`EXHIBIT 10.23

  PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
   AND EXCHANGE COMMISSION IN A CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE
    SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL "[***]" IN THIS EXHIBIT
                      INDICATES THAT INFORMATION HAS BEEN OMITTED.

                                  CODE SHARE AGREEMENT

This CODE SHARE  AGREEMENT  (this  "Agreement") is made and entered into as of September
18, 2003 (the  "Contract  Date") to be effective  as of January 1, 2004 (the  "Effective
Date"), by and between FRONTIER  AIRLINES,  INC., a Colorado  corporation  ("Frontier"),
and  HORIZON  AIR  INDUSTRIES,  INC.,  a  Washington  corporation  ("Partner").  Certain
capitalized  terms not otherwise  defined herein will have the meanings ascribed to them
in Schedule A to this Agreement.

                                    R E C I T A L S

A.       Frontier  holds  a  certificate  of  public   convenience  and  necessity  issued  by  the
Department  of Transportation ("DOT") authorizing it to engage in the  interstate and overseas
air transportation of persons, property and mail between all points in the United  States, its
territories and possessions.

B.       Partner holds certificates of public convenience and necessity issued by the DOT authorizing
Partner to engage in the interstate transportation of persons, property and mail in the United States,
its territories and possessions.

C.       Frontier owns various trademarks, service marks and logos, including "Frontier Airlines" and
distinctive exterior color decor and patterns  on  its   aircraft,   hereinafter   referred  to
individually and collectively as the "Frontier Service Marks."

D.   Frontier and Partner desire to enter into a code share  agreement  whereby  Partner
will  provide  certain  flight and other  services to  Frontier on terms and  conditions
more particularly set forth in this Agreement from and after the Effective Date.

NOW,  THEREFORE,  in  consideration  of the  promises,  covenants,  representations  and
warranties  hereinafter  set forth,  and for other valuable  consideration,  the receipt
and  sufficiency  of which are hereby  acknowledged,  Frontier and Partner  agree as set
forth below.

                                   A G R E E M E N T


 1.  Rights, Responsibilities and Obligations of Partner:

         1.1      Flight  Service.  During  the  term of this  Agreement,  Partner  will
                  operate  "Frontier   JetExpress"  air  transportation   services  (the
                  "Flight  Services") using the Initial Fleet and the Option Fleet (each
                  as defined  in Section  1.3) to and from the cities and based upon the
                  schedule  established  from time to time by Frontier (the  "Schedule")
                  and  provided to Partner by written  notice (a  "Schedule  Notice") no
                  less than 70 days for schedule  changes not involving  Flight Services
                  to new cities and no less than 90 days for schedule changes  involving
                  the  addition of Flight  Services to a new city or cities prior to the
                  effective  date  of the  schedule  change  described  in the  Schedule
                  Notice. The aircraft  comprising the Fleet will be Bombardier CRJ-700s
                  and  are  herein  collectively  referred  to as  the  "Aircraft."  For
                  purposes of this Agreement,  "Flights" means flights operated pursuant
                  to the  Schedule.  Frontier  may change the  Schedule by issuance of a
                  Schedule  Notice at any  time.  When  creating  a  Schedule,  Frontier
                  shall:  (i) create a Schedule  which will  permit  Partner to schedule
                  flight  crews  in a  manner  consistent  with  Partner's  block  time,
                  operational  and  maintenance  practices  set forth on Exhibit  1.1 to
                  this Agreement,  as modified from time to time by mutual  agreement of
                  the parties  prior to the due date of the  relevant  Schedule  Notice;
                  (ii) take into  account  airport  facilities  available  for  Aircraft
                  handling;  (iii) permit  maintenance  as required by Section 1.7.2 and
                  scheduled heavy maintenance on Aircraft,  as required;  (iv) take into
                  account  the Spare  Aircraft  (as defined in Section  1.3.1);  and (v)
                  provide   for  at  least  70  days   prior   notice  of  any   holiday
                  cancellations.

         1.2      Ad Hoc Schedule  Changes.  Frontier may at its election require ad hoc
                  changes to the  Schedule for any reason  including  but not limited to
                  irregular  operations,  mechanical  problems,  weather conditions,  or
                  charter  opportunities  (such  flights as requested on an ad hoc basis
                  by Frontier and not  otherwise  reflected on a Schedule  Notice hereby
                  defined as "Ad Hoc  Flights").  Frontier  and Partner  will discuss Ad
                  Hoc Flights and Partner  will  complete  such Ad Hoc Flights only upon
                  mutual agreement of the parties.  Ad Hoc Flights  completed by Partner
                  will become part of the  Schedule for purposes of Section 6.2 but will
                  be excluded from the Partner's performance  requirements under Section
                  4.

         1.3      Fleet.

                  1.3.1    Initial  Fleet.  Each of the Aircraft  identified  on Exhibit
                           1.3.1 as the initial  aircraft (the "Initial  Fleet") will be
                           Bombardier  CRJ-700s and shall be placed into Flight Services
                           by Partner in the calendar  months set forth on Exhibit 1.3.1
                           (the  "Delivery  Schedule").   For  new  aircraft  deliveries
                           Partner  will  provide  no less than 60 days'  prior  written
                           notice  of the  week in which  the  Aircraft  in the  Initial
                           Fleet  will be  delivered,  and no less  than 30 days'  prior
                           written  notice  of the  day on  which  the  Aircraft  in the
                           Initial  fleet  will be  delivered.  In the event  Partner is
                           unable  to meet the  delivery  week or  dates  set for on any
                           notice,  Partner may use a Substitute Aircraft (as defined in
                           Section  1.3.4) to operate any Flight that was  scheduled for
                           the  delayed  Aircraft  for  up to 30  days  or,  with  prior
                           consent  of  Frontier,  for  such  longer  period  as  may be
                           necessary.  The Initial  Fleet will be comprised of eight (8)
                           core  operating  Aircraft (the "Core  Aircraft")  and one (1)
                           operational spare Aircraft (the "Spare Aircraft").

                  1.3.2    Option   Fleet.   Frontier   and   Partner   agree   to  meet
                           periodically  during  the term of this  Agreement  to discuss
                           and if possible  agree on the  expansion of the Initial Fleet
                           by as many as twelve  (12)  Aircraft  (the  "Option  Fleet").
                           Placement  of  the  Option  Fleet  into  Flight  Services  is
                           subject to review and mutual  agreement  between the parties,
                           provided,  it is  understood  and  agreed  that the terms and
                           conditions  set forth in this  Agreement  will  generally  be
                           applicable  to the Option  Fleet  other than such  changes as
                           may be agreed to by the  parties  with  respect  to the Fixed
                           Costs and  Maintenance  Parts relating to the Option Aircraft
                           and the possible  extension of the term of this  Agreement to
                           take into account a reasonable  operating  commitment for the
                           Option  Fleet.  The  Initial  Fleet and the Option  Fleet are
                           collectively referred to herein as the "Fleet."

                  1.3.3    Aircraft   Configuration,   Decor   and   Livery.   From  the
                           Effective  Date  until  such  time that all  Aircraft  in the
                           Initial Fleet are operating as Frontier  JetExpress  Flights,
                           all but two (2) of the Aircraft shall be painted,  marked and
                           decorated  to bear  Frontier  Service  Marks,  consisting  of
                           Frontier  livery  and  the  name  "Frontier   JetExpress"  in
                           accordance  with  the  livery  standards  to be  provided  by
                           Frontier   (the   "Frontier   JetExpress   Livery")  and,  at
                           Frontier's  election,  meet the  configurations  and interior
                           decor   standards   set   forth   in   Exhibit   1.3.3   (the
                           "Configuration   Standards").   Thereafter,   eighty  percent
                           (80%) of the Fleet,  rounded up to the nearest  whole number,
                           shall be painted,  marked and decorated to bear the "Frontier
                           JetExpress  Livery"  and, at  Frontier's  election,  meet the
                           Configuration  Standards.  Aircraft  not  required  to  be in
                           Frontier  JetExpress  Livery under the prior  sentence and in
                           the  Fleet  may be  left  with  an  all  white  exterior  and
                           otherwise  be  configured  in   accordance   with   Partner's
                           internal  standards (such Aircraft referred to as "White Tail
                           Aircraft").  Costs  and  expenses  incurred  in  meeting  the
                           Livery   and   Configuration    Standards   or   White   Tail
                           configuration   will  be  allocated   as  follows:   For  New
                           Aircraft,  the  Aircraft  will be  delivered  in the Frontier
                           JetExpress  Livery and  covered by the terms of the  purchase
                           agreement between Partner and the Aircraft manufacturer,  and
                           costs  relating to the  application  of the animal motif tail
                           decal and any costs  associated  with Frontier  Configuration
                           Standards   over  and   above   costs   for   Partner's   own
                           configuration   shall  be  borne   by   Frontier.   For  Used
                           Aircraft,  the costs of  removing  the  existing  livery  and
                           placing  the  exterior  of  the  Aircraft  in  an  all  white
                           condition  will be borne by Partner,  and the cost of placing
                           the Frontier  JetExpress  Livery and the  application  of the
                           animal  motif decal for all Used  Aircraft  not being left as
                           White  Tail  Aircraft  will  be  borne  by  Frontier.  Should
                           Frontier  elect to have the New  Aircraft  delivered  to meet
                           the  Configuration  Standards,  or have the  interior  of the
                           Used Aircraft  (other than the White Tail Aircraft)  modified
                           to  meet  the  Configuration  Standards,  related  costs  and
                           expenses  will be  borne  by  Frontier.  Any  changes  to the
                           Livery and  Configuration  Standards  requested  by  Frontier
                           after the  Aircraft  are placed  into  service as part of the
                           Fleet will be  performed by Partner at  Frontier's  sole cost
                           and   expense.    Such   configuration    changes   must   be
                           accomplished  within 120 days following  Frontier's  request.
                           In the event Frontier desires changes to Frontier  JetExpress
                           Livery,  Frontier  will provide  Partner with 120 days' prior
                           written   notice   and   all   requested   changes   must  be
                           accomplished   by  the  end  of  such  120  day  period,   at
                           Frontier's  sole  cost and  expense.  Partner  shall  use and
                           display  suitable  signs on the interior and exterior of each
                           Aircraft  identifying  Partner as the  operator of the Flight
                           Services.  All announcements,  displays or literature used or
                           viewed  by  Partner   customers  on  Flights   shall  feature
                           Frontier or  "Frontier JetExpress," and no other air carrier.

                  1.3.4    Substitute   Aircraft.   In  order  to  address   maintenance
                           requirements,  irregular  operations,  or  Aircraft  delivery
                           delays  as  permitted   under  Section  1.3.1,   Partner  may
                           substitute  for any  Aircraft in the Fleet an  aircraft  from
                           its own  operational  fleet (each,  a "Substitute  Aircraft")
                           for up to  thirty  (30)  days,  so long  as  such  substitute
                           aircraft  is  a  White  Tail  Aircraft  or  Horizon   Livery.
                           Permanent  substitutions  or  substitutions  over thirty (30)
                           days for any  aircraft in the Fleet will  require the advance
                           written consent of Frontier.

                  1.3.5    Fleet  Domicile.  On or before the  Effective  Date,  Partner
                           will  domicile  crews  required  for the  Fleet  Services  in
                           Denver,  Colorado  and  establish  a  line  maintenance  base
                           capable of  performing A Checks and  clearing  MELs at Denver
                           International Airport.

         1.4      Other  Services.  Frontier will be responsible for providing all Other
                  Services  required in connection with the Flight Services  through the
                  use of its own  personnel  or through  the  retention  of third  party
                  contractors,  and  will be  responsible  for all  costs  and  expenses
                  related to such Other Services.  Should Frontier request  proposals to
                  subcontract  for Other  Services,  Partner  will have a right of first
                  refusal to provide such Other Services upon the most  favorable  terms
                  and conditions being offered to Frontier by other  subcontractors on a
                  "right of first  refusal"  basis.  In the event Partner is selected to
                  perform  the Other  Services  on a  subcontract  basis,  Frontier  and
                  Partner  will  enter into a separate  agreement  with  respect to such
                  Other  Service,  the terms of which  will be  separate  and apart from
                  this Agreement.

         1.5      Personnel;  Training.  Partner shall hire, engage, employ and maintain
                  a  sufficient   number  of  trained   personnel  and   subcontractors,
                  including,   but  not  limited  to  pilots,  flight  attendants,   and
                  maintenance   personnel  necessary  to  provide  the  Flight  Services
                  required  by  this   Agreement.   Pilots,   Flight   Attendants,   and
                  maintenance  personnel  shall  wear  Partner  uniforms.   For  flights
                  attendants   newly  hired  by  Partner  to  provide  Flight  Services,
                  Frontier will be  responsible  for the cost of initial  training.  For
                  current  Partner flight  attendants  transferring  to Frontier  Flight
                  Services,   Frontier  will  be  responsible   for  relocation   costs.
                  Frontier will be responsible  for initial Pilot Training costs for new
                  Aircraft  Partner  will  allocate  such costs  over a 12 month  period
                  beginning  at the time of initial  training  and no  interest  will be
                  assessed by Partner.  Partner will be  responsible  for all  recurrent
                  training expenses relating to pilots,  flight attendants or mechanics,
                  including   uniform   allowances  and  cleaning  in  accordance   with
                  collective  bargaining  agreements and its internal  policies,  except
                  costs related to differences in training  related to Frontier  Service
                  requirements.  Costs and  expense for which  Frontier  is  responsible
                  under this  Section  will be  remitted as part of the Pass Thru Costs.
                  Should  Frontier  elect to provide an initial  orientation  program or
                  any similar  subsequent  refresher  programs for any Partner personnel
                  involved in Flight  Services,  Frontier  will be  responsible  for all
                  costs and expenses,  including without limitation expenses relating to
                  travel,  room and board. If Frontier elects to carry hazardous  and/or
                  dangerous  materials,  Frontier  will work with Partner to insure that
                  all  such  hazardous   materials   training  meets  all   governmental
                  regulations  applicable  to Frontier  and Partner.  Such  training and
                  related costs will be the sole responsibility of  Frontier.

         1.6      Service  Quality and Level.  All Flight  Services  and Other  Services
                  shall be  provided  by  Partner  at a  service  quality  and  level of
                  service  equal to or greater  than the  service  quality  and level of
                  service  provided by Frontier to the extent  applicable to the type of
                  Aircraft used to provide the Flight Services.  More specifically,  but
                  without limitation:

                           1.6.1  Partner  pilots  and  flights   attendants   providing
                  Flight  Services will be required and trained to comply with Partner's
                  appearance standards as set forth on Exhibit 1.6.1.

                           1.6.2 All  Aircraft in the Fleet,  at the time of  commencing
                  any Flight Service in the Schedule,  must have a functioning  lavatory
                  and coffee  maker,  notwithstanding  any  regulations  of the FAA that
                  would  permit  operation of the Aircraft  with such  equipment  tagged
                  inoperable.  Any flight cancelled  pursuant to this  subparagraph will
                  be deemed to be a flight  cancellation for purposes of calculating the
                  FCF and the OTP (each as defined in Section 4).

                           1.6.3 In the event  Frontier is required to  reaccommodate  a
                  passenger who is unable to complete a scheduled  flight  because of an
                  inoperable  seat,  Frontier  will apply its  applicable  policies  and
                  procedures and Partner will be required to reimburse  Frontier for all
                  reasonable  costs and  expenses  relating to the  reaccommodation.  In
                  the  alternative,  Frontier  may setoff such  amount  against its next
                  payment obligation to Partner arising under this Agreement.

                           1.6.4 If Frontier  changes  Frontier's  service  requirements
                  and as a result  Partner will be required to modify  related  training
                  programs or make any capital  upgrades to any  Aircraft,  Partner,  in
                  writing,  shall advise Frontier of the need for such upgrades together
                  with the  estimated  cost to complete  such  upgrades  (the  "Upgrade
                  Notice").  If,  after  receipt of the  Upgrade  Notice,  Frontier,  in
                  writing,  elects to  require  Partner to comply  with such  changes in
                  service requirements,  then Frontier,  within 30 days after receipt of
                  a written notice,  shall  reimburse  Partner for the costs incurred by
                  Partner  in  making  such  capital  upgrades.  If  Frontier  does  not
                  approve the making of the capital upgrades,  then Partner shall not be
                  required to meet the new Frontier service  requirements.  Partner will
                  cause each Aircraft in the Fleet to comply with all aircraft  exterior
                  cleanliness  and  appearance   standards,   including  appearance  and
                  condition of the livery, established by Frontier.


         1.7      Maintenance.


                  1.7.1    Obligation.  Partner,  at its own cost and expense,  shall be
                           responsible   for   the   service,    repair,    maintenance,
                           overhauling  and testing of each Aircraft:  (i) in compliance
                           with the  maintenance  program for each  Aircraft as approved
                           by  the  FAA  and   pursuant  to  all   applicable   aircraft
                           maintenance  manuals applicable to each Aircraft;  (ii) so as
                           to keep each Aircraft in good and safe  operating  condition;
                           and  (iii)  so as to keep  the  Aircraft  in  such  operating
                           condition  as may be  necessary  to enable the  airworthiness
                           certification  of  the  Aircraft  to be  maintained  in  good
                           standing.  Partner  shall retain full  authority  and control
                           over  the  service,  repair,  maintenance,   overhauling  and
                           testing   of   each   Aircraft.   Frontier   shall   have  no
                           obligations  or duties with respect to the  service,  repair,
                           maintenance, overhauling or testing of any Aircraft.


                  1.7.2    Scheduled  Maintenance.  At the time Aircraft are  identified
                           to  the  Fleet,   Frontier  and  Partner  will  cooperate  to
                           estimate the maintenance  schedule for each Aircraft and will
                           develop  a  schedule  for  required   maintenance  that  will
                           minimize  disruptions  to  Flight  Services  required  by the
                           Schedule  and  avoid  non-consecutive  scheduled  maintenance
                           events.  The Schedule  will also  provide that each  Aircraft
                           that will remain  overnight at DEN, or such other location as
                           may be mutually  agreed by the parties from time to time (the
                           " MTX RON  Location"),  will be scheduled in accordance  with
                           Exhibit 1.1.  Partner will  provide  Frontier  with 120 days'
                           prior written notice of any heavy  maintenance check required
                           under the applicable  maintenance  program that would require
                           removal of an  Aircraft  from the  Schedule.  Upon  receiving
                           such notice,  Frontier  and Partner  will  cooperate to alter
                           the scheduled  maintenance in order to minimize  interruption
                           to the Schedule and to provide  maximum Fleet capacity during
                           holiday periods.


                  1.7.3    Ground  Equipment.  Partner  will be  required to provide one
                           Aircraft tow bar for each Aircraft in the Fleet.


         1.8      Emergency  Operations.  Prior to the  commencement of Flight Services,
                  Partner and Frontier shall  coordinate to develop a plan that complies
                  with applicable Government  Regulations to be implemented in the event
                  of any incident  involving  personal injury or death to a passenger or
                  crew  member on a Flight.  The  emergency  response  teams of Frontier
                  and Partner shall  coordinate  their efforts and shall cooperate fully
                  in response to such emergency,  and Partner will provide Frontier full
                  access to all data and records  relating  to the  Flight.  The parties
                  recognize and agree that Frontier  will have sole  responsibility  for
                  addressing  the media and providing  all aspects of family  assistance
                  with the  exception  of  Partner's  retention  of  responsibility  for
                  operational  requirements  pursuant to Government  Regulations and for
                  family assistance relating to Partner crew members and employees.

         1.9      Post-Departure  Procedures.  Unless  otherwise  performed  by Frontier
                  personnel,  Partner shall perform  post-departure  procedures for each
                  Flight.   Partner  will  deposit  into  bank  accounts  identified  by
                  Frontier on a daily basis all cash  receipts  relating to liquor sales
                  conducted  on the  Aircraft in the Fleet.  Partner  will be liable for
                  all losses arising from  shortfalls  from the sales of liquor or other
                  catering,  if any. Partner will reimburse Frontier for all such losses
                  within  30 days  following  receipt  of an  invoice  or other  written
                  notice  setting  forth  the  details  of  such  losses.  Frontier  and
                  Partner  will each have the  right to audit  all  internal  collection
                  procedures   and  records   relating  to   Frontier's   and  Partner's
                  post-departure  procedures and all cash receipts  relating to catering
                  or  liquor  sales  on  board  the   Aircraft  in  the  Fleet.   Should
                  Frontier's  audit  identify  errors  or  losses  exceeding  10% of the
                  amount that should have been  reported and paid to Frontier,  Partner,
                  after a fifteen (15) day review period,  will  reimburse  Frontier for
                  all reasonable costs,  expenses and fees, including without limitation
                  the fees of any  outside  auditors,  incurred in  connection  with the
                  performance of the audits permitted under this Agreement.

2.   Rights, Responsibilities and Obligations of Frontier.

         2.1      Flight  Management  Items.  Frontier shall: (i) designate from time to
                  time,   pursuant  to  each   Schedule   Notice,   the  routes  on  and
                  destinations  to which  Partner is to provide the Flight  Services and
                  the times of departure for the Flights;  (ii) set the fares to be paid
                  for such Flights by the  passengers;  and (iii) be responsible for the
                  passenger  booking,  yield  management  and  overbooking  of  Flights,
                  limited  only  by the  Fleet  operated  by  Partner  pursuant  to this
                  Agreement.

         2.2      Maintenance  Items.  Frontier  shall provide:  (i) adequate  access to
                  hangar and related  facilities  that  insures that Partner can perform
                  necessary  maintenance functions in a timely fashion to support Flight
                  Services   pursuant  to  this   Agreement  and  related  OTP  and  FCF
                  requirements;  (ii)  subject  to  and  in  compliance  with  Partner's
                  Maintenance  Department Manual System as applicable  adequate tooling,
                  ground support  equipment,  power carts,  fuel bowser (ability to fuel
                  and de-fuel),  potable  water  equipment  (gate and hangar),  separate
                  climate  controlled  storage of Partner parts  inventory;  staging and
                  storage area for U/S  components,  materials  handling  equipment  and
                  supplies (including  racking,  fire cabinets,  pallet jack,  forklift,
                  boxes,  labels,  IATA  books,  scale,  etc);  (iii)  deicing  and snow
                  removal at  maintenance  facility;  (iv)  logistical  help for any AOG
                  parts shipments,  i.e. using Frontiers  internal co-mat system to move
                  parts required to support the operation;  (v) office, storage, uniform
                  locker space (with telecommunications  access) for Partner maintenance
                  personnel  (including  material  clerks),   manuals,  and  records  at
                  maintenance  facility;  (vi)  office  and parts  storage  space at DIA
                  terminal for  Partner;  (vii)  Partner's  internal  auditors  with the
                  ability to audit the  facilities  and services  provided to Partner to
                  the  extent  of the  Agreement's  terms  or  other  future  agreements
                  between the parties  allows  Partner use or  procurement  of the other
                  parties'  facilities,   parts/materials,   tools,  support  equipment,
                  fueling  services,  personnel  resources,  or technical data to ensure
                  regulatory   compliance;   and  (viii)  Partner  the  ability  to  use
                  Frontier's hazardous material disposal services.

         2.3      Marketing/Revenue.  Frontier,  in its sole  discretion and at its sole
                  cost,  shall  market,  advertise  and  sell  tickets  on all  Flights.
                  Frontier  shall  provide  all  reservation  services  for  the  Flight
                  Services and shall pay all ticketing and advertising expenses,  credit
                  card  charges,  travel agent  commissions  and CRS fees  applicable to
                  such  services.  Frontier  shall be  entitled  to retain,  and Partner
                  shall pay to Frontier,  all revenue and income generated by the Flight
                  Services.  Frontier  agrees that it will not require  Partner to enter
                  into an  Essential  Air Service  market  unless  Partner,  at its sole
                  discretion,  agrees in advance  to enter the  market  and the  parties
                  have  agreed in advance to a method for the  establishment  of related
                  rates and costs.

3.   Compliance with Regulations.

         3.1      Regulations.  Frontier and Partner  shall  perform  their  obligations
                  and duties under this Agreement,  including,  without limitation,  all
                  Flight  Services and Other  Services,  in full compliance with any and
                  all applicable laws, ordinances,  codes, statutes, orders, directives,
                  mandates,  requirements,  rules and regulations, whether now in effect
                  or hereafter  adopted or  promulgated,  of all  governmental  agencies
                  having  jurisdiction  over  Partner's  operations,  including  but not
                  limited  to the  FAA and the  DOT  (collectively,  "Regulations")  for
                  operations  in the 50  states in the  United  States  of  America  and
                  throughout  Canada and  Mexico.  If a party  fails to comply  with the
                  requirements  of this  Section 3.1,  that  failure  will  constitute a
                  default under Section 12.1.2 or Section 12.2.2, as the case may be.

         3.2      Flight  Operations.  Partner shall be responsible for the operation of
                  each  Aircraft and the safe  performance  of the Flights in accordance
                  with the Regulations and airline industry  standard practice and shall
                  retain  full  authority,  operational  control and  possession  of the
                  Aircraft to do so. Partner,  its agents or employees,  for the purpose
                  of  the  safe   performance  of  the  Flights,   shall  have  absolute
                  discretion  in and shall  have  sole  responsibility  for all  matters
                  concerning the  preparation of each Aircraft for its Flights,  and all
                  other  matters  relating to the  technical  operation of the Aircraft.
                  Partner will provide policies,  procedures and training to Frontier or
                  any other third party  providing  Other  Services in order to meet its
                  obligations  under  this  Section.  Partner,  insofar as it relates to
                  the  safe  operation  of  a  Flight,  shall  have  sole  and  absolute
                  discretion as to the load carried and its  distribution  and as to the
                  decision  whether such Flight shall be taken.  Partner shall be solely
                  responsible  for and Frontier shall have no obligations or duties with
                  respect  to  the  dispatch  of all  Flights,  provided,  Partner  will
                  provide  Frontier  at no cost to  Partner  with  access to its  flight
                  operations data on a real-time basis through  Bournemann or such other
                  similar system used by Partner in tracking its flight operations.

         3.3      Registration.  All  Aircraft  shall  remain  registered  in the United
                  States of America in accordance with the Regulations.

         3.4      Disclosure.  Partner,  upon  ten (10)  business  days'  prior  written
                  request,   shall  provide  Frontier  the  opportunity  to  review  all
                  operating   specifications,   operational  regulations,   manuals  and
                  calculations  with respect to all Aircraft and flight  statistics with
                  respect  to all  Flights  at  Partner's  corporate  or other  relevant
                  offices where such records are located.

         3.5      Frontier  Stations.   Documents  will  be  provided  to  the  relevant
                  airport  authorities as required for Partner to operate the Fleet into
                  any  city  set  forth  in the  Schedule,  or any  other  city to which
                  Frontier  provides  mainline  service  in order to enable  Partner  to
                  provide Flight Services to any city in Frontier's  system as in effect
                  from time to time.

         3.6      Reporting.  This  Agreement  shall be  treated as a code share for DOT
                  reporting  and  advertising   requirements.   Frontier  shall  provide
                  Partner,  within  ten  (10)  days' of  Partner's  request,  with  such
                  information  necessary  for  Partner  to  make  the  DOT  reports  and
                  disclosures.

4.   Operational  Performance  Criteria.  In order to promote efficient operation of the
     Flight Services,  other than Flight Services  conducted for ad hoc schedule changes
     described  in Section 1.2 of this  Agreement  or due to  circumstances  outside the
     Partner's Control,  the performance  criteria and related bonuses and penalties set
     forth in this Section 4 will become effective on and after January 1, 2005.

         4.1      On Time  Performance Rate Bonus and Penalty  Criteria.  The "OTP Rate"
                  is  defined  as the  percentage,  rounded  down  to the  nearest  full
                  percentage point if the percentage  point(s)  fractional amount is .49
                  or less and rounded up to the  nearest  full  percentage  point if the
                  fractional  amount is .50 or greater  (for example .49 is rounded down
                  to 0.00,  1.49 is rounded down to 1.0, and 1.50 is rounded up to 2.0),
                  determined  by dividing  the number of Flights not Delayed (as defined
                  below) by the total number of Flights  flown by Partner  pursuant to a
                  Schedule   during  the  applicable   period.   For  purposes  of  this
                  Agreement,  "Delayed"  means a  Flight  that  does not  arrive  at the
                  destination  within 15 minutes after the scheduled arrival time due to
                  matters  within  Partner's  Control.  All Flights will be included for
                  calculating   the  OTP  Rate.  A  cancelled   flight  (except  Flights
                  cancelled because of no passengers,  Flights cancelled by Frontier for
                  any  reason,  Flights  cancelled  for  reasons  not  within  Partner's
                  Control,  and the reasons set out in Section 4.2) is a Delayed flight.
                  If Partner's  OTP Rate exceeds the lower of (i)  Frontier's  OTP Rate,
                  or (ii)  [***]  (the  "OTP  Bonus  Threshold")  for any  given  month,
                  Frontier  shall pay Partner a performance  bonus in an amount equal to
                  [***] for each full  percentage  point  over the OTP Bonus  Threshold,
                  provided,  no  such  bonus  will be  payable  from  the  time of a OTP
                  Cancellation  Event  and  during  the OTP  Cure  Period  described  in
                  Section 7.3  herein.  If  Partner's  OTP Rate falls below the lower of
                  (i) Frontier's  OTP Rate, or (ii) [***] (the "OTP Penalty  Threshold")
                  for any given  month,  Partner  shall pay to  Frontier  a  performance
                  penalty in the amount of [***] for each full  percentage  point  below
                  the OTP Penalty  Threshold.  Amounts  payable in this Section shall be
                  made within 10 business days of receiving the statements  provided for
                  in Section 4.6.

         4.2      Flight  Completion  Factor  Bonus and Penalty  Criteria.  The "FCF" is
                  defined as the percentage of published,  scheduled  Flights  completed
                  for a given  month  rounded  to the  nearest  1/10th  of a  percentage
                  point.  For  example  97.48%  is  rounded  to 97.5%,  while  97.44% is
                  rounded  to  97.4%.  Flights  not  completed  due  to  matters  not in
                  Partner's  Control  will not be  included in either the  numerator  or
                  denominator  for  calculating the FCF. Any Flight that departs 2 hours
                  or more  after its  scheduled  departure,  or a Flight  that  fails to
                  depart  pursuant  to  Section  1.6.2  will  be  deemed  cancelled  for
                  purposes of  calculating  the FCF. If Partner's  FCF for a given month
                  exceeds the lower of (i) Frontier's FCF for the comparable  period, or
                  (ii) [***] (the "FCF Bonus and  Penalty  Threshold"),  Frontier  shall
                  pay  Partner  a  performance  bonus  in  an  amount  equal  to  [***],
                  provided,  no  such  bonus  will be  payable  from  the  time of a FCF
                  Cancellation  Event  and  during  the FCF  Cure  Period  described  in
                  Section 7.4  herein.  If  Partner's  FCF falls below the FCF Bonus and
                  Penalty  Threshold for any given month,  Partner shall pay to Frontier
                  a performance penalty as follows:

                   Consecutive Month                                  Amount of Penalty
                  Below FCF Bonus and                               per Percentage Point
                   Penalty Threshold                                 below the FCF Bonus
                                                                    and Penalty Threshold

                          1st                                               [***]
                          2nd                                               [***]
                          3rd                                               [***]
                   4th and Thereafter                                       [***]

                  Amounts  payable in this  Section 4.2 shall be made within 10 business
                  days of receiving the statements provided for in Section 4.6.

         4.3      Daily  Performance  Data.  Partner and Frontier  will  exchange  Fleet
                  performance  statistics,  including  information  relating  to  Flight
                  Delays,  cancellations,  departures  and  block  hours  flown  by each
                  Aircraft.  Each party will have 7  business  days from the  receipt of
                  such  information to dispute the  characterization  of the performance
                  statistics for purposes of calculating  the OTP Rate and FCF.  Failure
                  to dispute such operating  statistics within such 7 day period will be
                  deemed  acceptance.  In order to  resolve  disputes,  each  party will
                  designate a single  point of contact  who will  attempt to resolve any
                  disputes.  If these two  parties  are unable to reach  agreement,  the
                  dispute will be directed to the Vice  President,  Maintenance,  or his
                  or her designee, for each party for final resolution.

         4.4      Combined  Performance  Criteria.  In the event  Partner  fails to meet
                  both  the  OTP  Penalty  Threshold  and  the  FCF  Bonus  and  Penalty
                  Threshold  in any  given  month,  the  Standard  Margin  to be paid to
                  Partner  pursuant  to  Section 6 for that  month  will be  reduced  by
                  [***].  In the event Partner  exceeds both the OTP Bonus Threshold and
                  the FCF Bonus and Penalty  Threshold in any given month,  the Standard
                  Margin to be paid to  Partner  pursuant  to  Section 6 for that  month
                  will be increased by [***].

         4.5      Records.  Within 5 business days after the end of each calendar  month
                  Frontier  and  Partner  will  provide  each  other  with all  reports,
                  records and  supporting  documentation  as may reasonably be requested
                  by the other party evidencing the number of Aircraft  operating in the
                  Fleet,  block  hours  and  departures  flown  by  each  Aircraft,  and
                  passengers  carried  by each  Aircraft,  and  Frontier  shall  provide
                  Partner with statements  detailing its OTP Rate and FCF  calculations,
                  and, if applicable, MBR, for the prior calendar month.

         4.6      Right of  Setoff.  Each party will have the right to set off an amount
                  due the other party  against any amounts to be received from the other
                  party pursuant to this Agreement.

         4.7      Limitation on Applicability of Standards,  Criteria,  Incentives, and
                  Penalties.  Frontier  acknowledges  that Partner  operates flights and
                  provides  flight services and other services under its own name and/or
                  under names or service  marks  other than  Frontier  JetExpress  using
                  aircraft  that are not  included in the Fleet and that are not subject
                  to this  Agreement.  Notwithstanding  any  other  term,  condition  or
                  provision  hereof to the  contrary,  the  standards  and  criteria set
                  forth above in this Section 4 apply only to Flight  Services,  Flights
                  and  Other  Services  performed  by  Partner  hereunder  operating  as
                  Frontier  JetExpress and not to any other flights,  flight services or
                  other  services  performed  by  Partner  under its own name or under a
                  name  or  service  mark  other  than  Frontier  JetExpress.  Thus,  in
                  calculating  Partner's OTP Rate and the FCF, only Flight  Services and
                  Other  Services  performed by Partner  under the service mark Frontier
                  JetExpress  shall be taken into account in calculating  such rates and
                  assessing such incentives and penalties.

5.       Interline  Agreement.   Partner  maintenance  personnel  traveling  to  provide
         critical  repair  services and dead heading  Partner  crews will be entitled to
         travel on Frontier and  Frontier  JetExpress  flights as must ride  passengers.
         Commuting  Partner  crew  members  and  all  other  Partner  employees  will be
         entitled to free travel on  Frontier's  and  Frontier  JetExpress  flights at a
         category one level below the lowest category for Frontier  employees.  Frontier
         employees will be entitled to travel on Frontier  JetExpress  Flights under the
         category of travel to which they are  entitled  to travel on Frontier  flights,
         and will be entitled to travel on all other  Partner  flights at a category one
         level below the lowest category for Partner and Alaska Air Group employees.

6.       Payment  of  Fees.  Frontier  hereby  agrees  to  pay  the  following  sums  as
         consideration  for this Agreement and the provision of the Flight  Services and
         Other Services provided for herein:

         6.1      Estimated  Payments.  Ten (10)  business  days prior to the first
                  calendar day of each month in the Term, Frontier will provide operating
                  statistics  for the coming  month  based on the  number  of  Aircraft,
                  departures,  block  hours  and  revenue  passenger  miles to be flown
                  during the coming month assuming a [***] FCF (the "Estimated Statistics").
                  No later than five (5) business days  prior to the first calendar day of
                  each  month,  Partner  will invoice  Frontier for the estimated total
                  Fixed Costs, Variable Costs and Pass Thru Costs,  plus a margin of [***]
                  (the  "Standard  Margin") of the total of such items (the total of such
                  costs plus the  Standard Margin referred to as the "Estimated  Costs")
                  that will be incurred by Partner in connection  with providing the Flight
                  Services based on the Estimated  Statistics,  or, if  Frontier  fails to
                  provide Estimated Statistics, based on the Estimated Statistics provided
                  for the prior month.  Frontier will then pay the Estimated Costs no later
                  than (i) the first  business  day of the month  for which the  Estimated
                  Costs have been invoiced, or (ii) five (5) business days following receipt
                  by Frontier of the invoice, whichever is later. .

                  On or before the  Effective  Date,  Frontier  will pay to Partner  the
                  Estimated  Costs  for  the  first  two  months  of  Flight   Services.
                  Thereafter,  on the first  business day of each month during the Term,
                  Frontier  will pay to Partner the Estimated  Costs for the  subsequent
                  month of Flight Services.  For example,  on January 1, 2004,  Frontier
                  will pay to Partner the  Estimated  Costs for January and  February of
                  2004.  On  February  1,  2004,   Frontier  will  pay  to  Partner  the
                  Estimated Costs for March 2004.

         6.2      Settlement of Actual Costs.

                  6.2.1    Fixed  Costs.  Except  as  may be  modified  for  the  Option
                  Fleet,  Fixed  Costs  will  remain  fixed  during  the  term  of  this
                  Agreement  and  payment of the Fixed  Costs by Frontier at the time of
                  payment of the Estimated  Costs will be considered  payment in full of
                  the Fixed Costs.

                  6.2.2    Variable  Costs.  Upon  receipt  of  the  reports  due  under
                   Section 4.6 and  determination of the Utilization  Guaranty  described
                  in Section 6.5,  Frontier will  determine  final  Variable  Costs (the
                  "Final Variable  Costs") for the prior month by multiplying the higher
                  of (i) the actual  Unit of  Measure  incurred  in the prior  month for
                  each of the  Variable  Cost set forth on  Exhibit  6.1.1,  or (ii) the
                  Unit of Measure applicable under the Utilization  Guaranty,  times the
                  relevant  Unit Cost.  If the Final  Variable  Costs plus the  Standard
                  Margin exceed the Variable Costs and Standard  Margin paid by Frontier
                  as part of the  Estimated  Costs at the  beginning of the prior month,
                  Frontier  will pay to Partner the excess  within 10 business  days or,
                  at Partner's  option and  request,  add the excess to the next payment
                  of  Estimated  Costs.  If the Final  Variable  Costs are less than the
                  Variable  Costs and  Standard  Margin  paid by Frontier as part of the
                  Estimated Costs under Section 6.1,  Partner will pay the difference to
                  Frontier  within 10 business days or, at Frontier's  option,  Frontier
                  may deduct the difference from the next payment of Estimated Costs.

                  6.2.3    Pass  Thru  Costs.  Within  60 days of the end of each  month
                  during  the term,  Partner  will  provide  Frontier  with  preliminary
                  information   and   supporting    invoices   and   other    supporting
                  documentation as may reasonably be requested by Frontier,  relating to
                  the  actual  Pass  Thru  Costs  incurred  by  Partner  in such  month.
                  Frontier  will then  calculate  the total Pass Thru Costs as evidenced
                  by the  supporting  documentation  and  invoices  times  the  Standard
                  Margin (the "Actual Pass Thru Costs").  If the  aggregate  Actual Pass
                  Thru Costs  plus the  Standard  Margin  for the Fleet  exceed the Pass
                  Through  Costs and  Standard  Margin  paid by  Frontier as part of the
                  Estimated  Costs  under  Section 6.1 for the month in which such costs
                  were  incurred,  Frontier  will pay to Partner  the  excess  within 10
                  business days or, at Partner's  option and request,  add the excess to
                  the next  payment by Frontier of  Estimated  Costs.  If the  aggregate
                  Actual Pass Thru Costs are less than the Pass Thru Costs and  Standard
                  Margin paid by Frontier as part of the  Estimated  Costs under Section
                  6.1 for the month in which such costs were incurred,  Partner will pay
                  the  difference to Frontier  within 10 business days or, at Frontier's
                  option,  Frontier may deduct the  difference  from the next payment of
                  Estimated Costs.  Notwithstanding  settlement of the above payments at
                  the end of the 60 day period  described  above,  it is understood that
                  Partner may receive additional  invoices and supporting  documentation
                  with respect to Pass Thru Costs after the 60 day period.  Partner will
                  have the right to submit such  further  invoices  or other  supporting
                  documentation  to Frontier  with  respect to Pass Thru Costs up to 120
                  days from the end of the month in which  such  Pass  Thru  Costs  were
                  incurred by Partner,  at which time  Frontier  and Partner will settle
                  any over or  underpayment  of the Pass Thru Costs in  accordance  with
                  the  procedures   described  above.  No  further  settlement  of  Pass
                  Through Costs will be permitted after the close of the 120 day period.

         6.3      Variable  Cost  Adjustments.  The  Adjustable  Portion of the Variable
                  Costs as set forth on Exhibit  6.1.1 will be  adjusted as set forth in
                  this  Section 6 using the  indices  set forth next to the  category of
                  Variable Costs.

                  6.3.1    Definition.  "CPI" shall mean the Consumer Price Index,  U.S.
                           City Average,  Urban Wage Earners and Clerical  Workers,  All
                           Items (base  index year  1982-84 = 100) as  published  by the
                           United   States   Department   of  Labor,   Bureau  of  Labor
                           Statistics.  If the manner in which the Consumer  Price Index
                           as  determined  by the  Bureau of Labor  Statistics  shall be
                           substantially  revised,  including,   without  limitation,  a
                           change in the base index year,  an  adjustment  shall be made
                           by the parties in such  revised  index  which  would  produce
                           results  equivalent,  as nearly as  possible,  to those which
                           would have been  obtained  if such  Consumer  Price Index had
                           not  been so  revised.  If the  Consumer  Price  Index  shall
                           become  unavailable to the public because  publication is not
                           readily   available   to  enable  the  parties  to  make  the
                           adjustment  referred  to in this  Section,  then the  parties
                           shall  mutually  agree to  substitute  therefore a comparable
                           index based upon changes in the cost of living or  purchasing
                           power  of  the  consumer   dollar   published  by  any  other
                           governmental  agency or, if no such index shall be available,
                           then a  comparable  index  published by a major bank or other
                           financial  institution  or by a  university  or a  recognized
                           financial publication.

                  6.3.2    Adjustment  Formula.  On each  anniversary  of the  Effective
                           Date (each an  "Adjustment  Date")  and  except as  otherwise
                           specifically  provided  for in this  Agreement,  to determine
                           the  amount  of  adjustment  or  increase  based on CPI,  the
                           applicable  Adjustable  Portion of  Variable  Costs in effect
                           for the prior twelve months shall be adjusted by  multiplying
                           the  Adjustable  Portion of Variable  Costs in effect for the
                           prior twelve months by a fraction,  the numerator which shall
                           be the CPI for the  third  full  calendar  month  immediately
                           preceding the Adjustment  Date, and the  denominator of which
                           shall  be  the  CPI  for  the  same  calendar  month  in  the
                           immediately preceding twelve month period (the "Adjustment").

                  6.3.3    MTX  Adjustment.   Variable Costs relating to maintenance
                           operations  and  identified  as adjusted  pursuant to the MTX
                           Index will be adjusted on each  anniversary  of the Effective
                           Date pursuant to the formula set forth on Exhibit 6.3.3.

                  6.3.4    Negotiated  Variable  Cost  Adjustment.   [***].

         6.4      Net Pre-Tax  Operating Margin Payment.  In addition to the amounts set
                  forth above,  Frontier  will pay to Partner an incentive  payment (the
                  "Incentive  Payment")  relating to the pre-tax  net  operating  margin
                  [***]

                  The  Incentive  Payment  will  be  calculated  by  Frontier  within  5
                  business  days  following  the  filing  of  its  quarterly   financial
                  statements  with the SEC. The Incentive  Payment so determined will be
                  paid to Partner at the time of the next  payment of  Estimated  Costs.
                  Notwithstanding  the above,  Partner  will have no right to receive an
                  Incentive  Payment,  and  the  quarterly  Incentive  Payment  will  be
                  pro-rated,  for any month during the quarter Partner is in an OTP Cure
                  Period as defined in section  7.3 or an FCF Cure  Period as defined in
                  section 7.4

         6.5      Utilization  Guarantee.  Frontier will guarantee a minimum daily block
                  hour utilization  based on its original  estimate of [***] block hours
                  per Aircraft in the Fleet less all Spare  Aircraft.  For example,  for
                  10 Core Aircraft,  Frontier would guarantee any Schedule would require
                  [***]  total  block  hours of flight per day (10 Core  Aircraft  times
                  [***] hours per day) during the Schedule  period.  If Frontier  either
                  (i) scheduled  fewer than the 10 Core Aircraft,  or (ii) scheduled the
                  10 Core  Aircraft  for fewer  than  [***]  hours per day,  during  its
                  settlement of Variable Costs under Section 6.2.2,  notwithstanding the
                  actual figures  reported by Partner,  Frontier would need to calculate
                  the  Variable  Costs as if the actual  aircraft  and block hours flown
                  during  the  period  were 10 and [***],  respectively.  Frontier  will
                  also gross up any  reduction  in the  Aircraft  and block  hours flown
                  during any period from the guaranteed  amount due to acts or omissions
                  of Frontier's  employees,  agents, or subcontractors.  Notwithstanding
                  the above,  Frontier  will not be liable for any  reduction  in actual
                  Aircraft  or block hours  flown  during any period due to  maintenance
                  requirements  (includes heavy checks),  an  Extraordinary  Maintenance
                  Event (as defined in Section 6.7),  weather,  air traffic control,  or
                  matters within Partner's Control.

         6.6      Statements  and Audit Rights.  All  statements  and other  information
                  supplied by Partner  pursuant to Section 4.5 and this  Section 6 shall
                  be  accompanied   by  such   supporting   information,   documentation
                  described  on  Exhibit  6.6  attached  hereto,  and  as  Frontier  may
                  reasonably  request from time to time (the "Backup  Information").  If
                   Frontier  reasonably disputes the amount set forth in any statement or
                  the Backup Information is inadequate,  incomplete or inaccurate,  then
                  Frontier  shall pay the  undisputed  portion of such statement and the
                  portions for which the Backup  Information  is adequate,  complete and
                  accurate,  timely, and together with such payment provide Partner with
                  a written  statement  detailing  any disputed  amount and the specific
                  amounts for which the Backup Information is inadequate,  incomplete or
                  inaccurate.  Frontier  and Partner  shall meet and confer on a regular
                  basis as  necessary  to resolve any  disputed  amount and  inadequate,
                  incomplete  or  inaccurate  Backup  Information  within 30 days  after
                  Frontier  provides  notice of the dispute.  Both  Frontier and Partner
                  agree that it is in the best  interest  of both  parties to  initially
                  attempt  to resolve  disputes  without  the use of third  parties in a
                  cost effective manner. In the event resolution is not successful,  the
                  parties will mutually  agree to use  alternative  dispute  services as
                  described  in  Section 15.12,   unless  otherwise   agreed.   Disputed
                  amounts and shall not be payable  until the  dispute is  resolved  and
                  then shall be payable within 10 days after the dispute is resolved.

                  Frontier or Partner,  upon 10 business days' prior written notice, may
                  at  its  sole  cost  and  expense  review  and  audit,  or  cause  its
                  independent  accountants to review and audit for the preceding  twelve
                  months  of  operations,   records,   files,   information,   data  and
                  documentation   (including   computer   data  bases)  (the   "Record")
                  maintained by the other party specifically  related to the calculation
                  of the  payments  required  to be made by  Frontier  pursuant  to this
                  Agreement.  Both  parties will allow the other's  internal  auditor or
                  designees to  participate  in such review,  audit and  findings.  If a
                  party's review of the Records  reveals an overcharge or  underpayment,
                  then upon  demand  (subject to the other  party's  right to review and
                  dispute such  findings),  the  appropriate  adjustment will be made as
                  specified  above.  If the  overpayment  and/or  underpayment is 10% or
                  more than the amount  that  should  have been  charged  or paid,  then
                  there will also be a requirement of  reimbursement  for all reasonable
                  out of pocket  fees,  expenses  and  charges,  including  the fees and
                  charges of independent  accountants  retained by the auditing party to
                  complete  the  audit  permitted  by  this  Section,   within  30  days
                  following  receipt of a  detailed  invoice  setting  for the nature of
                  such fees,  charges and expenses.  Partner and Frontier shall maintain
                  all Records used in calculating  the sums payable or receivable  under
                  this  Agreement in good condition and order at Frontier's or Partner's
                  corporate  headquarters  for at least  three (3)  years  from the date
                  such  Records  are  created.  Frontier  and  Partner  acknowledge  and
                  understand  that audit  rights  under this  Section  shall be strictly
                  limited to the Records involving the Frontier JetExpress operations.

         6.7      Extraordinary  Maintenance  Event.  When an AD or a major component
                  failure that affects the Partner's entire fleet of CRJ-700 aircraft  (an
                  "Extraordinary Maintenance Event") occurs, Partner will advise Frontier's
                  VP Maintenance as soon as practicable.  Partner will then collect records
                  and reports for all costs  and  expenses relating to the cure of the
                  Extraordinary Maintenance Event and submit to Frontier for review and
                  approval, which approval will not be unreasonably withheld. Upon approval,
                  Frontier  will  reimburse  Partner  for all such  costs  and  expenses
                  according  to the  following  formula:  the total  approved  costs and
                  expenses will be divided by total  Partner fleet of CRJ-700  aircraft,
                  with the  quotient  further  divided by the  average  number of months
                  remaining  on the  leases  or  loans  in  place  with  respect  to the
                  Partner's  total Fleet.  This amount per month will then be multiplied
                  by the  number  of  Aircraft  in the  Fleet  and the  number of months
                  remaining in the term of this  Agreement.  Frontier  will then, at its
                  option,  either  (i) pay the  amounts  as a lump sum,  or (ii) pay the
                  amount  per month  per  aircraft  during  the  remaining  term of this
                  Agreement  as a  Pass  Thru  Cost;  provided  no  Standard  Margin  or
                  Incentive  Payment  will  be  made  on  these  amounts  or  costs.  If
                  Frontier  and  Partner  are unable to agree  whether an  Extraordinary
                  Maintenance  Event occurred or the costs  associated  with  addressing
                  the  Extraordinary  Maintenance  Event,  the  parties  agree to use an
                  independent  arbitrator  with  expertise  in aviation  maintenance  to
                  resolve the dispute.  Should the arbitrator  rule in favor of Partner,
                  the amortization  period will be as if it were the date the costs were
                  first presented to Frontier.  Any  cancellations  and delays resulting
                  from an  Extraordinary  Maintenance  Event will not be included in the
                  determination of Partner's OTP or FCF calculations  under both Section
                  4 and  Section  7. For the  period  of the  Extraordinary  Maintenance
                  Event,  Frontier will only pay a margin and bonus margin on those days
                  not  impacted  by the  event.  For  purposes  of  "Net-Pre  Tax Margin
                  Termination"  the quarter  during which an  Extraordinary  Maintenance
                  Event has occurred will not be included in the calculation.

         6.8      Start-up costs.  Frontier shall reimburse Partner for Start-up costs
                  as set forth in Exhibit 6.1.2.

7.       Term and Termination.

         7.1      Term.  The  term of this Agreement (the "Term") commences on
                  the  Effective  Date  and  shall  expire ("Expiration  Date") on the
                  12th anniversary of the Effective Date or, unless earlier terminated as
                  provided in this Agreement.

         7.2      Agreement  Review.  Frontier  and  Partner shall meet within  60 days
                  prior  to the  third  and  sixth anniversary of the Effective  Date of
                  the  Agreement.  The purpose of this  meeting shall be to evaluate and
                  modify the Agreement as the parties may deem appropriate. In the event
                  the meeting does not occur by the anniversary date, or no agreement is
                  reached  on  modifications of  the Agreement proposed by either party,
                  within thirty days of the receipt of a proposal, at the sole discretion
                  of either party. Frontier or Partner shall have the right to terminate
                  this Agreement upon 30 days written notice (an "Interim Termination Notice").
                  In the event of an Interim Termination Notice, there shall be a one year
                  Ramp Down Period as described  in Section 7.9,  during which all terms
                  of  the  Agreement  then  effect,  shall  control  both  Frontier  and
                  Partner.

         7.3      OTP Rate Early  Termination.  If at any time during the Term Partner's
                  OTP Rate falls  below the lower of (i)  Frontier's  OTP Rate,  or (ii)
                  [***]  (the  "OTP  Termination  Threshold")  for  three  of  any  four
                  consecutive calendar months (an "OTP Cancellation  Event"),  Frontier,
                  at its election,  may by written notice (an "OTP Performance  Notice")
                  inform  Partner that if Partner  does not achieve the OTP  Termination
                  Threshold and continue to meet the FCF Termination  Threshold for each
                  of the next two calendar  months after receipt of the OTP  Performance
                  Notice (the "OTP Cure  Period"),  Frontier,  at its option may give an
                  OTP  Termination  Notice (as defined  below).  If,  after the OTP Cure
                  Period has expired  Partner has not cured the OTP  Cancellation  Event
                  as set forth in the notice,  then  Frontier  may provide  Partner with
                  written  notice of its intent to terminate  this Agreement on the date
                  set  forth  therein  ("OTP  Termination  Notice"),  such date to be no
                  earlier  than 180 days  from the date the OTP  Termination  Notice  is
                  received by Partner.

         7.4      FCF Early  Termination.  If Partner's FCF falls below (a) for calendar
                  year 2004 and Ramp Down Period,  the lower of (i)  Frontier's  FCF, or
                  (ii) [***],  or (b) for any other year  during the Term,  the lower of
                  (i) Frontier's  FCF, or (ii) [***] (the "FCF  Termination  Threshold")
                  for  three  of  any  four  consecutive   calendar  months  (an  "FCF
                  Cancellation  Event"),  Frontier,  at its  election,  may  by  written
                  notice (an "FCF  Performance  Notice")  inform Partner that if Partner
                  does not achieve the FCF  Termination  Threshold  and continue to meet
                  the OTP  Termination  Threshold  for  each of the  next  two  calendar
                  months  after  receipt of the FCF  Performance  Notice (the "FCF Cure
                  Period"),  Frontier,  at its option may give an FCF Termination Notice
                  (as  defined  below).  If,  after  the FCF  Cure  Period  has  expired
                  Partner has not cured the FCF  Cancellation  Event as set forth in the
                  notice by the end of the FCF Cure  Period,  then  Frontier may provide
                  Partner with written  notice of its intent to terminate this Agreement
                  on the date set forth therein ("FCF  Termination  Notice"),  such date
                  to be no  earlier  than  180 days  from  the date the FCF  Termination
                  Notice is received by Partner.

         7.5      Overall  Performance Early Termination.  Beginning January 1, 2005 and
                  on January 1 of each  subsequent  year during the Term,  Frontier will
                  calculate  Partner's  FCF and OTP for the  prior 24 month  period.  If
                  either (i) Partner's OTP fails to meet the OTP Termination  Threshold,
                  or (ii)  Partner's FCF falls below the FCF  Termination  Threshold for
                  such 24 month period,  Frontier will have the right, at its option and
                  at any time until June 30th of the year in which the  calculations are
                  made,  to terminate  the term of this  Agreement  upon 180 days' prior
                  written notice.

         7.6      Change of Control  Termination. This Agreement may be terminated
                  by either  Partner or Frontier in the event  the  other  party,  including,
                  in the case of Partner, all Affiliated Service Providers, experiences a
                  change in control or a sale of substantially all of its assets by providing
                  30 days' prior written notice (the "Change Termination Notice"). For
                  purposes of this  paragraph,  "change of control"  means any person or
                  group (each as used in section  13(d)(3) and 14(d)(2) of the Exchange
                  Act) either becomes  the  beneficial  owner,  directly  or  indirectly,
                  of voting securities  of either party  representing  50% or more of the
                  combined voting power of all  securities of the party on a fully diluted
                  basis, or  otherwise  has the ability, directly or indirectly, to elect a
                  majority of the board of directors of the party.

         7.7      Route Overlap Termination. The following defined terms shall apply
                  only for purposes of this Section 7.7:  (i) "Affiliate" means an
                  entity majority owned by, owned in common with, or controlled by a
                  party; (ii) "F9" means Frontier Airlines, Inc. and all Affiliates;
                  (iii) "QX" means Alaska Air Group and all Affiliates; (iv) "Routes"
                  means markets served using non-stop flights; (v) "Flight Leg" is one
                  take-off and landing on a Route; (vi) "F9 Flight Legs" means the
                  total number of Flight Legs on all Routes served by F9, or by Partner
                  pursuant Flights operated under this Agreement, using aircraft
                  operated by F9 or Partner, but not including Routes served by its
                  other code share partners operating aircraft not owned or operated by
                  F9 or Partner; (vii) "F9 Departing Seats" means the total number of
                  seats on the aircraft operated on the F9 Flight Legs; (viii) "QX
                  Flight Legs" means the total number of Flight Legs on all Routes
                  served by QX using aircraft operated by QX, but not including Routes
                  served by its other code share partners operating aircraft not owned
                  or operated by QX; (ix) "QX Departing Seats" means the total number
                  of seats on the aircraft operated on the QX Flight Legs; (x)
                  "Overlap Legs" means the number of Flight Legs flown by both F9 and
                  QX on the same Routes; and (xi) "Overlap Seats" means the number of
                  seats on the aircraft operated on the Overlap Legs.

                  On the Effective Date, Frontier will calculate the number of F9
                  Departing Seats and Partner will calculate the number of QX Departing
                  Seats, each based on an average peak day in its schedule for the
                  month of January 2004.  An overlap ratio (the "Base Ratio") will be
                  determined in accordance with the following formula:

                                              [***]

                           where,


                           [***]

                           with all calculations rounded up to the nearest whole number

                  On each anniversary of the Effective Date, Frontier and Partner will
                  calculate an Overlap Ratio in accordance with the procedures and
                  formula set forth above.  If the then computed Overlap Ratio is
                  greater than [***] the Base Ratio, then either party may terminate
                  this Agreement by providing no fewer than 30 days' prior written
                  notice (a " Route Overlap Notice") to the other party.

         7.8      Effect of  Termination.  If either  party  elects  to  terminate  this
                  Agreement  pursuant to this Section 7, Frontier and Partner shall make
                  all  payments  as  required  by this  Agreement,  with full  rights of
                  setoff as set forth herein,  for the period  through and including the
                  termination  date set forth in the notice provided under Sections 7.2,
                  7.3, 7.4, 7.5, 7.6, or 7.7, as applicable.

         7.9      Ramp Down  Period.  At the final year of the Term,  or in the event of
                  an early  termination  under Sections 7.2, 7.6 or 7.7, a one-year ramp
                  down period will be  permitted  under which  Aircraft  will be removed
                  from the  Fleet at a rate of 25% of the  Aircraft  then in the  Fleet,
                  rounded up to the nearest  whole number,  per 90 day period  following
                  the  effective  date of  termination  upon  the end of the  Term or as
                  required by such  notice.  Any notice of  termination  under  Sections
                  7.2,  7.6 or 7.7 will state the dates on which the  Aircraft are to be
                  removed from the Fleet.  For a  termination  upon the end of the Term,
                  Frontier  must provide  Partner 180 days notice of date that  aircraft
                  will be taken out within each 90-day period.

8.       Service Mark License For Services Provided By Partner.

         8.1      Grant of  License.  For the  payment of $1.00,  Frontier  and  Partner
                  each  hereby  grant to the  other a  non-exclusive,  non-transferable,
                  revocable  license to use the other's  Service  Marks as Frontier  and
                  Partner may  designate,  in writing,  from time to time solely for the
                  purpose of  conducting  the Flight  Services and Other  Services to be
                  rendered  by  Partner;  provided,  however,  that at any time prior to
                  expiration or termination  of this Agreement  Frontier and Partner may
                  alter,  amend or revoke the  license  hereby  granted  and require the
                  other's use of any new or different  Frontier or Partner  Service Mark
                  in  conjunction  with the Flight  Services as Frontier and Partner may
                  determine in its sole discretion and judgment.

         8.2      Terms and Conditions Governing Service Mark License.

                  8.2.1    Frontier  and  Partner  hereby  acknowledge   Frontier's  and
                           Partner's   ownership  of  their  respective  Service  Marks,
                           further  acknowledge the validity of their Service Marks, and
                           agree that it shall not do  anything  in any way to  infringe
                           or abridge upon the other's  rights in their Service Marks or
                           directly  or  indirectly  to  challenge  the  validity of the
                           other's  Service  Marks.  Frontier's and Partner's use of the
                           Service Marks inures to the benefit of the respective  party.
                           Frontier  and Partner  will sign any lawful  documents,  make
                           any  lawful  declaration,  or provide  affidavits,  the other
                           reasonably   requests  in   connection   with  any  trademark
                           application  or  registration  for the  Frontier  or  Partner
                           Service Marks or any variation thereof.
                  8.2.2    To assure that the production,  appearance and quality of the
                           Frontier   Service  Marks  is  consistent   with   Frontier's
                           reputation for high quality and the goodwill  associated with
                           the  Frontier  Service  Marks,  Partner  agrees to maintain a
                           level of quality  consistent with  Frontier's  quality in the
                           Flight  Services it provides  pursuant to this  agreement and
                           to follow Frontier's  written  instructions  regarding use of
                           the  Frontier's  Service  Marks,  as they may be amended from
                           time to time.  Partner  also  retains  the  right to  require
                           Frontier to follow Partner's written  instructions  regarding
                           use of the Partner's  Service Marks,  as they may be modified
                           from time to time.
                  8.2.3    Frontier  and Partner  agree that,  in  providing  the Flight
                           Services  and Other  Services,  they shall not  advertise  or
                           make use of either  party's  Service  Marks without the prior
                           written  consent of the other.  Frontier  and  Partner  shall
                           have absolute  discretion to withhold its consent  concerning
                           any and all such  advertising and use of its Service Marks in
                           any  advertising.  In the event Frontier or Partner  approves
                           the  use of  its  Service  Marks  in  any  advertising,  such
                           advertising  shall  identify the owner of such Service  Marks
                           and conform  with any  additional  requirements  specified by
                           the owner.
                  8.2.4    To the extent that either party  licenses the use its Service
                           Marks,  the Service  Marks  shall be used only in  connection
                           with  the  Flight  Services  and not in  connection  with any
                           other business or activity of Frontier,  Partner or any other
                           entity.
                  8.2.5    Nothing in this  agreement  shall be construed to give either
                           party the  exclusive  right to use the other's  Service Marks
                           or abridge the  owner's  right to use and license the Service
                           Marks,  and Frontier and Partner  herby  reserve the right to
                           continue to use its Service  Marks and to license  such other
                           uses of its Service Marks, as it may desire.
                  8.2.6    No term or provision of the  Agreement  shall be construed to
                           preclude  Frontier  from  allowing  the  use of the  Frontier
                           Service  Marks,   including  "Frontier  JetExpress,"  or  the
                           aircraft   exterior   color  decor  and   patterns  by  other
                           individuals or entities not covered by this Agreement.
                  8.2.7    Upon the  termination  or expiration of this  Agreement,  the
                           license and use of the Frontier and Partner  Service Marks by
                           the other  shall  cease  and such use  shall  not  thereafter
                           occur.
9.       Liability and Indemnification.

         9.1      Relationship   Between  the   Parties.   Nothing   contained  in  this
                  Agreement  will be deemed  to create  any  agency  or  partnership  or
                  similar relationship  between Frontier and Partner.  Nothing contained
                  in this  Agreement  will be deemed to  authorize  either  Frontier  or
                  Partner to bind or  obligate  the  other.  Partner  and its  employees
                  engaged in performing the Flight  Services and Other Services shall be
                  employees  of Partner  for all  purposes,  and under no  circumstances
                  shall be deemed to be employees,  agents or independent contractors of
                  Frontier.  Frontier  and  its  employees  engaged  in  performing  the
                  obligations  of  Frontier  under this  Agreement  shall be  employees,
                  agents and independent  contractors of Frontier for all purposes,  and
                  under no  circumstances  shall be  deemed to be  employees,  agents or
                  independent  contractors  of  Partner.  Pursuant  to  this  Agreement,
                  Partner shall act, for all purposes, as an independent  contractor and
                  not as an agent  for  Frontier.  Frontier  shall  have no  supervisory
                  power or control over any  employees  engaged by Partner in connection
                  with their  performance  hereunder,  and all  complaints  or requested
                  changes  in  procedures   shall  be   transmitted  by  Frontier  to  a
                  designated  officer of Partner.  Nothing  contained in this  Agreement
                  shall be intended to limit or  condition  Partner's  control  over its
                  operations  or the  conduct of its  business  as an air  carrier,  and
                  Partner and its principals  assume all risks of financial losses which
                  may  result  from the  operation  of the  Flight  Services  and  Other
                  Services to be provided by Partner hereunder.
                  Each party  accepts full and  exclusive  liability for the payments of
                  workers'  compensation  and employer's  liability  insurance  premiums
                  with  respect to its own  employees  and for the payment of all taxes,
                  contributions or other payments for  unemployment  compensation or old
                  age  benefits,  pensions or annuities  now or  hereafter  imposed upon
                  employers  by the  government  of the  United  States  or by any other
                  national,  state, or local governmental  authority having jurisdiction
                  with respect to a party's employees,  measured by the wages, salaries,
                  compensation,  or  other  remuneration  paid to a  party's  employees.
                  Each party  further  agrees to make such payments and to make and file
                  all reports,  and to do  everything  necessary to comply with the laws
                  imposing such taxes, contributions or other payments.

         9.2      Indemnification  by Partner.  Partner agrees to indemnify,  defend and
                  hold harmless Frontier, its directors,  officers,  employees,  agents,
                  parent corporation,  subsidiaries and affiliates for, from and against
                  any and all loss,  liability,  claim, damage,  penalty,  fine, charge,
                  cause of action,  demand,  cost and expense (including  attorneys' and
                  consultants' fees and costs) whatsoever (collectively,  "Damages"), as
                  incurred,  arising out of, or resulting from: (i) the provision of the
                  Flight   Services  by  Partner  or  any  of  its  employees,   agents,
                  licensees,  officers  or  directors;  (ii)  Partner's  breach  of this
                  Agreement;  (iii) damage or destruction of property of any person,  or
                  injury  or death of any  person,  caused  by,  arising  out of,  or in
                  connection  with  any  act or  omission  of  Partner,  its  employees,
                  agents, licensees, contractors,  suppliers, officers or directors; and
                  (iv) Partner's  failure to comply with any Regulations.  Partner shall
                  reimburse  Frontier or other  Indemnified Party (as defined below) for
                  any   legal   and  any   other   expenses   reasonably   incurred   in
                  investigating,  preparing  or  defending  against  any claim or action
                  arising  out of or  relating to any of the  foregoing.  The  indemnity
                  provisions  of this  paragraph  9.2 will not apply if it is determined
                  by final  decision of a court or tribunal  that,  with  respect to the
                  cause of the  applicable  Damages,  the  percentage of  responsibility
                  allocated  to Partner is less than the  percentage  of  responsibility
                  allocated  directly to Frontier for its negligence,  gross negligence,
                  or  willful  misconduct.  The  indemnification   obligations  of  this
                  paragraph  9.2  shall  survive   termination  or  expiration  of  this
                  Agreement.

         9.3      Indemnification  by Frontier.  Frontier  agrees to  indemnify,  defend
                  and  hold  harmless  Partner,  its  directors,   officers,  employees,
                  agents,  subsidiaries  and affiliates and their officers and directors
                  for,  from and against any and all Damages,  as incurred,  arising out
                  of, or resulting from: (i) Frontier's  breach of this Agreement;  (ii)
                  damage or  destruction  of property of any person,  or injury or death
                  of any person,  caused by,  arising out of, or in connection  with any
                  act  or  omission  of  Frontier,  its  employees,  agents,  licensees,
                  contractors,   suppliers,   officers  or   directors   in   performing
                  Frontier's  obligations or in connection with Flight  operations;  and
                  (iii)  Frontier's  failure  to  comply  with  any of the  Regulations.
                  Frontier  shall  reimburse  Partner  or other  Indemnified  Party  (as
                  defined  below)  for any  legal  and  any  other  expenses  reasonably
                  incurred in  investigating,  preparing or defending  against any claim
                  or action  arising  out of or relating  to any of the  foregoing.  The
                  indemnity  provisions  of this  paragraph  9.3 will not apply if it is
                  determined  by  final  decision  of a court  or  tribunal  that,  with
                  respect to the cause of the  applicable  Damages,  the  percentage  of
                  responsibility  allocated to Frontier is less than the  percentage  of
                  responsibility  allocated  directly  to  Partner  for its  negligence,
                  gross  negligence,   or  willful   misconduct.   The   indemnification
                  obligations  of  this  paragraph  9.3  shall  survive  termination  or
                  expiration of this Agreement.


         9.4      Conduct  of   Indemnification   Proceedings.   The  person  or  entity
                  claiming indemnification hereunder is referred to as the "Indemnified
                  Party" and the party  against whom such claims are asserted  hereunder
                  is referred to as the  "Indemnifying  Party".  Each Indemnified  Party
                   shall give reasonably  prompt notice to the Indemnifying  Party of any
                  action  or  proceeding  or  assertion  or  threat  of claim  commenced
                  against it in respect of which indemnity may be sought hereunder,  but
                  failure to so notify the Indemnifying  Party (i) shall not relieve the
                  Indemnifying  Party  from any  liability  which it may have  under the
                  indemnity  agreement  provided  in this  Agreement,  unless and to the
                  extent the Indemnifying  Party did not otherwise learn of such action,
                  threat  or  claim  and the lack of  notice  by the  Indemnified  Party
                  results in the  forfeiture by the  Indemnifying  Party of  substantial
                  rights and  defenses  and (ii) shall not,  in any event,  relieve  the
                  Indemnifying  Party  from any  obligations  to the  Indemnified  Party
                  other than the indemnification obligation provided under Sections 9.2
                  and 9.3 above.  If the  Indemnifying  Party elects within a reasonable
                  time after receipt of notice,  the  Indemnifying  Party may assume the
                  defense  of the  action or  proceeding  at  Indemnifying  Party's  own
                  expense with counsel chosen by the Indemnifying  Party and approved by
                  the Indemnified  Party;  provided,  however,  that, if the Indemnified
                  Party reasonably  determines upon advice of counsel that a conflict of
                  interest exists where it is advisable for the Indemnified  Party to be
                  represented  by  separate  counsel or that,  upon  advice of  counsel,
                  there may be legal  defenses  available to it which are different from
                  or in addition to those available to the Indemnifying  Party, then the
                  Indemnified  Party shall be  entitled  to separate  counsel at its own
                  expense,  which  counsel shall be chosen by the  Indemnified  Party in
                  its sole  discretion.  If the  Indemnifying  Party does not assume the
                  defense,  after having  received the notice  referred to in the second
                  sentence  of  this  Section,  the  Indemnifying  Party  will  pay  the
                  reasonable  fees and  expenses of counsel for the  Indemnified  Party.
                  Unless and until a final  judgment  that an  Indemnified  Party is not
                  entitled to the costs of defense  under the foregoing  provision,  the
                  Indemnifying  Party shall  reimburse,  promptly as they are  incurred,
                  the Indemnified Party's costs of defense.


         9.5      Insurance.


                  9.5.1    Frontier  and  Partner,  at all times during the Term of this
                           Agreement,  shall have and maintain in full force and effect,
                           policies of insurance  of the types of  coverage,  and in the
                           minimum  amounts  stated  below with  insurance  companies of
                           recognized   reputation  and  responsibility  in  the  United
                           States  commercial  air  carrier  industry,  licensed  to  do
                           business in the state(s) of the  location(s)  covered by this
                           Agreement,  including insurance coverage on all Aircraft used
                           to provide Flight Services.  Unless otherwise specified,  the
                           minimum  amounts of  insurance  coverage  required  hereunder
                           shall  be per  occurrence,  combined  single  limit  for  all
                           insurance coverage required hereunder.


                             1.   Aircraft Liability                   [***].per Occurence
                                     and Ground                          Combined Single
                                  Liability Insurance                  Limit of Liability
                                  (including Commercial                     for CRJs
                                  General Liability)

                                  a. Bodily Injury                      Included in
                                     and Personal                       Combined Single
                                     Injury - Passengers                      Limit

                                  b. Bodily Injury                      Included in
                                     and Personal                       Combined Single
                                     Injury - Third Parties                 Limit


                                  c. Property Damage                    Included in
                                                                        Combined Single
                                                                            Limit

                                                                        Per Accident

                             2.   Worker's Compensation                 Statutory
                                  Insurance (Company
                                  Employees)

                                  Employers' Liability                  [***].
                                  (Company Employees)

                                  Baggage                               [***] (per
                                  Liability                             Passenger),
                                                                        unlimited for
                                                                        assistive devices

                                  Cargo Liability                       [***] any One
                                                                        Aircraft.

                                                                        [***] any One
                                                                        Disaster with
                                                                        Terms, Limitations
                                                                        and Conditions
                                                                        Acceptable to
                                                                        Frontier

                  9.5.2    The parties hereby agree that from time to time during the Term
                           of this Agreement, Frontier and Partner may  agree  that it is
                           necessary for Partner to have and maintain amounts of insurance
                           coverage different from those amounts set forth in Section 9.5.1.
                           If these changes in coverage are agreed to by Partner, Partner
                           shall implement these changes upon the earlier of the renewal
                           of the applicable policy and the effective date of the Regulation,
                           if any, requiring the insurance coverage.

                  9.5.3    Partner and Frontier shall cause all policies of insurance which
                           they  maintain  pursuant  to this Agreement,  to be duly and
                           properly endorsed by Partner's insurance underwriters as follows:


                             9.5.3.1        To  provide  that   Partner's   underwriters
                                            shall waive any and all  subrogation  rights
                                            against Frontier,  its directors,  officers,
                                            agents and employees  without  regard to any
                                            breach  of   warranty   by   Partner  or  to
                                            provide  other  evidence  of such  waiver of
                                            recourse  against  Frontier,  its directors,
                                            officers,  agents,  or employees as shall be
                                            acceptable   to   Frontier   to  the  extent
                                            Partner is liable pursuant to Section 9.2.


                             9.5.3.2        To  provide  that  Frontier's   underwriters
                                            shall waive any and all  subrogation  rights
                                            against  Partner,  its directors,  officers,
                                            agents and employees  without  regard to any
                                            breach  of   warranty   by  Frontier  or  to
                                            provide  other  evidence  of such  waiver of
                                            recourse  against  Partner,  its  directors,
                                            officers,  agents,  or employees as shall be
                                            acceptable   to   Partner   to  the   extent
                                            Frontier is liable pursuant to Section 9.3.


                             9.5.3.3        Be duly and  properly  endorsed  to  provide
                                            that each such  policy  or  policies  or any
                                            part  or   parts   thereof   shall   not  be
                                            canceled,    terminated,    or    materially
                                            altered,  changed or amended by  Frontier or
                                            Partner's  insurance   underwriters,   until
                                            after 30 days'  written  notice to  Frontier
                                            or  Partner  which 30 days'  written  notice
                                            shall  commence  to run from  the date  such
                                            notice is issued to  Frontier  or Partner or
                                            such  shorter  period (10 days in respect to
                                            non-payment   of   premium/7days   or   such
                                            shorter  period  as my  exist in the case of
                                            a War Risk coverage).


                  9.5.4    With respect to policies of  insurance  described as Aircraft
                           Liability  and Ground  Liability  Insurance and to the extent
                           of the  indemnity  provided  by Partner  in  Section  9.2 and
                           Frontier in Section  9.3,  Frontier  and Partner will provide
                           that Frontier's and Partner's policies:


                             9.5.4.1        Name  the  other   party,   its   directors,
                                            officers,   agents,  parents,   subsidiaries
                                            and   employees   as   Additional   Insureds
                                            thereunder.


                             9.5.4.2        Constitute   primary   insurance   for  such
                                            claims  and   acknowledge   that  any  other
                                            insurance  policy or  policies  of the other
                                            party   will   be    secondary   or   excess
                                            insurance; and


                             9.5.4.3        Provide     a     cross-liability     clause
                                            acceptable to both  parties,  and a specific
                                            contractual  liability  insurance  provision
                                            covering  liability  assumed by Frontier and
                                            Partner under this Agreement.


                  9.5.5      With  respect  to  policies  of   insurance   for  coverage
                             described  as  Aircraft   Liability  and  Ground  Liability
                             Insurance,  Partner shall cause its insurance  underwriters
                             to provide a breach of warranty clause.


                  9.5.6      Upon  request by  Frontier  and Partner  shall  furnish the
                             other with  evidence of the  aforesaid  insurance  coverage
                             and by providing  certificates of insurance certifying that
                             the  aforesaid   insurance  policy  or  policies  with  the
                             aforesaid  policy limits are duly and properly  endorsed as
                             aforesaid and are in full force and effect.


                  9.5.7      Frontier shall maintain cargo liability coverage,  in types
                             and   amounts   required   by  law,   for  all   airfreight
                             transported  by  Partner  under a  Frontier  airbill on any
                             Flights.


10.  Confidentiality.

         10.1     Frontier and Partner agree that the terms of this  Agreement  shall be
                  treated as  confidential  and shall not be disclosed to third  parties
                  without the express  written  consent of Frontier and  Partner,  or as
                  required by law.  In the event of  disclosure  required  by law,  only
                  those  portions of this  Agreement  required to be disclosed  shall be
                  disclosed.  The  disclosing  party  shall make good  faith  efforts to
                  minimize  the  portions to be  disclosed  and shall seek  confidential
                  treatment  by  the   receiving   party  or  agency  for  any  portions
                  disclosed.  In the  event of one  party  being  served a  subpoena  or
                  discovery  request,  prior to  responding  to the subpoena or request,
                  the party  served  shall  notify the other  party to provide the other
                  party an  opportunity  to contest the  disclosure of any terms of this
                  Agreement.


         10.2     "Confidential  Information"  means the terms  and  conditions  of this
                  Agreement  and any and all  information  or data  shared  between  the
                  parties or learned  by either  party as the result of the  performance
                  of its obligations under this Agreement,  including but not limited to
                  information  and  data  relating  to  fares,   route  performance  and
                  profitability,   maintenance  programs,  technical  manuals,  or  load
                  factors,  in  any  form,   including,   without  limitation,   written
                  documents,  oral communications,  recordings,  videos,  software, data
                  bases,  business plans, and electronic and magnetic media,  except for
                  information  generally  available to the public.  Frontier and Partner
                  agree  that  they  shall  maintain  all  Confidential  Information  in
                  confidence and use such Confidential  Information  solely for purposes
                  of performance  under this Agreement.  Such  Confidential  Information
                  shall be  distributed  within each  party's  company only to personnel
                  and  to  its  legal  counsel,  auditors  and  other  consultants  on a
                  need-to-know  basis  for  purposes  related  to this  Agreement  or in
                  compliance   with  a  court   order   or   statutory   or   regulatory
                  requirements.   Except  for  legal  counsel  and   auditors,   and  as
                  permitted by Section  10.1,  in no event shall  either party  disclose
                  Confidential  Information to any third parties  except  subcontractors
                  and independent  consultants and then only if approved by both parties
                  in writing in advance  of such  disclosure.  Confidential  Information
                  does not include  information  that is available to the general public
                  other  than as a  result  of  disclosure  by the  disclosing  party or
                  information  that  was  known  or   independently   developed  by  the
                  receiving  party prior to disclosure,  as evidenced by records kept in
                  the ordinary course of business.


11.      Taxes.   Partner shall pay, prior to delinquency, those taxes related directly
         to the Partner's  provision of Flight  Services  under this  Agreement with the
         following exceptions.  For the purposes of this Agreement,  Partner will not be
         construed  as the  seller  of  transportation  to the  passenger.  Fuel  taxes,
         property  taxes,  and sales taxes on aircraft parts and  maintenance  equipment
         associated  with this Agreement will be treated as Pass Thru Costs.  Net income
         taxes on Partner's  profits are the  responsibility  of Partner.  Frontier will
         pay,  prior to  delinquency,  all taxes  imposed on any sums paid by Partner to
         Frontier under this Agreement.


12.      Defaults and Remedies.

         12.1     Default  by  Partner.  The occurrence of any one or more of the
                  following  events  shall  constitute  a material  default and breach
                  of this  Agreement by Partner (an "Event of Default"):

                  12.1.1   The failure of Partner to make any payment required to be made
                           to Frontier by Partner  hereunder,  as and  when due, and such
                           failure  continues for five (5) days  after  Partner's receipt
                           of written notice from Frontier;


                  12.1.2   The  failure of  Partner  to  observe  or perform  any of the
                           material   covenants,   conditions   or  provisions  of  this
                           Agreement to be observed or performed by Partner,  other than
                           as described in 12.1.1 and such failure shall  continue for a
                           period of 15 days after written  notice thereof from Frontier
                           to  Partner  or  such  longer  period  as may  be  reasonably
                           necessary  to  complete  the cure of such  failure  up to 120
                           days;   provided  Partner  commences  such  cure  during  the
                           initial 15-day period and pursues the cure to completion;


                  12.1.3   (i) the  cessation  of  Partner's  business  operations  as a
                           going  concern;  (ii) the making by  Partner  of any  general
                           assignment,   or  general  arrangement  for  the  benefit  of
                           creditors;  (iii) the  inability of Partner to generally  pay
                           Partner's  debts  as  they  come  due and  Partner's  written
                           admission  of its  inability  to pay its  debts as they  come
                           due;  (iv) the filing by or against  Partner of a petition to
                           have   Partner   adjudged   bankrupt   or  a   petition   for
                           reorganization  or  arrangement  under  any law  relating  to
                           bankruptcy  (unless,  in the case of petition  filed  against
                           Partner, the same is dismissed,  stayed or vacated within 120
                           days);  (v) an  adjudication  of Partner's  insolvency;  (vi)
                           appointment  of a trustee or receiver to take  possession  of
                           substantially   all  of   Partner's   assets   which  is  not
                           dismissed,  stayed or vacated  within 120 days;  or (vii) the
                           attachment,   execution   or  other   judicial   seizure   of
                           substantially   all  of   Partner's   assets   which  is  not
                           dismissed, stayed or vacated within 120 days.


                  12.1.4   Upon an Event of  Default,  Frontier  may  within  30 days of
                           such Event of  Default:  (a) by written  notice to Partner (a
                           "Default  Termination  Notice"),   terminate  this  Agreement
                           effective   as  of  the  date  set   forth  in  the   Default
                           Termination  Notice  which date shall not be less than 30 nor
                           more than 180 days after the date of the Default;  and/or (b)
                           pursue all other rights and  remedies  available at law or in
                           equity  to  Frontier  for the  Event of  Default,  including,
                           without limitation,  injunctive relief,  specific performance
                           and damages.  After receipt of a Default  Termination Notice,
                           Partner  shall  continue to provide the Flight  Services  and
                           Other Services in accordance  with this  Agreement  until the
                           termination date set forth in the Default  Termination Notice
                           and provided  Frontier has  satisfied its  obligations  under
                           the  Agreement.  No remedy or election by Frontier  hereunder
                           shall be deemed exclusive,  but shall,  wherever possible, be
                           cumulative  with all other  rights and  remedies at law or in
                           equity.


         12.2     Frontier  Default.  The occurrence of any one or more of the following
                  events  shall  constitute  a  material  default  and  breach  of  this
                  Agreement by Frontier (an "Frontier Event of Default"):


                  12.2.1   The failure of  Frontier  to make any payment  required to be
                           made to Partner by Frontier  hereunder,  as and when due, and
                           such  failure  continues  for two  (2)  business  days  after
                           Frontier's receipt of written notice from Partner;


                  12.2.2   The  failure of  Frontier  to  observe or perform  any of the
                           covenants,  conditions or provisions of this  Agreement to be
                           observed or performed  by  Frontier,  other than as described
                           in  Section  12.2.1 and such  failure  shall  continue  for a
                           period of 15 days after written  notice  thereof from Partner
                           to  Frontier  or  such  longer  period  as may be  reasonably
                           necessary  to complete  the cure of such  failure,  up to 120
                           days,  provided  Frontier  commences  such  cure  during  the
                           initial 15-day period and pursues the cure to completion;


                  12.2.3   (i) the  cessation of  Frontier's  business  operations  as a
                           going  concern;  (ii) the making by  Frontier  of any general
                           assignment,   or  general  arrangement  for  the  benefit  of
                           creditors;  (iii) the  inability of Frontier to generally pay
                           Frontier's  debts  as they  come  due or  Frontier's  written
                           admission  of its  inability  to pay its  debts as they  come
                           due; (iv) the filing by or against  Frontier of a petition to
                           have   Frontier   adjudged   bankrupt   or  a  petition   for
                           reorganization  or  arrangement  under  any law  relating  to
                           bankruptcy  (unless,  in the case of petition  filed  against
                           Frontier,  the same is  dismissed,  stayed or vacated  within
                           120 days);  (v) an  adjudication  of  Frontier's  insolvency;
                           (vi)  appointment of a trustee or receiver to take possession
                           of  substantially  all  of  Frontier's  assets  which  is not
                           dismissed,  stayed or vacated  within 120 days;  or (vii) the
                           attachment,   execution   or  other   judicial   seizure   of
                           substantially   all  of   Frontier's   assets  which  is  not
                           dismissed, stayed or vacated within 120 days.


                  12.2.4   Upon the occurrence  and  continuance of an Frontier Event of
                           Default  under  Section   12.2.1,   Partner  may  immediately
                           terminate this Agreement,  discontinue  Flight Services,  and
                           /or pursue all other rights and remedies  available at law or
                           in equity, including, without limitation,  injunctive relief,
                           specific  performance  and damages.  Under any other Frontier
                           Event of  Default,  Partner  may:  (a) by  written  notice to
                           Frontier  (an  "Frontier  Default  Notice")   terminate  this
                           Agreement  effective as of the date set forth in the Frontier
                           Default  Notice which date shall not be less than 30 nor more
                           than  180  days  after  the  date of the  Frontier  Event  of
                           Default;  and/or  (b) pursue  all other  rights and  remedies
                           available  at law or in equity to  Partner  for the  Frontier
                           Event of Default, including,  without limitation,  injunctive
                           relief,  specific  performance and damages.  After receipt of
                           a  Frontier  Default  Notice,   Frontier  shall  continue  to
                           perform  its  obligations  under  this  Agreement  until  the
                           termination  date set forth in the Frontier  Default  Notice.
                           No remedy or  election by Partner  hereunder  shall be deemed
                           exclusive,  but shall,  wherever possible, be cumulative with
                           all other rights and remedies at law or in equity.


13.  Records and Reports.


         13.1     Retention of Records.  Frontier  and Partner  shall retain all records
                  developed in connection  with this Agreement in accordance the express
                  terms of this  Agreement  and as  required by  applicable  law and the
                  Regulations.


         13.2     Provision   of   Additional   Records.   Subject  to  DOT   practices,
                  regulations and procedures,  Partner shall promptly furnish  Frontier,
                  upon  written  request by Frontier  with a copy of every final  report
                  that it prepares and is required to submit to the DOT,  FAA,  National
                  Transportation   Safety  Board  or  any  other  governmental   agency,
                  relating to any  accident or incident  involving  an Aircraft  used in
                  performing  Flight Services under this  Agreement,  when such accident
                  or  incident  is  claimed  to  have   resulted  in  the  death  of  or
                  substantial  injury  to any  person  or the loss  of,  damage  to,  or
                  destruction  of any  property.  Frontier  agrees  to  treat  all  such
                  material  supplied by Partner pursuant to this Section as Confidential
                  as defined under Section 10 of this Agreement.

14.      Exclusivity.  Nothing  contained in this  Agreement  shall  restrict  either party from  entering into any
      other code-share agreement with any other party.


15.      Miscellaneous Provisions.

         15.1     Notices.  All  notices,  consents,   approvals  or  other  instruments
                  required or  permitted  to be given by either  party  pursuant to this
                  Agreement  shall  be in  writing  and  given  by:  (i) hand  delivery;
                  (ii) facsimile;   (iii) express   overnight   delivery   service;   or
                  (iv) certified  or registered mail,  postage  prepaid,  return receipt
                  requested.  Notices  shall be provided  to the  parties and  addresses
                  (or facsimile  numbers,  as applicable)  specified  below and shall be
                  effective  upon receipt or the rejection of such  delivery,  except if
                  delivered  by facsimile  outside of business  hours in which case they
                  shall be effective on the next succeeding business day:


                  If to Frontier:           Frontier Airlines, Inc.
                                            7001 Tower Road
                                            Denver, Colorado 80239
                                            Attn: Vice President - Marketing & Planning
                                            Telephone:  [***]
                                            Facsimile: [***]

                  If to Partner:            Horizon Air
                                            19521 International Boulevard
                                            Attn:  Vice President, Finance
                                            Telephone:  [***]
                                            Facsimile:  [***]


         15.2     Waiver  and  Amendment.  No  provisions  of this  Agreement  shall  be
                  deemed waived or amended except by a written instrument  unambiguously
                  setting  forth the matter  waived or  amended  and signed by the party
                  against  which  enforcement  of such  waiver or  amendment  is sought.
                  Waiver of any  matter  shall not be deemed a waiver of the same or any
                  other matter on any future occasion.


         15.3     Captions.   Captions   are  used   throughout   this   Agreement   for
                  convenience  of  reference  only and  shall not be  considered  in any
                  manner in the construction or interpretation hereof.


         15.4     Attorneys'  Fees.  In the event of any  judicial or other  adversarial
                  proceeding  between  the  parties   concerning  this  Agreement,   the
                  prevailing  party shall be entitled to recover its attorneys' fees and
                  other  costs  in  addition  to any  other  relief  to  which it may be
                  entitled.


         15.5     Entire Agreement. This Agreement,  including all attached exhibits and
                  schedules,  constitutes the entire agreement  between the parties with
                  respect  to  the  subject  matter  hereof  and  supercedes  any  prior
                  agreements,  whether  written or oral,  with respect to such  matters,
                  and  there are no other  representations,  warranties  or  agreements,
                  written or oral,  between  Frontier  and Partner  with  respect to the
                  subject matter of this Agreement other than as set forth herein.


         15.6     Jurisdiction;   Choice  of  Law.   For   purposes  of  any  action  or
                  proceeding  arising out of this  Agreement,  the parties hereto hereby
                  expressly submit to the non-exclusive  jurisdiction of all federal and
                  state courts located in the State of Colorado.  This  Agreement  shall
                  be governed by and construed in accordance  with the laws of the State
                  of New York.


         15.7     Severability.  If this  Agreement,  any one or more of the  provisions
                  of this Agreement,  or the  applicability of this Agreement or any one
                  or more of the provisions of this  Agreement to a specific  situation,
                  shall be held  invalid,  illegal or  unenforceable  or in violation of
                  any contract or  agreement  to which  Partner or Frontier are a party,
                  then  Frontier  and Partner  shall in good faith amend and modify this
                  Agreement,  consistent  with the intent of Partner  and  Frontier,  as
                  evidenced by this Agreement,  to the minimum extent  necessary to make
                  it or its application  valid,  legal and enforceable and in accordance
                  with  the  applicable  agreement  or  contract,  and the  validity  or
                  enforceability  of all  other  provisions  of this  Agreement  and all
                  other  applications  of any  such  provision  shall  not  be  affected
                  thereby.

         15.8     Force Majeure.   A party may not consider any default, delay, or
                  failure to perform by the other party, including Partner's failure to
                  achieve the OTP and/or the FCF rates required under this Agreement,
                  other than a failure to pay amounts when due, as a breach of this
                  Agreement if such default, delay or failure to perform is shown to be
                  due entirely to causes beyond the reasonable control of the party
                  charged with a default including, but not limited to, causes such as
                  strikes or other labor disputes, riots, civil disturbances, actions
                  of governmental authorities that effect Partner's  fleet of CRJ-700
                  aircraft, epidemics, war, embargoes, terrorism, weather, fire,
                  earthquakes, nuclear disasters, or acts of God or of the public enemy.

         15.9     Counterparts.   This   Agreement  may  be  executed  in  one  or  more
                  counterparts, each of which shall be deemed an original.

         15.10    Binding  Effect.  This  Agreement  shall be binding  upon and inure to
                  the benefit of Frontier  and Partner and their  respective  successors
                  and permitted assigns.

         15.11    No  Assignment.  The rights,  obligations  and duties of Frontier and
                  Partner under this Agreement may not be assigned or  delegated,
                  except as may otherwise be mutually  agreed by Frontier and Partner,
                  which shall not be unreasonably withheld.

         15.12    Arbitration.  Except as otherwise expressly provided herein, any
                  controversy, dispute, disagreement or claim between the parties
                  arising under or relating to this Agreement (a "Dispute"), including
                  any question concerning the validity, termination, interpretation,
                  performance, operation, enforcement or breach of this Agreement,
                  shall be referred to binding arbitration.  Each of Frontier and
                  Partner irrevocably submits to the exclusive jurisdiction of such
                  arbitration and expressly and irrevocably waives its rights to bring
                  suit against the other party in any court of law except for the
                  limited purpose of enforcing an arbitral award obtained in respect of
                  a Dispute, or for obtaining any injunctive relief available to it
                  under the laws of any jurisdiction for a breach or threatened breach
                  by the other party of this Agreement that threatens irreparable
                  damage.

                  Any Dispute submitted for arbitration will be finally settled by
                  binding and confidential arbitration according to the American
                  Arbitration Association Commercial Arbitration Rules (the "Rules"),
                  except as modified by mutual agreement of Frontier and Partner.  In
                  the event of a conflict between the Rules and this Section 15.12, the
                  provisions of this Section 15.12 will prevail.  The arbitration will
                  be conducted by three arbitrators, each of whom will be knowledgeable
                  about the legal, marketing and other business aspects of the airline
                  industry, unless otherwise agreed.  Initially, and until written
                  notice has been received to the contrary, all notifications and
                  communications arising from the arbitral proceedings may be made to
                  the parties in the manner and the addresses specified in Section 15.1.

                  In the event that any Dispute is submitted to arbitration, all then
                  current Disputes (including counterclaims between the parties) will
                  be consolidated in a single arbitration proceeding.  The arbitral
                  proceeding will not exceed ninety (90) days commencing on the date
                  the last arbitrator accepts his or her appointment.  If the arbitral
                  award is not issued within this time, then the arbitration proceeding
                  will be renewed automatically for another ninety (90) days.  Evidence
                  may not be taken in the arbitral proceeding except in the presence of
                  both parties and all witnesses, if any, may be questioned by both
                  parties.  Notwithstanding the outcome of any Dispute, each party will
                  bear its own costs and expenses, including attorneys' and expert
                  fees, relating to any arbitration occurring pursuant to this Section.







                     IN  WITNESS   WHEREOF,   the  parties  executed  and  deliver  this
         Agreement as of the date first written above.


                                                              Frontier Airlines, Inc.,
                                                              a Colorado corporation


                                                              By:                             
                                                              Name:                           
                                                              Title:                          

                                                              HORIZON AIR INDUSTRIES, INC.
                                                              a Washington corporation


                                                              By:                             
                                                              Name:                           
                                                              Title:                          





                                        EXHIBITS


Schedule A                 Certain Defined Terms
Exhibit 1.1                Partner Operational and Maintenance Practices
Exhibit 1.3.1              Initial Fleet
Exhibit 1.3.3              Configuration, Decor and Livery Standards
Exhibit 1.6.1              Pilot and Flight Attendant Appearance Standards
Exhibit 6.1.1              Fixed, Variable and Pass Thru Costs
Exhibit 6.1.2              Training/Start-up Pass Thru Costs
Exhibit 6.3.3              MTX Variable Cost Adjustment Formula
Exhibit 6.6                Backup Documentation






                                      EXHIBIT 1.1


                    PARTNER'S OPERATIONAL AND MAINTENANCE PRACTICES


1.  Aircraft are scheduled to have a minimum turn time of [***] minutes in the hub,
and [***] minutes of minimum turn time in non-hub stations.

2.  Three aircraft are scheduled to RON in DEN, or another MTX RON location as
mutually agreed, each night, of which two are scheduled Aircraft and one is a spare
Aircraft.  Two Aircraft will have a minimum ground time of [***], and 1 Aircraft
will have a minimum ground time of [***]. The Schedule will provide that each
aircraft will remain overnight in DEN or MTX RON location at least once every [***].

3.  Each line of flying that originates at a non-maintenance RON location as defined
in section 1.7.2 in the agreement, will be scheduled to have one [***] turn in DEN
each day.






                                      EXHIBIT 1.3.1

Initial Fleet - 8 + 1 Spare

                   Anticipated                                Number of
                  In-Service                                  Aircraft
                     Month
                   [***]2004                            3 Core + 1 Spare; 4 Used

                   [***]2004                                2 Core; 2 New

                   [***]2004                                1 Core; Used

                   [***]2004                                1 Core; Used

                   [***]2004                                1 Core; Used








                                     EXHIBIT 1.3.3

                       CONFIGURATION AND INTERIOR DECOR STANDARDS




Aircraft seating configuration

1.  All aircraft will be configured to have 70 seats with a 31 inch pitch, except for
the exit row, which will have a 41 inch pitch.

2.  Seats will be covered in color (color#) leather according to the current Horizon
standard interior configuration (reference to Horizon aircraft configuration manual)
for a Bombardier CRJ-700 aircraft.


Carpeting

All aircraft interiors will have carpet according to current Horizon standard interior
configuration (reference to Horizon aircraft configuration manual) for a Bombardier
CRJ-700 aircraft.


Emergency cards

All aircraft will be outfitted with emergency cards in their seatback pocked as
required by federal regulations.  Emergency cards will be labeled  "Frontier
JetExpress operated by Horizon Airlines".








                                     EXHIBIT 1.6.1


                    PILOT AND FLIGHT ATTENDANT APPEARANCE STANDARDS



Pilots

All pilots are to adhere to the appearance standards set by the Policies and
Procedures section of the Horizon Air Flight Operations Manual.


Flight Attendants

All flight attendants are to adhere to the appearance standards set by the Policies
and Standards section of the Horizon Air Flight Attendant Manual.






                                     EXHIBIT 6.1.1

                          FIXED, VARIABLE AND PASS THRU COSTS

                                         [***]





                                     EXHIBIT 6.1.2

                           TRAINING/START-UP PASS THRU COSTS

                                         [***]





                                     EXHIBIT 6.3.3

                          MTX VARIABLE COST ADJUSTMENT FORMULA

                                         [***]






                                      EXHIBIT 6.6

                                  BACKUP DOCUMENTATION

     Cost                            Backup Required                    Minimum Frequency


Hull Insurance                 Insurance Policy & Invoice         Annually or at time of change

Liability Insurance            Insurance Policy & Invoice         Annually or at time of change

War Risk Insurance             Insurance Policy & Invoice         Annually or at time of change

Property Taxes                 Assessment & Evidence of Payment   Semi-annually

Deicing                        Invoices & Evidence of Payment     Monthly

Fuel Costs                     Invoices & Evidence of Payment     Monthly

Catering                       Invoices & Evidence of Payment     Monthly

Landing Fees                   Invoices & Evidence of Payment     Monthly

Security Fees                  Invoices & Evidence of Payment     Monthly

Station Rent                   Lease Document; Invoices &         Monthly
                               Evidence of Payment

Aircraft Ownership Costs       Lease or Finance Documents         When added to Fleet

Station Costs                  Subcontracts; All Invoices         Monthly
                               and Evidence of Payment















                                       SCHEDULE A

                                 CERTAIN DEFINED TERMS

"Fixed Costs"                              means each of the cost elements identified as
                                           Fixed Costs on Exhibit 6.1 to this Agreement,
                                           or such costs and expenses as may be otherwise
                                           agreed to by the parties from time to time and
                                           evidenced by an appropriate amendment to
                                           Exhibit 6.1.

"Other Services"                           means (i) curb-side service in all locations
                                           where it is normal and customary or where
                                           another airline offers curbside check-in; (ii)
                                           check-in service with automated baggage tags
                                           and boarding pass printers in all locations;
                                           (iii) ticketing and security services in
                                           accordance with the Federal Aviation
                                           Administration and Frontier directives and
                                           guidelines, as may be issued from time to
                                           time, and any other directives or guidelines
                                           as Partner and Frontier may mutually approve,
                                           in all locations; (iv) transportation of mail
                                           and other cargo (other than hazardous
                                           materials) on Flights, at the order of
                                           Frontier, to the extent of available Aircraft
                                           capacity; (v) the acquisition and delivery of
                                           aircraft fuel and oil to the Fleet; (vi)
                                           Aircraft deicing when needed; (vii) station
                                           handling, including aircraft, ticket counter,
                                           gate, ramp, aircraft cleaning and baggage
                                           services; and (viii) communication systems,
                                           office supplies, postage, parking, training,
                                           reaccommodation, in-flight catering.

"Partner Control"                          means acts, omissions or events are not due to
                                           the acts or omissions of a Frontier employee
                                           or agent, including any third party contractor
                                           of Frontier, or Force Majeure as defined in
                                           Section 15.8 of this Agreement, or are not due
                                           to acts taken by Partner in order to comply
                                           with Regulations.

"Pass Thru Costs"                          means each of the cost elements identified as
                                           Pass Thru Costs on Exhibit 6.1 to this
                                           Agreement and certain occasional costs
                                           incurred by Partner while providing the Flight
                                           Services, such as costs relating to opening
                                           new cities or costs and expenses relating to
                                           arranging for and conducting Ad Hoc Flights
                                           pursuant to Section 1.2 of this Agreement.

"Unit of Measure"                          means the unit used to measure the Fixed
                                           Costs, Variable Costs and Pass Thru Costs as
                                           set forth on Exhibit 6.1 to this Agreement.

"Variable Costs"                           means each of the cost elements identified as
                                           Variable Costs on Exhibit 6.1 to this
                                           Agreement, as adjusted from time to time in
                                           accordance with the terms of this Agreement.`