traffic, and averages are based on 313
    service days (weekdays and weekends) each year.




                                       2



<PAGE>   3



this order will automatically become final. We expect persons objecting to our
tentative decision to support their objections with relevant and material facts.
We will not entertain general, vague or unsupported objections.

Carriers interested in filing competing proposals, with or without subsidy
requests, should file them within the 20-day period set for objections. At the
end of that period, our staff will docket any competing proposals, thereby
making them public, and direct each carrier to serve a copy of its proposal on
the civic parties and other applicants. Each applicant, including the incumbent,
will then have an opportunity to finalize its proposal in rate discussions with
Department staff before we seek final community comments. We will give full
consideration to all proposals that are timely filed. As a general matter, we
request proposals that would provide at least three round trips a day from the
communities to a suitable hub with twin-engine aircraft operated by two pilots.

SERVICE HISTORY AND TRAFFIC DATA

Big Sky has operated subsidized service at the seven communities since 1980,
when it replaced Frontier Airlines, Inc. During the year ended March 31, 2000,
the most recent 12-month period for which data are available, Glasgow averaged
6.6 enplanements a day, Glendive 3.8, Havre 4.5, Lewistown 3.5, Miles City 4.6,
Sidney 8.4 and Wolf Point 5.0, with traffic at each of the seven communities
showing improvement over the previous 12-month period. On a composite basis, the
communities averaged a total of 36.5 enplanements a day during the year ended
March 31, 2000 -- an increase of 15.8 percent over the previous 12-month period,
as we noted earlier.

PROCEDURES FOR FILING COMPETITIVE PROPOSALS

For interested carriers unfamiliar with our procedures and recommended form for
supplying the necessary information, we have prepared two explanatory documents
that we will make available upon request. The first describes the process for
handling carrier replacement cases under 49 U.S.C. 41734(f), and discusses in
detail the process of requesting proposals, conducting reviews of applicants,
and selecting a replacement carrier. The second is an evidence request
containing an explanatory statement, a copy of Part 204 of our regulations (14
CFR 204), and schedules setting forth our recommended form for submitting data
required for calculating compensation and determining the financial and
operational ability of applicants to provide reliable essential air service.
(Section 204.4 describes the fitness information required of all applicants for
authority to provide essential air service.) Applicant carriers that have
already submitted this information in another case need only resubmit it if a
substantial change has occurred. However, if there are more recent data or if
there have been any changes to the information on file, carriers should provide
updates of those information elements. Interested carriers that need to obtain
copies of these documents may contact the Office of Aviation Analysis at (202)
366-1053.



                                       3



<PAGE>   4




OTHER CARRIER REQUIREMENTS

The Department is responsible for implementing various Federal statutes
governing lobbying activities, drug-free workplaces, and nondiscrimination.(4)
Consequently, all carriers receiving Federal subsidy for essential air service
must certify that they are in compliance with Department regulations regarding
drug-free workplaces and nondiscrimination, and those carriers whose subsidies
exceed $100,000 over the life of the rate term must also certify that they are
in compliance with the regulations governing lobbying activities. All carriers
that plan to submit proposals involving subsidy should submit the required
certifications along with their proposals. Interested carriers requiring more
detailed information regarding these requirements as well as copies of the
certifications should contact the Office of Aviation Analysis at (202) 366-1053.
The Department is prohibited from paying subsidy to carriers that do not submit
these documents.

COMMUNITY AND STATE COMMENTS

If we receive competing proposals, the communities and state are welcome to
submit comments on the proposals at any time. Early in the proceeding, comments
on the proposals' strengths and weaknesses would be particularly helpful, and
the civic parties may also express a preference for a particular carrier, if
they choose. In any event, after conducting rate conferences with all
applicants, we will provide a summary of the conference results to the civic
parties and ask them to file their final comments.(5)

This order is issued under authority delegated in 49 CFR 1.56a(f).

ACCORDINGLY,

1.   We tentatively reselect Big Sky Transportation Co., d/b/a Big Sky Airlines,
     to provide essential air service at Glasgow, Glendive, Havre, Lewistown,
     Miles City, Sidney and Wolf Point, Montana, as described in Appendix D, for
     the period from December 1, 2000, through November 30, 2002;

2.   We tentatively set the final rate of compensation for Big Sky
     Transportation Co., d/b/a Big Sky Airlines, for the provision of essential
     air service at Glasgow, Glendive, Havre,




----------
(4) The regulations applicable to each of these three areas are (1)49 CFR Part
    20, New Restrictions on Lobbying, implementing title 31, United States
    Code, section 1352, entitled "Limitation on use of appropriated funds to
    influence certain Federal contracting and financial transactions.'' (2)49
    CFR Part 29, Subpart F, Drug-Free Workplace Requirements (Grants),
    implementing the Drug-Free Workplace Act of 1988; and (3)49 CFR Part 21,
    Nondiscrimination in Federally-Assisted Programs of the Department of
    Transportation -- Effectuation of Title VI of the Civil Rights Act of 1964;
    49 CFR Part 27, Nondiscrimination on the Basis of Handicap in Programs and
    Activities Receiving or Benefiting from Federal Financial Assistance; and 14
    CFR Part 382, Nondiscrimination on the basis of handicap in Air Travel.

(5) In cases where a carrier proposes to provide essential air service without
    subsidy and we determine that service can be reliably provided without such
    compensation, we do not normally hold rate conferences. Instead, we rely on
    the carrier's subsidy-free service as proposed.




                                       4


<PAGE>   5



     Lewistown, Miles City, Sidney and Wolf Point, Montana, as described in
     Appendix D for the period from December 1, 2000, through November 30, 2002,
     payable as follows: for each month during which essential air service is
     provided, the amount of compensation shall be subject to the weekly ceiling
     set forth in Appendix D, and shall be determined by multiplying the
     subsidy-eligible arrivals and departures completed during the month by
     $555.49;(6)

3.   We direct Big Sky Transportation Co., d/b/a Big Sky Airlines, to retain all
     books, records, and other source and summary documentation to support
     claims for payment, and to preserve and maintain such documentation in a
     manner that readily permits its audit and examination by representatives of
     the Department. Such documentation shall be retained for seven years or
     until the Department indicates that the records may be destroyed. Copies of
     flight logs for aircraft sold or disposed of must be retained. The carrier
     may forfeit its compensation for any claim that is not supported under the
     terms of this order;

4.   We find that Big Sky Transportation Co., d/b/a Big Sky Airlines, continues
     to be fit, willing and able to operate as a commuter air carrier and
     capable of providing reliable essential air service at Glasgow, Glendive,
     Havre, Lewistown, Miles City, Sidney and Wolf Point, Montana;

5.   We direct any interested persons having objections to the selection of Big
     Sky to provide essential air service as described in ordering paragraph 1
     above, at the rate set forth in ordering paragraph 2 above, to file such
     objections or competing service proposals no later than 20 days from the
     date of service of this order;(7)

6.   If we receive objections or competing proposals within the 20-day period,
     Big Sky will be compensated at the subsidy rate set forth in order
     paragraph 2 above as a final rate until all objections are resolved;

7.   We will afford full consideration to the matters and issues raised in any
     timely and properly filed objections and service proposals before we take
     further action.(8) If no objections or competing service proposals are
     filed, all further procedural steps will be deemed waived and this order
     shall become effective on the twenty-first day after its service date;

8.   This docket will remain open until further order of the Department; and



----------
(6) See Appendix D for the calculation of this rate, which assumes the use of
    the aircraft designated. If the carrier reports a significant number of
    aircraft substitutions, revision of this rate may be required.

(7) Objections should be filed with the Documentary Services Division, SVC-124,
    Room PL-401, Department of Transportation, 400 7th Street S.W., Washington
    DC 20590. Proposals to provide essential air service should be filed with
    the Chief, EAS & Domestic Analysis Division, X-53, Office of Aviation
    Analysis, Room 64171, Department of Transportation, at the same address.
    Questions regarding filings in response to this order may be directed to
    Dennis J. DeVany at (202)366-1061.

(8) Since we are providing for the filing of objections to this order, we will
    not entertain petitions for reconsideration.



                                       5



<PAGE>   6



9.   We will serve copies of this order on the mayors and airport managers of
     Glasgow, Glendive, Havre, Lewistown, Miles City, Sidney and Wolf Point,
     Montana; Big Sky Transportation Co., d/b/a/ Big Sky Airlines; and the
     persons listed in Appendix E.


By:




                              FRANCISCO J. SANCHEZ
                        Assistant Secretary for Aviation
                           and International Affairs





(SEAL)




              An electronic version of this document is available
                  on the World Wide Web at http://dms.dot.gov




                                       6



<PAGE>   7



                                                                      APPENDIX A


                      GLASGOW, GLENDIVE, HAVRE, LEWISTOWN,
                  MILES CITY, SIDNEY AND WOLF POINT, MONTANA,
                           AND THE SURROUNDING REGION







                                     [MAP]




<PAGE>   8


                                                                      APPENDIX B
                                                                     Page 1 of 4



               BIG SKY TRANSPORTATION CO., d/b/a BIG SKY AIRLINES
                      ANNUAL COMPENSATION REQUIREMENT FOR
         ESSENTIAL AIR SERVICE AT GLASGOW, GLENDIVE, HAVRE, LEWISTOWN,
                   MILES CITY, SIDNEY AND WOLF POINT, MONTANA


<TABLE>
<S>                                  <C>                              <C>
Block Hours:

  Revenue (App. B, p. 2)                                                   6,039
  Non-revenue                                                                229
                                                                      ----------
Total Block Hours                                                          6,268

Operating Revenue:

  Passenger Revenue (App. B, p. 3)                                    $1,668,210
  Freight Revenue                                                         16,682
                                                                      ----------
Total Operating Revenue                                               $1,684,892

Direct Expenses:

  Flying Operations                  $124.50 per block hour           $  780,366
  Fuel & Oil                         $131.56 per block hour              824,618
  Direct Maintenance                 $159.66 per block hour            1,000,749
  Maintenance Burden                                                     335,108
  Aircraft Lease                     $138.78 per block hour              869,873
  Hull Insurance                     $ 22.13 per block hour              138,711
  Property Tax on Aircraft                                               134,400
                                                                      ----------
Total Direct Expenses                                                 $4,083,825
                                                                      ==========
Indirect Expenses:

  Advertising                                                             35,000
  Departure-related Expenses                                           1,035,423
  Traffic-related Expenses                                               467,030
  Capacity-related Expenses                                              662,588
                                                                      ----------
Total Indirect Expenses                                               $2,200,041
                                                                      ==========

Total Operating Expenses                                              $6,283,866
                                                                      ==========

Operating Loss                                                        $4,598,974
Profit Element at 5% of Total Operating Expenses                      $  314,193
Interest                                                              $   39,067
Compensation Requirement                                              $4,952,234
</TABLE>



<PAGE>   9



                                                                      APPENDIX B
                                                                     Page 2 of 4


                          ANNUAL SCHEDULED BLOCK HOURS


<TABLE>
<S>                                                                       <C>
HAVRE AND LEWISTOWN

Havre-Lewistown-Billings
   4 flts x (36 + 36 min)/60 x 313 service days x .96 =                    1,442

GLASGOW AND WOLF POINT

Glasgow-Wolf Point-Billings
   2 flts x (22 + 60 min)/60 x 365 days x .96 =                              958
Billings-Glasgow-Wolf Point-Billings
   1 flt x (54 + 22 + 60 min)/60 x 261 weekdays x .96 =                      568
                                                                           -----
                                                                           1,526
SIDNEY, GLENDIVE AND MILES CITY

Sidney-Billings
   4 flts x 65 min/60 x 261 weekdays x .96 =                               1,086
   2 flts x 65 min/60 x 52 weekends x .96 =                                  108
Sidney-Bismarck
   2 flts x 50 min/60 x 261 weekdays x .96 =                                 418
Glendive-Miles City-Billings
   4 flts x (28 + 43 min)/60 x 261 weekdays x .96 =                        1,186
   2 flts x (28 + 43 min)/60 x 52 weekends x .96 =                           118
Sidney-Glendive-Miles City-Billings
   2 flts x (22 + 43 + 28 min)/60 x 52 weekends x .96 =                      155
                                                                           -----
                                                                           3,071
                                                                           -----

TOTAL SCHEDULE BLOCK HOURS                                                 6,039
                                                                           =====

</TABLE>




<PAGE>   10



                                                                      APPENDIX B
                                                                     Page 3 of 4



                    ANNUAL PASSENGERS AND PASSENGER REVENUE


<TABLE>
COMMUNITIES                     PASSENGERS               AVG. FARE            REVENUE
-----------                     ----------               ---------          -----------
<S>                             <C>                      <C>                <C>
HAVRE AND LEWISTOWN

Havre                             2,410                  $ 62.00            $   149,420
Lewistown                         1,990                    35.00                 69,650
                                -------                                     -----------
                                  4,400                                     $   219,070


GLASGOW AND WOLF POINT

Glasgow                           4,070                  $ 70.00            $  284,900
Wolf Point                        3,500                    81.00               283,500
                                -------                                     ----------
                                  7,570                                     $  568,400


SIDNEY, GLENDIVE AND MILES CITY

Sidney-Billings                   4,740                  $ 62.00            $  293.880
Sidney-Bismarck                     700                    70.00                49,000
Billings-Bismarck                 2,450                   112.00               274,400
Glendive                          2,290                    58.00               132,820
Miles City                        2,840                    46.00               130,640
                                -------                                     ----------
                                 13,020                                     $  880,740

                                -------                                     ----------
TOTALS                           24,990                  $ 66.76            $1,668,210
                                =======                                     ==========
</TABLE>




<PAGE>   11



                                                                      APPENDIX B
                                                                     Page 4 of 4


                           ANNUAL SCHEDULED DEPARTURES


<TABLE>
<S>                                                                        <C>
HAVRE AND LEWISTOWN

Havre-Lewistown-Billings
     8 dpts x 313 service days x .96 =                                     2,404

GLASGOW AND WOLF POINT

Glasgow-Wolf Point-Billings
     4 dpts x 365 days x .96 =                                             1,402
Billings-Glasgow-Wolf Point-Billings
     3 dpts x 261 weekdays x .96 =                                           752
                                                                           -----
                                                                           2,154

SIDNEY, GLENDIVE AND MILES CITY

Sidney-Billings
     4 dpts x 261 weekdays x .96 =                                         1,002
     2 dpts x 52 weekends x .96 =                                            100
Sidney-Bismarck
     2 dpts x 261 weekdays x .96 =                                           501
Glendive-Miles City-Billings
     8 dpts x 261 weekdays x .96 =                                         2,004
     4 dpts x 52 weekends x .96 =                                            200
Sidney-Glendive-Miles City-Billings
     6 dpts x 52 weekends x .96 =                                            300
                                                                           -----
                                                                           4,107

TOTAL SCHEDULED DEPARTURES                                                 8,665
</TABLE>



<PAGE>   12



                                                                      APPENDIX C
                                                                     Page 1 of 2


              HISTORICAL ENPLANEMENTS AT GLASGOW, GLENDIVE, HAVRE,
             LEWISTOWN, MILES CITY, SIDNEY AND WOLF POINT, MONTANA

<TABLE>
<CAPTION>
                                 GLASGOW             GLENDIVE             HAVRE              LEWISTOWN
                                 -------             --------             -----              ---------
                               NO.      AVG.        NO.     AVG.       NO.      AVG.        NO.     AVG.
                               ---      ----        ---     ----       ---      ----        ---     ----
<S>                           <C>       <C>       <C>       <C>       <C>       <C>        <C>      <C>
1990                          1,361     4.3         641     2.0         768      2.5         325    1.0
1991                          1,606     5.1         582     1.9       1,034      3.3         858    2.7
1992                          2,101     6.7         695     2.2       1,176      3.8         815    2.6
1993                          2,048     6.5         919     2.9       1,320      4.2       1,098    3.5
1994                          1,975     6.3         844     2.7       1,535      4.9       1,165    3.7
1995                          2,056     6.6         871     2.8       1,468      4.7       1,230    3.9
1996                          1,756     5.6         720     2.3       1,284      4.1         963    3.1
1997                          1,565     5.0         634     2.0       1,200      3.8         832    2.7
1998                          1,699     5.4         964     3.1       1,256      4.0         904    2.9
1999                          2,001     6.4       1,166     3.7       1,375      4.4       1,073    3.4

1998 2nd qtr                    374                 227                 311                  203
     3rd qtr                    420                 218                 271                  206
     4th qtr                    510                 325                 337                  274
1999 1st qtr                    373                 215                 267                  194
     2nd qtr                    477                 300                 380                  274
     3rd qtr                    575                 314                 364                  314
     4th qtr                    576                 337                 363                  290
2000 1st qtr                    443                 253                 317                  213

Year ended March 31, 1999     1,677     5.4         985     3.1       1,186      3.8         876    2.8
Year ended March 31, 2000     2,071     6.6       1,204     3.8       1,424      4.5       1,091    3.5
</TABLE>

<PAGE>   13



                                                                      APPENDIX C
                                                                     Page 2 of 2


<TABLE>
<CAPTION>
                                MILES CITY            SIDNEY            WOLF POINT             TOTAL
                                ----------            ------            ----------             -----
                               NO.      AVG.        NO.     AVG.       NO.      AVG.        NO.     AVG.
                               ---      ----        ---     ----       ---      ----        ---     ----
<S>                           <C>       <C>       <C>       <C>       <C>       <C>       <C>       <C>
1990                            516     1.6       2,031     6.5       1,111     3.5       6,753     21.6
1991                            720     2.3       1,973     6.3       1,361     4.3       8,134     26.0
1992                            913     2.9       2,193     7.0       1,679     5.4       9,572     30.6
1993                            937     3.0       2,054     6.6       1,756     5.6      10,132     32.4
1994                          1,008     3.2       2,410     7.7       1,541     4.9      10,477     33.5
1995                            928     3.0       2,344     7.5       1,670     5.3      10,566     33.8
1996                            831     2.7       1,750     5.6       1,469     4.7       8,771     28.0
1997                            819     2.6       2,085     6.7       1,361     4.3       8,494     27.1
1998                          1,202     3.8       2,356     7.5       1,443     4.6       9,822     31.4
1999                          1,469     4.7       2,512     8.0       1,519     4.9      11,113     35.5

1998 2nd qtr                    268                 584                 357               2,324
     3rd qtr                    281                 598                 384               2,377
     4th qtr                    428                 647                 398               2,920
1999 1st qtr                    345                 497                 343               2,234
     2nd qtr                    323                 596                 385               2,736
     3rd qtr                    368                 654                 383               2,972
     4th qtr                    432                 765                 408               3,171
2000 1st qtr                    314                 608                 385               2,532

Year ended March 31, 1999     1,322     4.2       2,326     7.4       1,482     4.7       9,853     31.5
Year ended March 31, 2000     1,437     4.6       2,623     8.4       1,562     5.0      11,411     36.5
</TABLE>


SOURCE: BTS Form 298-C, Schedule T-1. Enplanements represent one-half of total
origin-and-destination traffic, and average enplanements per day are based on
313 service days (weekdays and weekends) each year. The total figures for all
seven communities include a very small amount of traffic between the
communities that is double-counted.

<PAGE>   14



                                                                      APPENDIX D
                                                                     Page 1 of 2

               BIG SKY TRANSPORTATION CO., d/b/a BIG SKY AIRLINES
         ESSENTIAL AIR SERVICE AT GLASGOW, GLENDIVE, HAVRE, LEWISTOWN,
                   MILES CITY, SIDNEY AND WOLF POINT, MONTANA


<TABLE>
<S>                           <C>
EFFECTIVE PERIOD              December 1, 2000, through November 30, 2002

SERVICE
Havre                         12 nonstop or one-stop round trips to Billings each week
Lewistown                     12 nonstop round trips to Billings each week
Glasgow and Wolf Point        12 nonstop or one-stop round trips to Billings each week
Glendive and Miles City       12 nonstop or one-stop round trips to Billings each week
Sidney                        12 nonstop round trips to Billings and 5 nonstop round trips to
                              Bismarck each week. At its own discretion, the carrier may
                              revert to operating 5 round trips to Billings with no more than
                              two intermediate stops in lieu of any service to Bismarck.

AIRCRAFT TYPE                 Fairchild Metro III (19 seats)

TIMING OF FLIGHTS             Flights must be well-timed and well-spaced to ensure full
                              compensation

SUBSIDY RATE PER
ARRIVAL/DEPARTURE             $555.49(1)

COMPENSATION CEILING
EACH WEEK                     $98.877(2)
</TABLE>

---------------
1. Annual compensation of $4,952,234 divided by 8,915 annual arrivals and
departures at a 96 percent completion factor. For payout purposes, the
Billings-Glasgow-Wolf Point-Billings round-robin flight each weekday is
counted as one Glasglow-Wolf Point-Billings linear round trip involving four
departures rather than three as shown in Appendix B, p. 4.
2. Subsidy rate per arrival/departure of $555.49 multiplied by 178 subsidy-
eligible arrivals and departures each week.

<PAGE>   15



                                                                      APPENDIX D
                                                                     Page 2 of 2


                                      NOTE

The carrier understands that it may forfeit its compensation for any flights
that it does not operate in conformance with the terms and stipulations of the
rate order, including the service plan outlined in the order and any other
significant elements of the required service, without prior approval. The
carrier understands that an aircraft take-off and landing at its scheduled
destination constitutes a completed flight; absent an explanation supporting
subsidy eligibility for a flight that has not been completed, such as certain
weather cancellations, only completed flights are considered eligible for
subsidy. In addition, if the carrier does not schedule or operate its flights in
full conformance with the order for a significant period, it may jeopardize its
entire subsidy claim for the period in question. If the carrier contemplates any
such changes beyond the scope of the order during the applicable period of this
rate, it must first notify the Office of Aviation Analysis in writing and
receive written approval from the Department to be assured of full compensation.
Should circumstances warrant, the Department may locate and select a replacement
carrier to provide service on these routes. The carrier must complete all
flights that can be safely operated; flights that overfly points for lack of
traffic will not be compensated. In determining whether subsidy payment for a
deviating flight should be adjusted or disallowed, the Department will consider
the extent to which the goals of the program are met and the extent of access to
the national air transportation system provided to the community.

If the Department unilaterally, either partially or completely, terminates or
reduces payments for service or changes service requirements at a specific
location provided for under this order, then, at the end of the period for which
the Department does make payments in the agreed amounts or at the agreed service
levels, the carrier may cease to provide service to that specific location
without regard to any requirement for notice of such cessation. Those
adjustments in the levels of subsidy and or service that are mutually agreed to
in writing by the parties to this order do not constitute a total or partial
reduction or cessation of payment.

Subsidy contracts are subject to, and incorporate by reference, relevant
statutes and Department regulations, as they may be amended from time to time.
However, any such statutes, regulations, or amendments thereto shall not operate
to controvert the foregoing paragraph.

<PAGE>   16



                                                                      APPENDIX E



                     SERVICE LIST FOR THE STATE OF MONTANA

                           Air Wisconsin, Inc.
                           Alpine Aviation, Inc.
                           Amerijet International, Inc.
                           Barken International, Inc.
                           Big Sky Transportation Co.
                           Blue Ridge Airlines
                           Delta Connection
                           Empire Airlines, Inc.
                           Mesa Airlines, Inc.
                           Mesaba Aviation, Inc.
                           Metroflight, Inc.
                           Midway Airlines, Inc.
                           Midwest Express Airlines, Inc.
                           Northern Tier Airlines, Inc.
                           Northwest Airlink
                           Pacific Air West, Inc.
                           Renown Aviation, Inc.
                           West Isle Air, Inc.

                           Ken Bannon
                           E.B. Freeman
                           Ben Harrison
                           A. Edward Jenner
                           Keith Kahle
                           Bob Karns
                           John McFarlane
                           John Rahenberg
                           Richard A. Raymer
                           Tracy Schoenrock
                           Dan Traitor
                           Gary L. White