AMENDMENT TO MERCHANT AGREEMENT


This AMENDMENT TO MERCHANT AGREEMENT (the "Agreement") is entered
into as of February 6, 1997, by and between Vanguard Airlines,
Inc., a Delaware corporation whose address is 30 NW Rome Circle
(Terminal B), Kansas City International Airport, Kansas City,
Missouri 64153 (the "Merchant") and Michigan National Bank, a
national banking association whose address is c/o Michigan
Bankard Services, Lansing, Michigan ("MNB").
                                
                            RECITALS
                                
A.   Merchant and MNB are parties to a certain Merchant Agreement
dated as of even date herewith (as amended, the "Agreement")
pursuant to which Merchant and MNB agreed to the terms and
conditions whereby Merchant could honor Credit and/or Debit Cards
and receive payment from MNB upon MNB's acceptance of related Sales
Drafts.

B.   Merchant and MNB desire to amend the Agreement to set forth
certain non-standard provisions relating to the specific
transaction contemplated by the parties.

NOW, THEREFORE, for good and valuable consideration the parties
hereto agree as follows:

1. ADDITIONAL DEFINITIONS. The defined terms set forth below shall
be deemed a part of the Agreement.  Capitalized terms used in this
Amendment but not otherwise defined shall have the meanings
assigned thereto in the Agreement.

(A)"BUSINESS DAY" means a day (other than a Saturday or Sunday) on
which banks generally are open for the conduct of substantially all
of their business activities.

(B)"DAILY OUTSTANDING BALANCE" means, for any particular day,
Merchant's unearned revenue relating to tickets sold by Merchant on
or before such day in connection with Merchant's honor of Visa and
Mastercard Credit Cards and relating to flights occurring on or
after such day as shown on Merchant's most-recent Travel Timeframes
Report.  For example, Exhibit A sets forth a Travel Timeframes
Report supplied by Merchant to MNB which shows a Daily Outstanding
Balance for the date shown thereon of $4,050,431.21.  Merchant
agrees that the Daily Outstanding Balance set forth by Merchant
within each particular Travel Timeframes Report shall be subject to
reconciliation by Bank and that any adjustments made thereto by
Bank which Bank deems necessary, appropriate or desirable in Bank's
sole discretion shall be binding upon Merchant.

(C)"GROSS EXPOSURE" means, for any particular day, an amount
determined 

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by multiplying Merchant's Daily Outstanding Balance for the
immediately-preceding day by one hundred thirty percent (130%). 
The Gross Exposure for the day following the date shown on the
Travel Timeframes Report attached as Exhibit A is $5,265,560.57.

(D) "LETTER OF CREDIT" means any letter or letters of credit issued
on behalf of Merchant or an affiliate in favor of MNB and shall
have the meaning ascribed to such term under Article 5 of the
Michigan Uniform Commercial Code, as amended from time to time, as
supplemented by the Uniform Customs and Practice for Documentary
Credits, ICC Publication 500, as amended from time to time.

(E) "TRAVEL TIMEFRAMES REPORT" means the report of Merchant's
unearned revenue relating to tickets sold in connection with
Merchant's honor of Visa and Mastercard Credit Cards and relating
to flights occurring on or after such day which Merchant agrees to
generate for each calendar day upon which sales Transactions are
consummated and transmit to MNB via facsimile on the next-succeeding
Business Day.

1. AMENDMENT.  Section 5 of the Agreement is hereby amended by
adding thereto an additional subparagraph (e) as follows:

(e) Except as may otherwise be set forth herein, Merchant shall
cause to be issued in favor of MNB and cause to remain outstanding
during the term of the Agreement an irrevocable direct-pay Letter
of Credit in an amount equal to the Gross Exposure as determined by
MNB in its sole discretion, adjustable upon twenty-four (24) hours
prior written notice from MNB.  The  Letter of Credit shall have
such Letter of Credit draft instructions as are acceptable to MNB
in its sole discretion.  Merchant shall cause to be paid for each
Letter of Credit issued in favor of MNB on behalf of Merchant all
issuance fees, payment fees, amendment fees, non-utilization fees,
communication and delivery expenses arising in connection
therewith.  Any Letter of Credit issued in favor of MNB shall have
an expiry date of not less than twelve (12) months after the issue
date.

The sum of the amount remaining to be drawn upon any valid and
outstanding Letter of Credit and the amount of the Security Deposit
which Bank may require shall at all times be no less than the Gross
Exposure.  Merchant agrees that Bank shall have the absolute right
to determine the ratio of Letter of Credit to Security Deposit in
determining whether the Bank has been provided coverage in the
amount of the Gross Exposure.  In the event that MNB reasonably
determines that it is likely that the issuer of the Letter of
Credit will be unable or unwilling to perform under the terms
thereof, MNB may require that the Security Deposit equal the amount
of the Gross Exposure.

Upon the occurrence of any default or any other event that gives
rise to MNB's right under the Agreement (i) to make demand on
Merchant for payment to MNB, (ii) to apply amounts represented by
the Security Deposit to obligations 
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of Merchant under the Agreement or (iii) otherwise to retain and
not pay to Merchant amounts paid to MNB by MasterCard International
or the Visa System on account of Sales Drafts, then MNB, at its
option, may draw on the  Letter of Credit without first taking any
of the actions described in clauses (i), (ii) and (iii) above or
elsewhere in the Agreement.

In addition to MNB's rights as set forth above, MNB, at its option,
may draw up to the full amount remaining undrawn on the Letter of
Credit upon the occurrence of any default; provided, however,
unless Merchant has failed to provide MNB with Merchant's Travel
Timeframes Report or MNB reasonably determines that such report has
become materially misleading, MNB shall limit the amount so drawn
to an amount equal to the then-current amount of the Gross
Exposure, as determined by MNB in its sole discretion.  No failure
to draw or delay in making a draw on the Letter of Credit shall
impair MNB's right to draw thereon at a later time.

Merchant acknowledges that any Security Deposit which may be
required represents sums payable to Merchant, subject to the
occurrence or non-occurrence of certain events, rather than funds
owned by Merchant.  Nevertheless, to the extent a court of
competent jurisdiction may hold to the contrary, Merchant hereby
grants MNB a continuing security interest in the Security Deposit,
if any, to secure amounts owed by Merchant to MNB hereunder or
under the Agreement.  Merchant further acknowledges that upon any
draw by MNB on the Letter of Credit, MNB may apply the same in
satisfaction of Merchant's obligations to MNB under the Agreement
and MNB shall also be entitled to hold the proceeds thereof for
payment of MNB's obligations under the Agreement and otherwise
apply such proceeds in such manner as MNB deems reasonably
appropriate.  Merchant agrees that if at such time, if ever, that
MNB determines that Merchant has no further obligations to MNB
under the Agreement, and MNB is holding funds that otherwise would
be payable to Merchant, MNB, subject to the terms of any agreement
with the issuer of the standby letter of credit, shall remit such
funds as a court of competent jurisdiction might decree.

Merchant agrees that in addition to the circumstances set forth in
subparagraph (a) of Section 5 of the Agreement the occurrence of
which, or any of them, would immediately give rise to MNB's right
at any time to require Merchant to provide MNB with a interest
bearing Security Deposit, in the event the amount of the Letter of
Credit is ever exceeded by the amount of the Gross Exposure, as
calculated by MNB in its sole discretion on each Business Day, MNB
shall also have the right in its sole discretion (i) to require the
implementation of the Security Deposit, (ii) to (y) transfer an
amount from the Settlement Account as a Security Deposit or (z)
withhold as a Security Deposit an amount from any prospective
credit to the Settlement Account pursuant to Sales Drafts of
Merchant properly transmitted to MNB or (iii) to require the
issuance in favor of MNB of an additional Letter of Credit.  In
such event the amount of funds to be provided to MNB by Merchant or
withheld from any pending credit to the 

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Settlement Account for the purpose of establishing the Security
Deposit or, in the alternative, the amount of any such additional
Letter of Credit to be obtained by Merchant in favor of MNB, shall
be that amount which is equal to the difference between the Gross
Exposure as calculated by MNB and the aggregate amount of the
Letter of Credit and any other then-existing Letter of Credit
issued in favor of MNB in connection with the Agreement, without
regard to whether the increase in Gross Exposure is the result of
increases in Merchant revenue or any other reason.  Merchant
acknowledges that (i) MNB's preference in all cases shall be to
require Merchant to provide MNB with additional Letters of Credit
in the required amount in lieu of a Security Deposit and Merchant
shall have no right whatsoever to offer MNB a Security Deposit in
response to any demand made by MNB in accordance with the terms
hereof for additional Letters of Credit and that (ii) MNB may elect
to declare a default and exercise its rights hereunder with respect
to any existing Letters of Credit even if (y) Merchant is willing
and able to provide MNB with a Security Deposit in the required
amount or (z) MNB is capable of establishing the Security Deposit
by withholding funds from the Settlement Account.

1. REPRESENTATIONS AND WARRANTIES.  Merchant hereby represents and
warrants to MNB that on and as of the date hereof and after giving
effect to this Amendment:

(a)  All of Merchant's representations and warranties contained in
the Agreement are true, correct, and complete in all respects as of
the date hereof as though made on and as of such date.

(b) Merchant has the power and legal right and authority to enter
into this Amendment and has duly authorized as appropriate the
execution and delivery of this Amendment and none of the agreements
contained herein contravene or constitute a default under any
agreement, instrument, or indenture to which the Merchant is a
party or a signatory or a provision of Merchant's Certificate of
Incorporation, Bylaws, or, to the best of Merchant's knowledge and
belief, any other agreement or requirement of law, or result in the
imposition of any lien on any of its property under any agreement
binding on or applicable to Merchant on any of its property except,
if any, to MNB.

(c) Merchant is duly organized and in good standing under the laws
of the State of its organization and is qualified to do business in
each state where the nature of its activities or the character of
its properties makes such qualification necessary or desirable
except where the failure to so qualify would not have a material
adverse effect on the assets or operations of an airline.

(d) Upon the effective date of this Amendment, this Amendment and
the Agreement, as modified hereby, will constitute the legal, valid
and binding obligations of Merchant enforceable in accordance with
their terms.

2. OTHER DEFAULT. In addition to such other matters as may be set
forth in 

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the Agreement, the occurrence of any of the following events shall
constitute a default under the Agreement:

(e) Receipt of notification by MNB from the issuer of any Letter of
Credit issued in favor of MNB in connection with the Agreement that
such issuer has elected not to renew such letter of credit.

(f) A substantial number of the scheduled flights of Merchant fail
to operate on any particular day for reasons other than weather or
regularly-scheduled maintenance.

(g) Any warranty or representation of Merchant in connection with
or contained in the Agreement, or any financial statements now or
hereafter furnished to MNB by or on behalf of the Merchant, is
false or misleading in any material respect.

(h) Any non-MNB indebtedness of Merchant is declared to be due and
payable prior to the stated maturity thereof.

(i) There shall be entered against Merchant any judgment which
materially affects Merchant's business, property or financial
condition, or if any tax lien, levy, attachment, forfeiture,
seizure, garnishment, execution or similar writ or process shall be
issued against Merchant's property or which materially affects
Merchant's business, property or financial condition, and which
remains unpaid, unstayed on appeal, undischarged, unbonded, or
undismissed for a period of thirty (30) days after the date
thereof.

(j) The institution of any criminal proceeding wherein forfeiture
of Merchant's property is a potential penalty.

(k) Merchant shall voluntarily suspend transaction of its business;
shall make a general assignment for the benefit of creditors; shall
file or have filed against Merchant any reorganization or
liquidation under the Bankruptcy Code or under any other State or
Federal law for the relief of debtors, or a receiver, trustee or
custodian shall be appointed for Merchant for any portion of
Merchant's property, which is not discharged within thirty (30)
days after filing.

2. ACCELERATION. If any default occurs, the obligations of MNB to
accept Sales Drafts shall automatically terminate and Merchant's
obligations to MNB under the Agreement shall immediately become due
and payable without any election or action on the part of MNB and
without presentment, demand, protest or notice of any kind, all of
which Merchant hereby expressly waives.

3. PRESERVATION OF RIGHTS; SETOFF.  No delay or omission of MNB to
exercise any right hereunder or under the Agreement shall impair
such right or be construed to be a waiver of any default or an
acquiescence therein, and the acceptance of Sales Drafts
notwithstanding the existence of a default shall not constitute any
waiver or acquiescence.  Any single or partial exercise of any such 

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right shall not preclude other or further exercise thereof or the
exercise of any other right, and no waiver, amendment or other
variation of the terms, conditions or provisions of the Agreement
whatsoever shall be valid unless in writing signed by MNB and then
only to the extent in such writing specifically set forth.  All
remedies contained in this Amendment, the Agreement or by law
afforded shall be cumulative and all shall be available to MNB
until the Merchant's obligations to MNB have been paid in full.  In
addition to, and without limitation of, any rights of MNB under
applicable law, if Merchant becomes insolvent, however evidenced,
or any default occurs and is continuing, any and all deposits
(including all account balances, whether provisional or final and
whether or not collected or available) and any other indebtedness
at any time held or owing by MNB to or for the credit or account of
Merchant may be offset and applied toward the payment of the
obligations owing to MNB, whether or not the obligations of
Merchant to MNB, or any part thereof, shall then be due.

4. FINANCIAL INFORMATION; CANCELLATION.  During the term of the
Agreement Merchant agrees to furnish to MNB, within forty-five (45)
days after the end of each fiscal quarter, a true and correct copy
of Merchant's filed 10-Q financial statements and, within one
hundred twenty (120) after the end of each fiscal year, a true and
correct copy of Merchant's filed 10-K financial statements. 
Merchant also agrees to cause Hambrecht & Quist Group ("HQ") to
furnish to MNB, within forty-five (45) days after the end of each
fiscal quarter, a true and correct copy of HQ's filed 10-Q
financial statements and, within one hundred twenty (120) after the
end of each fiscal year, a true and correct copy of HQ's filed 10-K
financial statements.  Merchant agrees to promptly furnish to MNB
such other information and reports which MNB may reasonably request
concerning Merchant's business, property, and financial condition
as are provided to Merchant's owners.  Merchant agrees that MNB has
the right to cancel the Agreement at any time in MNB's sole
discretion upon thirty (30) days' prior written notice to Merchant. 
Upon the expiration of such thirty (30) day period, if Merchant has
failed to repay all amounts due MNB hereunder and under the
Agreement, MNB may exercise any and all remedies available to it
under the Agreement and this Amendment.  MNB agrees that Merchant
has the right to cancel this Agreement at any time in Merchant's
sole discretion upon thirty (30) days' prior written notice to MNB,
whereupon this Amendment and the Agreement shall terminate once the
Gross Exposure has been permanently reduced to zero (0) and MNB has
determined that any monies applied or held by MNB in satisfaction
of the Gross Exposure is no longer subject to return or restoration
to Borrower or to any trustee in bankruptcy under the U.S.
Bankruptcy Code.

5. EXPENSES.  Merchant shall reimburse MNB upon demand for any
reasonable costs, internal charges and out-of-pocket expenses
(including attorneys' fees and time charges of attorneys for MNB,
which attorneys may be employees of MNB) paid or incurred by MNB in
connection with the collection or enforcement of this Amendment and
the Agreement.  Any demand for such reimbursement shall include
reasonable detail of the costs, charges and expenses for which 

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reimbursement is sought.

6. NOTICES. All notices and other communications provided to any
party hereto shall be in writing, by facsimile, first class U.S.
mail or overnight courier and addressed or delivered to such party
at its address set forth below its signature hereto or at such
other address as may be designated by such party in a notice to the
other parties.  Any notice, if mailed and properly addressed with
first class postage prepaid, return receipt requested, shall be
deemed given three (3) Business Days after deposit in the U.S.
mail; any notice, if transmitted by facsimile, shall be deemed
given when transmitted; and any notice given by overnight courier
shall be deemed given when received by the addressee.

7. RATIFICATION OF AGREEMENT; ACKNOWLEDGEMENT.  Except as expressly
modified under this Amendment, all of the terms, conditions,
provisions, agreements, requirements, promises, obligations,
duties, covenants, and representations of Merchant and MNB,
respectively, under the Agreement are hereby ratified by Merchant
and MNB, respectively.

8. EFFECTIVE DATE.  This Amendment shall become effective upon
execution and delivery of duly executed counterparts by Merchant
and MNB.

9. MERGER AND INTEGRATION; SUPERSEDING EFFECT. This Amendment and
the Agreement, from and after the date hereof, embody the entire
agreement and understanding between the parties hereto, and
supersede and have merged therein all prior oral and written
agreements, on the same subjects by and between the parties hereto
with the effect that this Amendment and the Agreement shall control
with respect to the specific subjects hereof and thereof.

10. SUCCESSORS AND ASSIGNS.  This Amendment and the Agreement shall
inure to the benefit of and shall be binding upon the parties
hereto and their respective successors and assigns, provided:
Merchant acknowledges that Merchant cannot assign or transfer its
rights or obligations under the Agreement or this Amendment without
MNB's prior written consent.

11. GOVERNING LAW.  This Amendment and the Agreement shall be
governed by and construed in accordance with the internal laws,
without regard to conflict of laws provisions, of the state of
Michigan, but giving effect to federal laws applicable to national
banks.

12. COUNTERPARTS.  This Amendment may be executed in any number of
counterparts, each of which when so executed and delivered shall be
deemed to be an original, and all of which counterparts of this
Amendment when taken together, shall constitute one and the same
instrument.

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IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment as of the day and year first written above.

VANGUARD AIRLINES, INC.



By:_____________________________________
     Bill Garrett, Vice President of Finance


MICHIGAN NATIONAL BANK



By:_____________________________________



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