|                               (Mark one)                                                                                                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                         X___ Quarterly                Report Pursuant to Section 13 or 15(d) of the Securities Exchange                Act of                1934 for the quarterly period ended December 31,                2005 |

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

| Commission                File Number | 011720  |
|---------------------------------------|--------------|

| Air                T, Inc.                                                 |
|--------------------------------------------------------------------------------------|
| (Exact                name of registrant as specified in its                charter) |

|                  Delaware                  52-1206400     |
|-----------------------------------------------------------------------------------------|
| (State                or other jurisdiction of (I.R.S. Employer                         |
| incorporation                or organization) Identification                No.)        |

|                  Post Office Box 488, Denver, North Carolina 28037   |
|-------------------------------------------------------------------------------------|
| (Address                of principal executive offices, including zip code)         |
|                                                                                |
|                  (704) 377-2109                                 |
| (Registrant's                telephone number, including area                code)  |

| Yes                ____X_____   | No                ________ |
|--------------------------------------|----------------------------|

| Large                Accelerated Filer_____ | Accelerated                Filer______ | Non                Accelerated Filer __X___ |
|---------------------------------------------|----------------------------------------|---------------------------------------------|

| Yes                ________   | No                __X___ |
|------------------------------------|--------------------------|

----

|                                           |                                            AIR T, INC. AND SUBSIDIARIES |   |   |   |
|------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|
| INDEX                                          |
|                                           |                                                                                                                                                                                                 |   |   |   |
| PART                  I. FINANCIAL INFORMATION |                                                                                                                                                                                                 |   |

|   |                                                                      |                                                        | PAGE   |
|--------|---------------------------------------------------------------------------|-------------------------------------------------------------|--------|
|   | Item                  1. Financial Statements                             |                                                        |   |
|   |                                                                      |                                                        |   |   |
|   | Condensed                  Consolidated Statements of Operations          |                                                        |   |
|   | for                  the three and nine-month periods ended               |                                                        |   |
|   | December                  31, 2005 and 2004 (Unaudited)                   |                                                        | 3      |
|   |                                                                      |                                                        |   |   |
|   | Condensed                  Consolidated Balance Sheets at                 |                                                        |   |
|   | December                  31, 2005 (Unaudited)                            |                                                        |   |
|   | and                  March 31, 2005                                       |                                                        | 4      |
|   |                                                                      |                                                        |   |   |
|   | Condensed                  Consolidated Statements of Cash                |                                                        |   |
|   | Flows                  for the nine-month periods                         |                                                        |   |
|   | ended                  December 31, 2005 and 2004 (Unaudited)             |                                                        | 5      |
|   |                                                                      |                                                        |   |   |
|   | Condensed                  Consolidated Statements of Stockholders’ |                                                        |   |
|   | Equity                  and Other Comprehensive Income for the            |                                                        |   |
|   | nine-month                  periods ended December 31,                    |                                                        |   |
|   | 2005                  and 2004(Unaudited)                                 |                                                        | 6      |
|   |                                                                      |                                                        |   |   |
|   | Notes                  to Condensed Consolidated Financial                |                                                        |   |
|   | Statements                  (Unaudited)                                   |                                                        | 7-12   |
|   |                                                                      |                                                        |   |   |
|   | Item                  2.                                                  | Management’s                  Discussion and Analysis |   |   |
|   |                                                                      | of                  Financial Condition and Results         |   |   |
|   |                                                                      | of                  Operations                              |   | 12-19 |
|   |                                                                      |                                                        |   |   |
|   | Item                  3.                                                  | Quantitative                  and Qualitative Disclosure    |   |   |
|   |                                                                      | About                  Market Risk                          |   | 19 |
|   |                                                                      |                                                        |   |   |
|   | Item                  4.                                                  | Controls                  and Procedures                    |   | 19 |

| PART                  II. OTHER INFORMATION |   |   |
|---------------------------------------------|--------|--------|

|   | Item                  1. | Legal                  Proceedings              |   | 20-21  |
|--------|--------------------------|-------------------------------------------------|--------|--------|
|   |                     |                                            |   |   |
|   |                     |                                            |   |   |
|   | Item                  6. | Exhibits                                        |   | 21     |
|   |                     |                                            |   |   |
|   |                     | Signatures                                      |   | 22     |
|   |                     |                                            |   |   |
|   |                     | Exhibit                  Index                  |   | 23     |
|   |                     |                                            |   |   |
|   |                     | Officers’                  Certifications |   | 24-26  |

----

|                                                                          |   | Three                Months Ended   | Nine                Months Ended |
|--------------------------------------------------------------------------|--------|-----------------------------------------------|----------------------------------|
|                                                                          |   | December                31,              | December                31,      |
|                                                                     |   |                                          | 2005                             |   |   | 2004 |   |   | 2005 |   |   | 2004 |   |
| Operating                Revenues:                                       |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Overnight                air cargo                                       |   | $                                             | 10,549,955                       |   | $ | 10,066,069 |   | $ | 32,469,364 |   | $ | 28,669,675 |   |
| Ground                equipment                                          |   |                                          | 12,864,831                       |   |   | 8,267,516 |   |   | 26,297,588 |   |   | 21,116,387 |   |
|                                                                     |   |                                          | 23,414,786                       |   |   | 18,333,585 |   |   | 58,766,952 |   |   | 49,786,062 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Operating                Expenses:                                       |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Flight-air                cargo                                          |   |                                          | 5,085,348                        |   |   | 4,193,755 |   |   | 14,041,163 |   |   | 12,134,053 |   |
| Maintenance-air                cargo                                     |   |                                          | 4,019,817                        |   |   | 4,482,079 |   |   | 13,477,674 |   |   | 11,823,975 |   |
| Ground                equipment                                          |   |                                          | 10,641,270                       |   |   | 6,607,757 |   |   | 21,788,198 |   |   | 16,586,117 |   |
| General                and administrative                                |   |                                          | 2,330,762                        |   |   | 2,092,069 |   |   | 6,889,038 |   |   | 6,201,507 |   |
| Depreciation                and amortization                             |   |                                          | 188,121                          |   |   | 182,809 |   |   | 509,772 |   |   | 482,522 |   |
|                                                                     |   |                                          | 22,265,318                       |   |   | 17,558,469 |   |   | 56,705,845 |   |   | 47,228,174 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Operating                Income                                          |   |                                          | 1,149,468                        |   |   | 775,116 |   |   | 2,061,107 |   |   | 2,557,888 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Non-operating                (Income) Expense:                           |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Interest,                net                                             |   |                                          | 62,209                           |   |   | 23,246 |   |   | 122,024 |   |   | 74,894 |   |
| Deferred                retirement expense                               |   |                                          | 5,250                            |   |   | 5,250 |   |   | 15,750 |   |   | 15,750 |   |
| Investment                income and other                               |   |                                          | (24,774                          | ) |   | (17,406 | ) |   | (92,949 | ) |   | (70,075 | ) |
|                                                                     |   |                                          | 42,685                           |   |   | 11,090 |   |   | 44,825 |   |   | 20,569 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Earnings                Before Income Taxes                              |   |                                          | 1,106,783                        |   |   | 764,026 |   |   | 2,016,282 |   |   | 2,537,319 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Income                Tax Expense                                        |   |                                          | 431,555                          |   |   | 278,736 |   |   | 799,196 |   |   | 980,463 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Net                Earnings                                              |   | $                                             | 675,228                          |   | $ | 485,290 |   | $ | 1,217,086 |   | $ | 1,556,856 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Basic                and Diluted Net Earnings Per Share                  |   | $                                             | 0.25                             |   | $ | 0.18 |   | $ | 0.46 |   | $ | 0.58 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Weighted                Average Shares Outstanding:                      |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
|  Basic                                                              |   |                                          | 2,671,293                        |   |   | 2,693,001 |   |   | 2,671,293 |   |   | 2,679,054 |   |
|  Diluted                                                            |   |                                          | 2,671,714                        |   |   | 2,693,586 |   |   | 2,671,793 |   |   | 2,699,878 |   |
|                                                                     |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements. |   |                                          |                             |   |   |   |   |   |   |

----

|                                                                                                                             |   |   | DECEMBER31,                2005  |   |   | MARCH                31, 2005 |   |
|----------------------------------------------------------------------------------------------------------------------------------|--------|--------|---------------------------------------|--------|--------|-------------------------------|--------|
| ASSETS                                                                                                                           |   |   | (Unaudited)                           |   |   | (Note)                        |   |
| Current                Assets:                                                                                                   |   |   |                                  |   |   |                          |   |
|  Cash                and cash equivalents                                                                                   |   | $      | 2,192,044                             |   | $      | 3,497,659                     |   |
|  Marketable                securities                                                                                       |   |   | 780,676                               |   |   | 812,112                       |   |
|  Accounts                receivable, less allowance                                                                         |   |   |                                  |   |   |                          |   |
|  for                doubtful accounts of $278,480 at December                                                               |   |   |                                  |   |   |                          |   |
|  31,                2005 and $267,194 at March 31, 2005                                                                     |   |   | 12,718,199                            |   |   | 7,392,700                     |   |
|  Income                taxes receivable                                                                                     |   |   | -                                     |   |   | 465,610                       |   |
|  Notes                and other non-trade receivables-current                                                               |   |   | 69,100                                |   |   | 116,288                       |   |
|  Inventories,                net                                                                                            |   |   | 6,545,859                             |   |   | 6,102,637                     |   |
|  Deferred                tax assets                                                                                         |   |   | 610,243                               |   |   | 568,870                       |   |
|  Prepaid                expenses and other                                                                                  |   |   | 550,687                               |   |   | 77,447                        |   |
|  Total                Current Assets                                                                                        |   |   | 23,466,808                            |   |   | 19,033,323                    |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| Property                and Equipment                                                                                            |   |   | 9,086,301                             |   |   | 8,597,178                     |   |
|  Less                accumulated depreciation                                                                               |   |   | (5,878,471                            | )      |   | (5,439,142                    | )      |
|  Property                and Equipment, net                                                                                 |   |   | 3,207,830                             |   |   | 3,158,036                     |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| Deferred                Tax Assets                                                                                               |   |   | 181,605                               |   |   | 389,771                       |   |
| Other                Assets                                                                                                      |   |   | 58,864                                |   |   | 54,635                        |   |
| Cash                Surrender Value of Life Insurance Policies                                                                   |   |   | 1,245,000                             |   |   | 1,163,000                     |   |
| Notes                and Other Non-Trade Receivables-Long Term                                                                   |   |   | 229,998                               |   |   | 310,160                       |   |
|  Total                Assets                                                                                                |   | $      | 28,390,105                            |   | $      | 24,108,925                    |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                                                              |   |   |                                  |   |   |                          |   |
| Current                Liabilities:                                                                                              |   |   |                                  |   |   |                          |   |
|  Accounts                payable                                                                                            |   | $      | 6,523,087                             |   | $      | 6,092,186                     |   |
|  Income                taxes payable                                                                                        |   |   | 75,706                                |   |   | -                             |   |
|  Accrued                expenses                                                                                            |   |   | 1,887,069                             |   |   | 2,200,866                     |   |
|  Current                portion of long-term debt and obligations                                                           |   |   | 178,045                               |   |   | 191,256                       |   |
|  Total                Current Liabilities                                                                                   |   |   | 8,663,907                             |   |   | 8,484,308                     |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| Capital                Lease Obligations (less current portion)                                                                  |   |   | 20,807                                |   |   | 29,546                        |   |
| Long-Term                Debt (less current portion)                                                                             |   |   | 5,374,298                             |   |   | 1,024,052                     |   |
| Deferred                Retirement Obligations (less current portion)                                                            |   |   | 696,020                               |   |   | 1,485,466                     |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| Stockholders'                Equity:                                                                                             |   |   |                                  |   |   |                          |   |
|  Preferred                stock, $1 par value, authorized 50,000 shares,                                                    |   |   |                                  |   |   |                          |   |
|  none                issued                                                                                                 |   |   | -                                     |   |   | -                             |   |
|  Common                stock, par value $.25; authorized 4,000,000 shares;                                                  |   |   |                                  |   |   |                          |   |
|  2,671,293                shares issued and outstanding                                                                     |   |   | 667,823                               |   |   | 667,823                       |   |
|  Additional                paid in capital                                                                                  |   |   | 6,939,357                             |   |   | 6,939,357                     |   |
|  Retained                earnings                                                                                           |   |   | 6,002,558                             |   |   | 5,453,105                     |   |
|  Accumulated                other comprehensive income, net                                                                 |   |   | 25,335                                |   |   | 25,268                        |   |
|                                                                                                                             |   |   | 13,635,073                            |   |   | 13,085,553                    |   |
|  Total                Liabilities and Stockholders’ Equity                                                            |   | $      | 28,390,105                            |   | $      | 24,108,925                    |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| Note:                The balance sheet at March 31, 2005 has been derived from the audited                consolidated financial |
| statements                included in the Company's Annual Report, Form 10-K for the fiscal                year                  |
| ended                March 31, 2005.                                                                                             |   |   |                                  |   |   |                          |   |
|                                                                                                                             |   |   |                                  |   |   |                          |   |
| See                notes to condensed consolidated financial statements.                                                         |   |   |                                  |   |   |                          |   |

----

|                                                                               |   | Nine                Months Ended  |
|------------------------------------------------------------------------------------|--------|----------------------------------------|
|                                                                               |   | December                31,       |
|                                                                               |   |                                   | 2005 |   |   | 2004 |   |
| CASH                FLOWS FROM OPERATING ACTIVITIES:                               |   |                                   |   |   |   |   |   |
| Net                earnings                                                        |   | $                                      | 1,217,086 |   | $ | 1,556,856 |   |
| Adjustments                to reconcile net earnings to net                        |   |                                   |   |   |   |   |   |
| cash                (used in) provided by operating activities:                    |   |                                   |   |   |   |   |   |
| Change                in accounts receivable and inventory reserves                |   |                                   | 20,813 |   |   | (65,795 | ) |
| Depreciation                and amortization                                       |   |                                   | 509,772 |   |   | 482,522 |   |
| Increase                in cash surrender value of life insurance                  |   |                                   | (82,000 | ) |   | (135,000 | ) |
| Deferred                tax provision                                              |   |                                   | 166,793 |   |   | 31,064 |   |
| Net                periodic pension (benefit) cost                                 |   |                                   | (50,658 | ) |   | 122,997 |   |
| Change                in assets and liabilities which provided (used) cash         |   |                                   |   |   |   |   |   |
| Accounts                receivable                                                 |   |                                   | (5,336,785 | ) |   | (1,891,039 | ) |
| Notes                receivable                                                    |   |                                   | 127,350 |   |   | 113,491 |   |
| Income                taxes receivable/payable                                     |   |                                   | 541,316 |   |   | (251,442 | ) |
| Inventories                                                                        |   |                                   | (770,747 | ) |   | (182,521 | ) |
| Prepaid                expenses and other                                          |   |                                   | (477,469 | ) |   | 91,280 |   |
| Accounts                payable                                                    |   |                                   | 430,901 |   |   | 872,752 |   |
| Accrued                expenses and other current liabilities                      |   |                                   | (315,047 | ) |   | (86,745 | ) |
| Deferred                retirement obligation                                      |   |                                   | (695,354 | ) |   | - |   |
| Net                billings in excess of costs and estimated                       |   |                                   |   |   |   |   |   |
|  earnings                on uncompleted contracts                             |   |                                   | - |   |   | (426,334 | ) |
| Total                adjustments                                                   |   |                                   | (5,931,115 | ) |   | (1,324,770 | ) |
| Net                cash (used in) provided by operating activities                 |   |                                   | (4,714,029 | ) |   | 232,086 |   |
| CASH                FLOWS FROM INVESTING ACTIVITIES:                               |   |                                   |   |   |   |   |   |
| Proceeds                from sale of marketable securities                         |   |                                   | - |   |   | (6,380 | ) |
| Capital                expenditures                                                |   |                                   | (283,752 | ) |   | (358,430 | ) |
| Cash                proceeds from sale of fixed assets                             |   |                                   | - |   |   | 55,000 |   |
| Net                cash used in investing activities                               |   |                                   | (283,752 | ) |   | (309,810 | ) |
| CASH                FLOWS FROM FINANCING ACTIVITIES:                               |   |                                   |   |   |   |   |   |
| Proceeds                on (payments to) aircraft term loan                        |   |                                   | (74,409 | ) |   | 947,566 |   |
| Net                borrowings on line of credit                                    |   |                                   | 4,434,208 |   |   | 542,751 |   |
| Payment                of cash dividend                                            |   |                                   | (667,633 | ) |   | (535,658 | ) |
| Proceeds                from exercise of stock options                             |   |                                   | - |   |   | 213,710 |   |
| Repurchase                of common stock                                          |   |                                   | - |   |   | (179,424 | ) |
| Net                cash provided by financing activities                           |   |                                   | 3,692,166 |   |   | 988,945 |   |
| NET                (DECREASE) INCREASE IN CASH & CASH EQUIVALENTS              |   |                                   | (1,305,615 | ) |   | 911,221 |   |
| CASH                AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                    |   |                                   | 3,497,659 |   |   | 459,449 |   |
| CASH                AND CASH EQUIVALENTS AT END OF PERIOD                          |   | $                                      | 2,192,044 |   | $ | 1,370,670 |   |
|                                                                               |   |                                   |   |   |   |   |   |
| SUPPLEMENTAL                DISCLOSURE OF CASH FLOW INFORMATION:                   |   |                                   |   |   |   |   |   |
| Cash                paid during the period for:                                    |   |                                   |   |   |   |   |   |
| Interest                                                                           |   | $                                      | 139,642 |   | $ | 104,744 |   |
| Income                taxes                                                        |   |                                   | 87,931 |   |   | 1,200,840 |   |
|                                                                               |   |                                   |   |   |   |   |   |
| SUMMARY                OF SIGNIFICANT NON-CASH INFORMATION:                        |   |                                   |   |   |   |   |   |
| Decrease                in fair value of marketable securities, net of tax         |   | $                                      | (22,093 | ) | $ | (38,095 | ) |
| Leased                equipment transferred to inventory                           |   |                                   | 172,059 |   |   | 319,866 |   |
| Increase                in fair market value of derivative instruments, net of tax |   |                                   | 22,160 |   |   | 39,888 |   |
|                                                                               |   |                                   |   |   |   |   |   |
| See                notes to condensed consolidated financial statements.           |   |                                   |   |   |   |   |   |

----

|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   | Accumulated             |   |   |          |   |
|--------------------------------------------------------------------------|--------|-----------------------------------|--------------|------------|--------|---------|----------|--------|---------------|--------|--------|-----------|--------|--------|------------------------------|--------|--------|---------------|--------|
|                                                                          |   | Common                Stock  |         | Additional |   |    | Retained |   |          | Other  |   |      | Total  |   |
|                                                                     |   |                              |         |       |   |    |     |   | Paid-In  |   |   | Earnings  |   |   | Comprehensive                |   |   | Stockholders' |   |
|                                                                     |   |                              | Shares  |       |   | Amount  |     |   | Capital       |   |   |           |   |   | Income                (Loss  | )      |   | Equity        |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Balance,                March 31, 2004                                   |   |                              | 2,686,827    |       | $      | 671,706 |     | $      | 6,834,279     |   | $      | 4,127,484 |   | $      | 43,331                       |   | $      | 11,676,800    |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Comprehensive                Income:                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Net                earnings                                              |   |                              |         |       |   |    |     |   |          |   |   | 1,556,856 |   |   |                         |   |   |          |   |
| Change                in investment value,                               |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| net                of tax                                                |   |                              |         |       |   |    |     |   |          |   |   |      |   |   | (38,095                      | )      |   |          |   |
| Change                in fair value of                                   |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| derivative                instruments, net of tax                        |   |                              |         |       |   |    |     |   |          |   |   |           |   |   | 39,888                       |   |   |               |   |
| Total                Comprehensive Income                                |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   | 1,558,649     |   |
| Repurchase                and retirement                                 |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| of                common stock                                           |   |                              | (39,493      | )          |   | (9,873  | )        |   | (32,526       | )      |   | (137,025  | )      |   |                         |   |   | (179,424      | )      |
| Exercise                of stock options                                 |   |                              | 63,000       |       |   | 15,750  |     |   | 197,960       |   |   |      |   |   |                         |   |   | 213,710       |   |
| Cash                dividend                                             |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| ($0.20                per share)                                         |   |                              |         |       |   |    |     |   |          |   |   | (535,658  | )      |   |                         |   |   | (535,658      | )      |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Balance,                December 31, 2004                                |   |                              | 2,710,334    |       | $      | 677,583 |     | $      | 6,999,713     |   | $      | 5,011,657 |   | $      | 45,124                       |   | $      | 12,734,077    |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   | Accumulated             |   |   |          |   |
|                                                                     |   | Common                Stock  |         | Additional |   |    | Retained |   |          | Other  |   |      | Total  |   |
|                                                                     |   |                              |         |       |   |    |     |   | Paid-In  |   |   | Earnings  |   |   | Comprehensive                |   |   | Stockholders' |   |
|                                                                     |   |                              | Shares  |       |   | Amount  |     |   | Capital       |   |   |           |   |   | Income                (Loss) |   |   | Equity        |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Balance,                March 31, 2005                                   |   |                              | 2,671,293    |       | $      | 667,823 |     | $      | 6,939,357     |   | $      | 5,453,105 |   | $      | 25,268                       |   | $      | 13,085,553    |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Comprehensive                Income:                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Net                earnings                                              |   |                              |         |       |   |    |     |   |          |   |   | 1,217,086 |   |   |                         |   |   |          |   |
| Change                in investment value,                               |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| net                of tax                                                |   |                              |         |       |   |    |     |   |          |   |   |      |   |   | (22,093                      | )      |   |          |   |
| Change                in fair value of                                   |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| derivative                instruments, net of tax                        |   |                              |         |       |   |    |     |   |          |   |   |           |   |   | 22,160                       |   |   |               |   |
| Total                Comprehensive Income                                |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   | 1,217,153     |   |
| -                                                                        |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| -                                                                        |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Cash                dividend                                             |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| ($0.25                per share)                                         |   |                              |         |       |   |    |     |   |          |   |   | (667,633  | )      |   |                         |   |   | (667,633      | )      |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| Balance,                December 31, 2005                                |   |                              | 2,671,293    |       | $      | 667,823 |     | $      | 6,939,357     |   | $      | 6,002,558 |   | $      | 25,335                       |   | $      | 13,635,073    |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
|                                                                     |   |                              |         |       |   |    |     |   |          |   |   |      |   |   |                         |   |   |          |   |
| See                notes to condensed consolidated financial statements. |   |                              |         |       |   |    |     |   |          |

----

|                                                       |   | Three                Months Ended   | Nine                Months Ended |
|------------------------------------------------------------|--------|-----------------------------------------------|----------------------------------|
|                                                       |   | December                31,         | December                31,      |
|                                                       |   |                                          | 2005                             |   |   | 2004 |   |   | 2005 |   |   | 2004 |   |
|                                                       |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Net                earnings                                |   | $                                             | 675,228                          |   | $ | 485,290 |   | $ | 1,217,086 |   | $ | 1,556,856 |   |
|                                                       |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Basic                and Diluted Net Earnings Per Share    |   | $                                             | 0.25                             |   | $ | 0.18 |   | $ | 0.46 |   | $ | 0.58 |   |
|                                                       |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Weighted                Average Shares Outstanding:        |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Basic                                                      |   |                                          | 2,671,293                        |   |   | 2,693,001 |   |   | 2,671,293 |   |   | 2,679,054 |   |
| Plus:                Incremental shares from stock options |   |                                          | 421                              |   |   | 585 |   |   | 500 |   |   | 20,824 |   |
| Diluted                                                    |   |                                          | 2,671,714                        |   |   | 2,693,586 |   |   | 2,671,793 |   |   | 2,699,878 |   |

----

|                                           |   |   | December                31, 2005  |   |   | March                31, 2005 |   |
|------------------------------------------------|--------|--------|----------------------------------------|--------|--------|-------------------------------|--------|
| Aircraft                parts and supplies     |   | $      | 681,503                                |   | $      | 767,936                       |   |
| Ground                equipment manufacturing: |   |   |                                   |   |   |                          |   |
| Raw                materials                   |   |   | 5,067,160                              |   |   | 3,844,875                     |   |
| Work                in process                 |   |   | 1,161,614                              |   |   | 1,305,891                     |   |
| Finished                goods                  |   |   | 86,472                                 |   |   | 625,298                       |   |
| Total                inventory                 |   |   | 6,996,749                              |   |   | 6,544,000                     |   |
| Reserves                                       |   |   | (450,890                               | )      |   | (441,363                      | )      |
|                                           |   |   |                                   |   |   |                          |   |
| Total,                net of reserves          |   | $      | 6,545,859                              |   | $      | 6,102,637                     |   |

*Inventory      Costs*

*Exchanges      of Non-monetary Assets*

*Share-Based      Payment*
*Accounting      for Stock-Based Compensation*
*Accounting      for Stock Issued to Employees*
*Statement      of Cash Flows*
*requires*

----

|                                                         |   | Three                Months Ended   | Nine                Months Ended |
|--------------------------------------------------------------|--------|-----------------------------------------------|----------------------------------|
|                                                         |   | December                31,         | December                31,      |
|                                                         |   |                                          | 2005                             |   |   | 2004 |   |   | 2005 |   |   | 2004 |   |
|                                                         |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Net                earnings                                  |   | $                                             | 675,228                          |   | $ | 485,290 |   | $ | 1,217,086 |   | $ | 1,556,856 |   |
|                                                         |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Compensation                expense, net of tax              |   |                                          | (18,450                          | ) |   | (1,011 | ) |   | (18,450 | ) |   | (1,011 | ) |
| Pro                forma net earnings                        |   | $                                             | 656,778                          |   | $ | 484,279 |   | $ | 1,198,636 |   | $ | 1,555,845 |   |
|                                                         |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Basic                and diluted earnings per share          |   | $                                             | 0.25                             |   | $ | 0.18 |   | $ | 0.46 |   | $ | 0.58 |   |
| Compensation                expense, net of tax              |   |                                          | (0.01                            | ) |   | (0.00 | ) |   | (0.01 | ) |   | (0.00 | ) |
|                                                         |   |                                          |                             |   |   |   |   |   |   |   |   |   |   |
| Proforma                basic and diluted earnings per share |   | $                                             | 0.24                             |   | $ | 0.18 |   | $ | 0.45 |   | $ | 0.58 |   |

| 6.   | Warranty                Reserve |
|----------------|---------------------------------|

|                                     |   | Three                Months Ended  | Nine                Months Ended |
|-------------------------------------|--------|-----------------------------------------|----------------------------------|
|                                     |   | December                31,        | December                31,      |
|                                |   |                                    | 2005                             |   |   | 2004 |   |   | 2005 |   |   | 2004 |   |
|                                |   |                                    |                             |   |   |   |   |   |   |   |   |   |   |
| Beginning                balance    |   | $                                       | 210,000                          |   | $ | 156,000 |   | $ | 198,000 |   | $ | 147,000 |   |
| Additions                to reserve |   |                                    | 128,000                          |   |   | 71,000 |   |   | 183,000 |   |   | 136,000 |   |
| Use                of reserve       |   |                                    | (4,000                           | ) |   | (60,000 | ) |   | (47,000 | ) |   | (116,000 | ) |
| Ending                balance       |   | $                                       | 334,000                          |   | $ | 167,000 |   | $ | 334,000 |   | $ | 167,000 |   |

----

*Accounting      for Derivative Instruments and Hedging Activities*

| 8.   | Financing                Arrangements |
|----------------|---------------------------------------|

| 9.   | Segment                Information |
|----------------|------------------------------------|

----

|                                                                |   | Three                months ended December 31,  | Nine                months ended December 31, |
|---------------------------------------------------------------------|--------|------------------------------------------------------|-----------------------------------------------|
|                                                                |   |                                                 | 2005                                          |   |   | 2004 |   |   | 2005 |   |   | 2004 |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Operating                Revenues                                   |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Overnight                Air Cargo:                                 |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                            |   | $                                                    | 8,366,685                                     |   | $ | 8,102,606 |   | $ | 25,627,750 |   | $ | 22,670,585 |   |
| International                                                       |   |                                                 | 2,183,270                                     |   |   | 1,963,463 |   |   | 6,841,614 |   |   | 5,999,090 |   |
| Total                Overnight Air Cargo                            |   |                                                 | 10,549,955                                    |   |   | 10,066,069 |   |   | 32,469,364 |   |   | 28,669,675 |   |
| Ground                Equipment:                                    |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Domestic                                                            |   |                                                 | 7,450,860                                     |   |   | 8,043,175 |   |   | 19,775,444 |   |   | 20,547,274 |   |
| International                                                       |   |                                                 | 5,413,971                                     |   |   | 224,341 |   |   | 6,522,144 |   |   | 569,113 |   |
| Total                Ground Equipment                               |   |                                                 | 12,864,831                                    |   |   | 8,267,516 |   |   | 26,297,588 |   |   | 21,116,387 |   |
| Total                                                               |   | $                                                    | 23,414,786                                    |   | $ | 18,333,585 |   | $ | 58,766,952 |   | $ | 49,786,062 |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Operating                Income (Loss)                              |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                                    | 426,110                                       |   | $ | 310,526 |   | $ | 1,926,180 |   | $ | 1,591,218 |   |
| Ground                Equipment                                     |   |                                                 | 1,182,677                                     |   |   | 970,532 |   |   | 1,679,500 |   |   | 2,332,503 |   |
| Corporate                (1)                                        |   |                                                 | (459,319                                      | ) |   | (505,942 | ) |   | (1,544,573 | ) |   | (1,365,833 | ) |
| Total                                                               |   | $                                                    | 1,149,468                                     |   | $ | 775,116 |   | $ | 2,061,107 |   | $ | 2,557,888 |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Depreciation                and Amortization                        |   |                                                 |                                          |   |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                                    | 126,566                                       |   | $ | 127,607 |   | $ | 349,964 |   | $ | 338,319 |   |
| Ground                Equipment                                     |   |                                                 | 50,300                                        |   |   | 42,050 |   |   | 117,850 |   |   | 103,194 |   |
| Corporate                                                           |   |                                                 | 11,255                                        |   |   | 13,152 |   |   | 41,958 |   |   | 41,009 |   |
| Total                                                               |   | $                                                    | 188,121                                       |   | $ | 182,809 |   | $ | 509,772 |   | $ | 482,522 |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Capital                Expenditures, net                            |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                                    | 54,937                                        |   | $ | 98,390 |   | $ | 200,457 |   | $ | 222,815 |   |
| Ground                Equipment                                     |   |                                                 | 24,141                                        |   |   | 43,071 |   |   | 37,030 |   |   | 47,303 |   |
| Corporate                                                           |   |                                                 | 10,769                                        |   |   | 3,687 |   |   | 46,265 |   |   | 88,312 |   |
| Total                                                               |   | $                                                    | 89,847                                        |   | $ | 145,148 |   | $ | 283,752 |   | $ | 358,430 |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
|                                                                     |   | As                of                            |                                          |   |   |   |   |   |
|                                                                |   |                                                 | December                31, 2005         |   |   | March                31, 2005 |   |   |   |   |   |   |   |
| Identifiable                Assets                                  |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Overnight                Air Cargo                                  |   | $                                                    | 6,415,525                                     |   | $ | 7,312,183 |   |   |   |   |   |   |   |
| Ground                Equipment                                     |   |                                                 | 18,269,857                                    |   |   | 10,180,943 |   |   |   |   |   |   |   |
| Corporate                                                           |   |                                                 | 3,704,723                                     |   |   | 6,615,799 |   |   |   |   |   |   |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| Total                                                               |   | $                                                    | 28,390,105                                    |   | $ | 24,108,925 |   |   |   |   |   |   |   |
|                                                                |   |                                                 |                                          |   |   |   |   |   |   |   |   |   |   |
| (1)                Includes income from inter-segment transactions. |   |                                                 |                                          |   |   |   |

----

*Catalyst      & Chemical Services, et al. vs Global Ground Support, LLC, et      al.,*

----

----

|                                |   | Three                Months Ended  | Nine                Months Ended |
|-------------------------------------|--------|-----------------------------------------|----------------------------------|
|                                |   | December                31,        | December                31,      |
|                                |   |                                    | 2005                             |   |   | 2004 |   |   | 2005 |   |   | 2004 |   |
|                                |   |                                    |                             |   |   |   |   |   |   |   |   |   |   |
| Beginning                balance    |   | $                                       | 210,000                          |   | $ | 156,000 |   | $ | 198,000 |   | $ | 147,000 |   |
| Additions                to reserve |   |                                    | 128,000                          |   |   | 71,000 |   |   | 183,000 |   |   | 136,000 |   |
| Use                of reserve       |   |                                    | (4,000                           | ) |   | (60,000 | ) |   | (47,000 | ) |   | (116,000 | ) |
| Ending                balance       |   | $                                       | 334,000                          |   | $ | 167,000 |   | $ | 334,000 |   | $ | 167,000 |   |

----

----

----

----

*Accounting      for Derivative Instruments and Hedging Activities*

----

----

*Catalyst      & Chemical Services, et al. vs Global Ground Support, LLC, et      al.,*

----

| 3.1   | Restated                Certificate of Incorporation, incorporated by reference to                Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q for the                period ended September 30, 2001 |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3.2   | By-laws                of the Company, as amended, incorporated by reference to Exhibit 3.2                of the Company’s Annual Report on Form 10-K for the fiscal year ended                March 31, 1996 |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4.1   | Specimen                Common Stock Certificate, incorporated by reference to Exhibit 4.1 of                the Company’s Annual Report on Form 10-K for the fiscal year ended                March 31, 1994 |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10.1   | Amended                and Restated Employment Agreement dated as of December 29, 2005,                between                Air T, Inc., Mountain Air Cargo, Inc., CSA, Inc. MAC Aviation Services,                LLC and John J. Gioffre, incorporated by reference to Exhibit 10.1                of the                Company’s Current Report on Form 8-K dated January 4,                2006 |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 31.1   | Certification                of Walter Clark |
|------------------|----------------------------------------------|

| 31.2   | Certification                of John J. Gioffre |
|------------------|-------------------------------------------------|

| 32.1   | Section                1350 Certification |
|------------------|-------------------------------------------|

----

----

----