|      X | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2010 |
|----------------------------|-------------------------------------------------------------------------------------------------------------------------------------------|

|   | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____ |
|--------|---------------------------------------------------------------------------------------------------------------------------------------|

----

|                                  | AIR T, INC. AND SUBSIDIARIES                                                          |   |   |     |
|---------------------------------------|---------------------------------------------------------------------------------------|--------|--------|----------|
|                                  | QUARTERLY REPORT ON FORM 10-Q                                                         |   |   |     |
|                                  | TABLE OF CONTENTS                                                                     |   |   |     |
|                                  |                                                                                  |   |   |     |
|                                  |                                                                                  |   | Page   |     |
|                                  | PART I                                                                                |   |   |     |
|                                  |                                                                                  |   |   |     |
| Item 1.                               | Financial statements                                                                  |   |   |     |
|                                  |                                                                                  |   |   |     |
|                                  | Condensed Consolidated Statements of Income                                           |   |   | 3        |   |
|                                  | Three Months and Six Months Ended September 30, 2010 and 2009 (Unaudited)             |   |   |     |   |
|                                  |                                                                                  |   |   |     |   |
|                                  | Condensed Consolidated Balance Sheets                                                 |   |   | 4        |   |
|                                  | September 30, 2010 (Unaudited) and March 31, 2010                                     |   |   |     |   |
|                                  |                                                                                  |   |   |     |   |
|                                  | Condensed Consolidated Statements of Cash Flows                                       |   |   | 5        |   |
|                                  | Six Months Ended September 30, 2010 and 2009 (Unaudited)                              |   |   |     |   |
|                                  |                                                                                  |   |   |     |   |
|                                  | Condensed Consolidated Statements of Stockholders' Equity                             |   |   | 6        |   |
|                                  | Six Months Ended September 30, 2010 and 2009 (Unaudited)                              |   |   |     |   |
|                                  |                                                                                  |   |   |     |   |
|                                  | Notes to Condensed Consolidated Financial Statements (Unaudited)                      |   |   | 7        |   |
|                                  |                                                                                  |   |   |     |   |
| Item 2.                               | Management's Discussion and Analysis of Financial Condition and Results of Operations |   |   | 10       |   |
|                                  |                                                                                  |   |   |     |   |
| Item 3.                               | Quantitative and Qualitative Disclosures About Market risk                            |   |   | 15       |   |
|                                  |                                                                                  |   |   |     |   |
| Item 4(T).                            | Controls and Procedures                                                               |   |   | 15       |   |
|                                  |                                                                                  |   |   |     |   |
|                                  |                                                                                  |   |   |     |   |
|                                  | PART II                                                                               |   |   |     |   |
|                                  |                                                                                  |   |   |     |   |
| Item 1.                               | Legal proceedings                                                                     |   |   | 16       |   |
| Item 2.                               | Unregistered Sales of Equity Securities and Use of Proceeds                           |   |   | 16       |   |
| Item 5.      | Other Information                                                                     |   |   |  16 |   |
| Item 6.                               | Exhibits                                                                              |   |   | 17       |   |
|                                  | Signatures                                                                            |   |   | 18       |   |
|                                  | Exhibit Index                                                                         |   |   | 19       |   |
|                                  | Certifications                                                                        |   |   | 20       |   |

----

|                                                      |   | Three Months Ended September 30, |       |   | Six Months Ended September 30, |   |
|-----------------------------------------------------------|--------|----------------------------------|------------|--------|--------------------------------|--------|
|                                                      |   | 2010                             |       |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| Operating Revenues:                                       |   |                             |       |   |                           |   |   |   |   |   |   |   |
| Overnight air cargo                                       |   | $                                | 10,324,353 |   |                           | $      | 9,814,199 |   |   | $ | 19,244,527 |   |   | $ | 18,602,675 |   |
| Ground equipment sales                                    |   |                             | 7,018,073  |   |                           |   | 8,092,702 |   |   |   | 10,943,813 |   |   |   | 16,195,521 |   |
| Ground support services                                   |   |                             | 2,828,858  |   |                           |   | 2,234,887 |   |   |   | 5,006,219 |   |   |   | 4,291,899 |   |
|                                                      |   |                             | 20,171,284 |   |                           |   | 20,141,788 |   |   |   | 35,194,559 |   |   |   | 39,090,095 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Operating Expenses:                                       |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Flight-air cargo                                          |   |                             | 4,647,358  |   |                           |   | 4,444,922 |   |   |   | 8,616,703 |   |   |   | 8,280,391 |   |
| Maintenance-air cargo                                     |   |                             | 4,172,143  |   |                           |   | 3,908,095 |   |   |   | 7,611,377 |   |   |   | 7,273,917 |   |
| Ground equipment sales                                    |   |                             | 5,763,781  |   |                           |   | 6,209,186 |   |   |   | 8,962,568 |   |   |   | 11,960,912 |   |
| Ground support services                                   |   |                             | 2,195,044  |   |                           |   | 1,580,039 |   |   |   | 3,700,950 |   |   |   | 3,085,775 |   |
| General and administrative                                |   |                             | 2,485,715  |   |                           |   | 2,561,488 |   |   |   | 4,888,641 |   |   |   | 5,212,007 |   |
| Depreciation and amortization                             |   |                             | 90,868     |   |                           |   | 107,466 |   |   |   | 187,583 |   |   |   | 211,364 |   |
|                                                      |   |                             | 19,354,909 |   |                           |   | 18,811,196 |   |   |   | 33,967,822 |   |   |   | 36,024,366 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Operating Income                                          |   |                             | 816,375    |   |                           |   | 1,330,592 |   |   |   | 1,226,737 |   |   |   | 3,065,729 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Non-operating Expense (Income):                           |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Gain on retirement plan settlement                        |   |                             | -          |   |                           |   | - |   |   |   | - |   |   |   | (8,460 | ) |
| Interest expense                                          |   |                             | 1,067      |   |                           |   | 3,241 |   |   |   | 1,355 |   |   |   | 16,920 |   |
| Investment income                                         |   |                             | (38,871    | )      |                           |   | (27,530 | ) |   |   | (96,348 | ) |   |   | (54,579 | ) |
| Other                                                     |   |                             | -          |   |                           |   | 2,826 |   |   |   | - |   |   |   | 2,826 |   |
|                                                      |   |                             | (37,804    | )      |                           |   | (21,463 | ) |   |   | (94,993 | ) |   |   | (43,293 | ) |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Before Income Taxes                              |   |                             | 854,179    |   |                           |   | 1,352,055 |   |   |   | 1,321,730 |   |   |   | 3,109,022 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Income Taxes                                              |   |                             | 308,000    |   |                           |   | 505,000 |   |   |   | 477,000 |   |   |   | 1,144,000 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Net Earnings                                              |   | $                                | 546,179    |   |                           | $      | 847,055 |   |   | $ | 844,730 |   |   | $ | 1,965,022 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Per Share:                                       |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                                     |   | $                                | 0.23       |   |                           | $      | 0.35 |   |   | $ | 0.35 |   |   | $ | 0.81 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Diluted                                                   |   | $                                | 0.22       |   |                           | $      | 0.35 |   |   | $ | 0.34 |   |   | $ | 0.81 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Dividends Declared Per Share                              |   | $                                | -          |   |                           | $      | - |   |   | $ | 0.33 |   |   | $ | 0.33 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding:                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |
| Basic                                                     |   |                             | 2,431,291  |   |                           |   | 2,424,486 |   |   |   | 2,431,309 |   |   |   | 2,424,486 |   |
| Diluted                                                   |   |                             | 2,451,937  |   |                           |   | 2,428,033 |   |   |   | 2,475,445 |   |   |   | 2,424,486 |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| See notes to condensed consolidated financial statements. |   |                             |       |   |                           |   |   |   |   |   |   |   |   |

----

|                                                              |   | September 30, 2010 |       |   | March 31, 2010 |   |
|-------------------------------------------------------------------|--------|--------------------|------------|--------|----------------|--------|
| ASSETS                                                            |   | (Unaudited)        |       |   |           |   |
| Current Assets:                                                   |   |               |       |   |           |   |
| Cash and cash equivalents                                         |   | $                  | 4,781,267  |   |           | $      | 9,777,587 |   |
| Short-term investments                                            |   |               | 1,261,860  |   |           |   | 2,254,589 |   |
| Accounts receivable, less allowance for                           |   |               |       |   |           |   |   |   |
|   doubtful accounts of $51,000 and $89,000              |   |               | 9,334,337  |   |           |   | 5,601,064 |   |
| Notes and other non-trade receivables-current                     |   |               | 423,929    |   |           |   | 570,931 |   |
| Income tax receivable                                             |   |               | 662,451    |   |           |   | 467,000 |   |
| Inventories                                                       |   |               | 10,398,259 |   |           |   | 6,843,347 |   |
| Deferred income taxes                                             |   |               | 496,000    |   |           |   | 404,000 |   |
| Prepaid expenses and other                                        |   |               | 401,275    |   |           |   | 360,635 |   |
|   Total Current Assets                                  |   |               | 27,759,378 |   |           |   | 26,279,153 |   |
|                                                              |   |               |       |   |           |   |   |   |
| Property and Equipment, net                                       |   |               | 1,213,717  |   |           |   | 1,317,290 |   |
|                                                              |   |               |       |   |           |   |   |   |
| Deferred Income Taxes                                             |   |               | 443,000    |   |           |   | 372,000 |   |
| Cash Surrender Value of Life Insurance Policies                   |   |               | 1,531,838  |   |           |   | 1,497,836 |   |
| Notes and Other Non-Trade Receivables-LongTerm                    |   |               | -          |   |           |   | 50,000 |   |
| Other Assets                                                      |   |               | 87,968     |   |           |   | 87,968 |   |
|   Total Assets                                          |   | $                  | 31,035,901 |   |           | $      | 29,604,247 |   |
|                                                              |   |               |       |   |           |   |   |   |
| LIABILITIES AND STOCKHOLDERS' EQUITY                              |   |               |       |   |           |   |   |   |
| Current Liabilities:                                              |   |               |       |   |           |   |   |   |
| Accounts payable                                                  |   | $                  | 4,629,096  |   |           | $      | 2,623,590 |   |
| Accrued expenses                                                  |   |               | 1,448,013  |   |           |   | 2,059,373 |   |
| Current portion of long-term obligations                          |   |               | 13,573     |   |           |   | 13,573 |   |
|  Total Current Liabilities                                   |   |               | 6,090,682  |   |           |   | 4,696,536 |   |
|                                                              |   |               |       |   |           |   |   |   |
| Long-term Obligations                                             |   |               | 977        |   |           |   | 7,071 |   |
|                                                              |   |               |       |   |           |   |   |   |
| Stockholders' Equity:                                             |   |               |       |   |           |   |   |   |
| Preferred stock, $1.00 par value, 50,000 shares authorized        |   |               | -          |   |           |   | - |   |
| Common stock, $.25 par value; 4,000,000 shares authorized,        |   |               |       |   |           |
|   2,431,286 and 2,431,326 shares issued and outstanding |   |               | 607,821    |   |           |   | 607,831 |   |
| Additional paid-in capital                                        |   |               | 6,235,298  |   |           |   | 6,234,079 |   |
| Retained earnings                                                 |   |               | 18,101,123 |   |           |   | 18,058,730 |   |
|   Total Stockholders' Equity                            |   |               | 24,944,242 |   |           |   | 24,900,640 |   |
|   Total Liabilities and Stockholders’ Equity      |   | $                  | 31,035,901 |   |           | $      | 29,604,247 |   |
|                                                              |   |               |       |   |           |   |   |   |
|                                                              |   |               |       |   |           |   |   |   |
|                                                              |   |               |       |   |           |   |   |   |
|                                                              |   |               |       |   |           |   |   |   |
| See notes to condensed consolidated financial statements.         |   |               |       |   |           |

----

|                                                         |   | Six Months Ended September 30, |       |
|--------------------------------------------------------------|--------|--------------------------------|------------|
|                                                         |   | 2010                           |       |   | 2009 |   |
| CASH FLOWS FROM OPERATING ACTIVITIES:                        |   |                           |       |   |   |   |
| Net earnings                                                 |   | $                              | 844,730    |   |   | $ | 1,965,022 |   |
| Adjustments to reconcile net earnings to net                 |   |                           |       |   |   |   |   |   |
|   cash used in operating activities:               |   |                           |       |   |   |   |   |   |
| Loss on sale of assets                                       |   |                           | -          |   |   |   | 2,826 |   |
| Change in accounts receivable and inventory reserves         |   |                           | 25,386     |   |   |   | 29,790 |   |
| Depreciation and amortization                                |   |                           | 187,583    |   |   |   | 211,364 |   |
| Change in cash surrender value of life insurance             |   |                           | (34,002    | ) |   |   | (34,002 | ) |
| Deferred income taxes                                        |   |                           | (163,000   | ) |   |   | 270,000 |   |
| Gain on retirement plan settlement                           |   |                           | -          |   |   |   | (8,460 | ) |
| Warranty reserve                                             |   |                           | 32,308     |   |   |   | (28,612 | ) |
| Compensation expense related to stock options                |   |                           | 1,600      |   |   |   | 130,685 |   |
| Change in operating assets and liabilities:                  |   |                           |       |   |   |   |   |   |
|   Accounts receivable                              |   |                           | (3,695,935 | ) |   |   | (3,557,337 | ) |
|   Notes receivable and other non-trade receivables |   |                           | 197,002    |   |   |   | 32,155 |   |
|   Inventories                                      |   |                           | (3,617,087 | ) |   |   | (32,146 | ) |
|   Prepaid expenses and other                       |   |                           | (41,188    | ) |   |   | 8,992 |   |
|   Accounts payable                                 |   |                           | 2,005,506  |   |   |   | (220,909 | ) |
|   Accrued expenses                                 |   |                           | (643,668   | ) |   |   | (428,193 | ) |
|   Accrued  compensation to executive     |   |                           | -          |   |   |   | (941,540 | ) |
|   Income taxes receivable                          |   |                           | (195,451   | ) |   |   | (153,000 | ) |
| Total adjustments                                            |   |                           | (5,940,946 | ) |   |   | (4,718,387 | ) |
|  Net cash used in operating activities                  |   |                           | (5,096,216 | ) |   |   | (2,753,365 | ) |
|                                                         |   |                           |       |   |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                        |   |                           |       |   |   |   |   |   |
| Proceeds from sale of investments, net                       |   |                           | 992,729    |   |   |   | - |   |
| Capital expenditures                                         |   |                           | (84,011    | ) |   |   | (97,062 | ) |
| Stock repurchase                                             |   |                           | (391       | ) |   |   | - |   |
|  Net cash provided by (used in) investing activities    |   |                           | 908,327    |   |   |   | (97,062 | ) |
|                                                         |   |                           |       |   |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                        |   |                           |       |   |   |   |   |   |
| Aircraft term loan payments                                  |   |                           | -          |   |   |   | (450,035 | ) |
| Proceeds from line of credit, net                            |   |                           | -          |   |   |   | 63,028 |   |
| Payment of cash dividend                                     |   |                           | (802,337   | ) |   |   | (800,080 | ) |
| Payment on capital leases                                    |   |                           | (6,094     | ) |   |   | (12,937 | ) |
|  Net cash used in financing activities                  |   |                           | (808,431   | ) |   |   | (1,200,024 | ) |
| NET DECREASE IN CASH AND CASH EQUIVALENTS                    |   |                           | (4,996,320 | ) |   |   | (4,050,451 | ) |
| CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD             |   |                           | 9,777,587  |   |   |   | 6,852,713 |   |
| CASH AND CASH EQUIVALENTS AT END OF PERIOD                   |   | $                              | 4,781,267  |   |   | $ | 2,802,262 |   |
|                                                         |   |                           |       |   |   |   |   |   |
|                                                         |   |                           |       |   |   |   |   |   |
|                                                         |   |                           |       |   |   |   |   |   |
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:            |   |                           |       |   |   |
| Cash paid during the period for:                             |   |                           |       |   |   |   |   |   |
| Interest                                                     |   | $                              | 1,065      |   |   | $ | 19,723 |   |
| Income taxes                                                 |   |                           | 835,000    |   |   |   | 1,027,000 |   |
|                                                         |   |                           |       |   |   |   |   |   |
|                                                         |   |                           |       |   |   |   |   |   |
|                                                         |   |                           |       |   |   |   |   |   |
| See notes to condensed consolidated financial statements.    |   |                           |       |   |   |   |   |   |

----

|                                                                                                                                                |   | Common Stock |      |   | Additional |   |    |    |   |    | Total     |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------|-----------|--------|------------|--------|---------|---------|--------|---------|-----------|--------|
|                                                                                                                                                |   |         |      |   |       |   |    | Paid-In |   |    | Retained  |   |   | Stockholders' |   |
|                                                                                                                                                |   | Shares       |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |   | Equity |   |
| Balance, March 31, 2009                                                                                                                             |   |         | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,045,330 |   |   | $ | 15,101,787 |   |   | $ | 21,753,238 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Net earnings                                                                                                                                        |   |         |      |   |       |   |    |    |   |    |      |   |   |   | 1,965,022 |   |   |   | 1,965,022 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Cash dividend ($0.33 per share)                                                                                                                     |   |         |      |   |       |   |    |    |   |    |      |   |   |   | (800,080 | ) |   |   | (800,080 | ) |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Compensation expense related to                                                                                                                     |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|     stock options                                                                                                               |   |         |      |   |       |   |    |    |   |    | 130,685   |   |   |   |   |   |   |   | 130,685 |   |
| Balance, September 30, 2009                                                                                                                         |   |         | 2,424,486 |   |       | $      | 606,121 |    |   | $       | 6,176,015 |   |   | $ | 16,266,729 |   |   | $ | 23,048,865 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   | Common Stock |      |   | Additional |   |    |    |   |    |      | Total  |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   | Paid-In |      |   | Retained |   |   | Stockholders' |   |
|                                                                                                                                                |   | Shares       |      |   | Amount     |   |    | Capital |   |    | Earnings  |   |   | Equity |   |
| Balance, March 31, 2010                                                                                                                             |   |         | 2,431,326 |   |       | $      | 607,831 |    |   | $       | 6,234,079 |   |   | $ | 18,058,730 |   |   | $ | 24,900,640 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Net earnings                                                                                                                                        |   |         |      |   |       |   |    |    |   |    |      |   |   |   | 844,730 |   |   |   | 844,730 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Cash dividend ($0.33 per share)                                                                                                                     |   |         |      |   |       |   |    |    |   |    |      |   |   |   | (802,337 | ) |   |   | (802,337 | ) |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Compensation expense related to                                                                                                                     |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|     stock options                                                                                                               |   |         |      |   |       |   |    |    |   |    | 1,600     |   |   |   |   |   |   |   | 1,600 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| Stock repurchase                                                                                                                                    |   |         | (40       | )      |       |   | (10     | )       |   |    | (381      | )      |   |   |   |   |   |   | (391 | ) |
| Balance, September 30, 2010                                                                                                                         |   |         | 2,431,286 |   |       | $      | 607,821 |    |   | $       | 6,235,298 |   |   | $ | 18,101,123 |   |   | $ | 24,944,242 |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
|                                                                                                                                                |   |         |      |   |       |   |    |    |   |    |      |   |   |   |   |   |   |   |   |   |
| See notes to condensed consolidated financial statements.                |   |         |      |   |       |   |    |    |   |

----

| 1.   | Financial Statement Presentation |
|----------------|----------------------------------|

| 2.   | Income Taxes |
|----------------|--------------|

| 3.   | Net Earnings Per Share |
|----------------|------------------------|

|                                 |   | Three Months Ended September 30, |      |   | Six Months Ended September 30, |   |
|--------------------------------------|--------|----------------------------------|-----------|--------|--------------------------------|--------|
|                                 |   | 2010                             |      |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
|                                 |   |                             |      |   |                           |   |   |   |   |   |   |   |
| Net earnings                         |   | $                                | 546,179   |   |                           | $      | 847,055 |   |   | $ | 844,730 |   |   | $ | 1,965,022 |   |
|                                 |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Earnings Per Share:                  |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                |   | $                                | 0.23      |   |                           | $      | 0.35 |   |   | $ | 0.35 |   |   | $ | 0.81 |   |
| Diluted                              |   | $                                | 0.22      |   |                           | $      | 0.35 |   |   | $ | 0.34 |   |   | $ | 0.81 |   |
|                                 |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Weighted Average Shares Outstanding: |   |                             |      |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Basic                                |   |                             | 2,431,291 |   |                           |   | 2,424,486 |   |   |   | 2,431,309 |   |   |   | 2,424,486 |   |
| Diluted                              |   |                             | 2,451,937 |   |                           |   | 2,428,033 |   |   |   | 2,475,445 |   |   |   | 2,424,486 |   |

----

| 4.   | Inventories |
|----------------|-------------|

|                                  |   | September 30, |       |   | March 31, |   |
|---------------------------------------|--------|---------------|------------|--------|-----------|--------|
|                                  |   | 2010          |       |   | 2010      |   |
|  Aircraft parts and supplies     |   | $             | 128,577    |   |      | $      | 124,777 |   |
|  Ground equipment manufacturing: |   |          |       |   |      |   |   |   |
| Raw materials                         |   |          | 7,483,970  |   |      |   | 5,029,982 |   |
| Work in process                       |   |          | 2,177,093  |   |      |   | 415,920 |   |
| Finished goods                        |   |          | 1,272,532  |   |      |   | 1,873,857 |   |
|  Total inventories               |   |          | 11,062,172 |   |      |   | 7,444,536 |   |
|  Reserves                        |   |          | (663,913   | )      |      |   | (601,189 | ) |
|                                  |   |          |       |   |      |   |   |   |
| Total, net of reserves                |   | $             | 10,398,259 |   |      | $      | 6,843,347 |   |

| 5.   | Stock-Based Compensation |
|----------------|--------------------------|

| 6.   | Fair Value of Financial Instruments |
|----------------|-------------------------------------|

|                   |   | Fair Value Measurements at |      |
|------------------------|--------|----------------------------|-----------|
|                   |   | September 30, 2010         |      |   | March 31, 2010 |   |
|                   |   |                       |      |   |   |   |
| Short-term investments |   | $                          | 1,261,860 |   |   | $ | 2,254,589 |   |
|                   |   |                       |      |   |   |   |   |   |

| 7.   | Financing Arrangements |
|----------------|------------------------|

----

|   |    |
|--------|--------------|

| 8.   | Segment Information |
|----------------|---------------------|

|                            |   | Three Months Ended September 30, |       |   | Six Months Ended September 30, |   |
|---------------------------------|--------|----------------------------------|------------|--------|--------------------------------|--------|
|                            |   | 2010                             |       |   | 2009                           |   |   | 2010 |   |   | 2009 |   |
| Operating Revenues:             |   |                             |       |   |                           |   |   |   |   |   |   |   |
| Overnight Air Cargo             |   | $                                | 10,324,353 |   |                           | $      | 9,814,199 |   |   | $ | 19,244,527 |   |   | $ | 18,602,675 |   |
| Ground Equipment Sales:         |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
|    Domestic      |   |                             | 4,194,878  |   |                           |   | 5,045,182 |   |   |   | 5,504,226 |   |   |   | 12,030,007 |   |
|    International |   |                             | 2,823,195  |   |                           |   | 3,047,520 |   |   |   | 5,439,587 |   |   |   | 4,165,514 |   |
| Total Ground Equipment Sales    |   |                             | 7,018,073  |   |                           |   | 8,092,702 |   |   |   | 10,943,813 |   |   |   | 16,195,521 |   |
| Ground Support Services         |   |                             | 2,828,858  |   |                           |   | 2,234,887 |   |   |   | 5,006,219 |   |   |   | 4,291,899 |   |
| Total                           |   | $                                | 20,171,284 |   |                           | $      | 20,141,788 |   |   | $ | 35,194,559 |   |   | $ | 39,090,095 |   |
|                            |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Operating Income (Loss):        |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Overnight Air Cargo             |   | $                                | 668,074    |   |                           | $      | 605,133 |   |   | $ | 1,396,057 |   |   | $ | 1,399,944 |   |
| Ground Equipment Sales          |   |                             | 362,225    |   |                           |   | 951,190 |   |   |   | 199,288 |   |   |   | 2,307,722 |   |
| Ground Support Services         |   |                             | 231,740    |   |                           |   | 309,949 |   |   |   | 531,039 |   |   |   | 565,291 |   |
| Corporate                       |   |                             | (445,664   | )      |                           |   | (535,680 | ) |   |   | (899,647 | ) |   |   | (1,207,228 | ) |
| Total                           |   | $                                | 816,375    |   |                           | $      | 1,330,592 |   |   | $ | 1,226,737 |   |   | $ | 3,065,729 |   |
|                            |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Capital Expenditures:           |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Overnight Air Cargo             |   | $                                | 24,154     |   |                           | $      | 22,085 |   |   | $ | 24,154 |   |   | $ | 34,585 |   |
| Ground Equipment Sales          |   |                             | 15,692     |   |                           |   | - |   |   |   | 15,692 |   |   |   | 20,436 |   |
| Ground Support Services         |   |                             | -          |   |                           |   | - |   |   |   | 32,640 |   |   |   | 13,555 |   |
| Corporate                       |   |                             | 6,385      |   |                           |   | - |   |   |   | 11,525 |   |   |   | 28,486 |   |
| Total                           |   | $                                | 46,231     |   |                           | $      | 22,085 |   |   | $ | 84,011 |   |   | $ | 97,062 |   |
|                            |   |                             |       |   |                           |   |   |   |   |   |   |   |   |   |   |   |
| Depreciation and Amortization:  |   |                             |       |   |                           |   |   |   |   |   |   |   |   |
| Overnight Air Cargo             |   | $                                | 47,488     |   |                           | $      | 52,972 |   |   | $ | 97,561 |   |   | $ | 106,147 |   |
| Ground Equipment Sales          |   |                             | 4,214      |   |                           |   | 13,280 |   |   |   | 11,237 |   |   |   | 25,148 |   |
| Ground Support Services         |   |                             | 27,476     |   |                           |   | 27,478 |   |   |   | 54,954 |   |   |   | 54,222 |   |
| Corporate                       |   |                             | 11,690     |   |                           |   | 13,736 |   |   |   | 23,831 |   |   |   | 25,847 |   |
| Total                           |   | $                                | 90,868     |   |                           | $      | 107,466 |   |   | $ | 187,583 |   |   | $ | 211,364 |   |

----

| 9.   | Commitments and Contingencies |
|----------------|-------------------------------|

| 10.   | Subsequent Events |
|-----------------|-------------------|

| (In thousands)                                     |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|----------------------------------------------------|--------|----------------------------------|--------|--------|--------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                               |   | Three Months Ended September 30, |   |   | Six Months Ended September 30, |   |
|                                               |   | 2010                             |   |   | 2009                           |   |   | 2010   |   |   | 2009   |   |
|                                               |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Overnight Air Cargo Segment:                       |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     FedEx                      |   | $                                | 10,324 |   |                           |   | 51     | %      |   | $      | 9,814  |   |   |   | 49     | %      |   | $      | 19,245 |   |   |   | 55     | %      |   | $ | 18,602 |   |   |   | 48 | % |
| Ground Equipment Sales Segment:                    |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Military                   |   |                             | 81     |   |                           |   | 0      | %      |   |   | 1,763  |   |   |   | 9      | %      |   |   | 578    |   |   |   | 2      | %      |   |   | 7,636 |   |   |   | 19 | % |
|     Commercial - Domestic      |   |                             | 4,114  |   |                           |   | 21     | %      |   |   | 3,282  |   |   |   | 16     | %      |   |   | 4,926  |   |   |   | 14     | %      |   |   | 4,394 |   |   |   | 11 | % |
|     Commercial - International |   |                             | 2,823  |   |                           |   | 14     | %      |   |   | 3,048  |   |   |   | 15     | %      |   |   | 5,440  |   |   |   | 15     | %      |   |   | 4,166 |   |   |   | 11 | % |
|                                               |   |                             | 7,018  |   |                           |   | 35     | %      |   |   | 8,093  |   |   |   | 40     | %      |   |   | 10,944 |   |   |   | 31     | %      |   |   | 16,196 |   |   |   | 41 | % |
|                                               |   |                             |   |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Ground Support Services Segment                    |   |                             | 2,829  |   |                           |   | 14     | %      |   |   | 2,235  |   |   |   | 11     | %      |   |   | 5,006  |   |   |   | 14     | %      |   |   | 4,292 |   |   |   | 11 | % |
|                                               |   | $                                | 20,171 |   |                           |   | 100    | %      |   | $      | 20,142 |   |   |   | 100    | %      |   | $      | 35,195 |   |   |   | 100    | %      |   | $ | 39,090 |   |   |   | 100 | % |

----

----

----

----

----

|                                                |   | Six Months Ended September 30, |       |
|-----------------------------------------------------|--------|--------------------------------|------------|
|                                                |   | 2010                           |       |   | 2009 |   |
|                                                |   |                           |       |   |   |   |
| Net Cash Used in Operating Activities               |   | $                              | (5,096,000 | ) |   | $ | (2,753,000 | ) |
| Net Cash Provided by (Used in) Investing Activities |   |                           | 908,000    |   |   |   | (97,000 | ) |
| Net Cash Used in Financing Activities               |   |                           | (808,000   | ) |   |   | (1,200,000 | ) |
|                                                |   |                           |       |   |   |   |   |   |
| Net Decrease in Cash and Cash Equivalents           |   | $                              | (4,996,000 | ) |   | $ | (4,050,000 | ) |

----

| AIRT PURCHASES OF EQUITY SECURITIES |
|-------------------------------------|
|                                |   | Total Number of Shares Purchased |   |   | Average Price Paid per Share Purchased |   |   | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |   |   | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs |   |
| Period                              |   |   |   |   |   |   |   |   |   |   |   |   |
| July 1 to                           |   |   |   |   |   |   |   |   |   |   |   |   |
|   July 31, 2010           |   |   | 40 |   |   | $ | 9.78 |   |   |   | - |   |   | $ | - |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| August 1 to                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   August 31, 2010         |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| September 1 to                      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   September 30, 2010      |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                               |   |   | 40 |   |   | $ | 9.78 |   |   |   | - |   |   | $ | - |   |
|                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

|   |   |
|--------|--------|

| (a)    |   | Exhibits |   |        |
|--------|--------|----------|--------|-------------|
|   |   | No.      |   | Description |
|   |   |     |   |        |
|   |   |     | 10.1   |        | Letter agreement dated August 30, 2010 between the Company and its subsidiaries and Bank of America, N.A. extending the Loan Agreement dated September 18, 2007, incorporated by reference to Exhibit 10.1 to the Company's current Report on Form 8-K dated September 2, 2010 (Commission file No. 0-11720) |
|   |   |     |   |        |   |
|   |   |     | 31.1   |        | Section 302 Certification of Chief Executive Officer |
|   |   |     |   |        |   |
|   |   |     | 31.2   |        | Section 302 Certification of Chief Financial Officer |
|   |   |     |   |        |   |
|   |   |     | 32.1   |        | Section 1350 Certifications |

----

----

|   |   |
|--------|--------|

| (a)    |   | Exhibits |   |        |
|--------|--------|----------|--------|-------------|
|   |   | No.      |   | Description |
|   |   |     |   |        |
|   |   |     | 10.1   |        | Letter agreement dated August 30, 2010 between the Company and its subsidiaries and Bank of America, N.A. extending the Loan Agreement dated September 18, 2007, incorporated by reference to Exhibit 10.1 to the Company's current Report on Form 8-K dated September 2, 2010 (Commission file No. 0-11720) |
|   |   |     |   |        |   |
|   |   |     | 31.1   |        | Section 302 Certification of Chief Executive Officer |
|   |   |     |   |        |   |
|   |   |     | 31.2   |        | Section 302 Certification of Chief Financial Officer |
|   |   |     |   |        |   |
|   |   |     | 32.1   |        | Section 1350 Certifications |

----