AIRCRAFT LEASE AGREEMENT

                          Dated as of February 26, 1999

                                     Between

                           FIRST SECURITY BANK, N.A.,
                                As Owner Trustee,

                                     Lessor

                                       and

                             FRONTIER AIRLINES, INC.

                                     Lessee


                       One Boeing Model 737-200A Aircraft
                   Bearing Manufacturer's Serial Number 23007



Items marked with "*" have been omitted pursuant to a request for confidential
treatment.
<PAGE>



                            AIRCRAFT LEASE AGREEMENT


      THIS AGREEMENT dated February 26, 1999  ("Lease"),  between FIRST SECURITY
BANK,  N.A.,  not in  its  individual  capacity  but  solely  as  owner  trustee
("Lessor"), and FRONTIER AIRLINES, INC., a Colorado corporation ("Lessee").

      Lessee  desires  to lease  from  Lessor  and Lessor is willing to lease to
Lessee  the  aircraft  described  herein  upon  and  subject  to the  terms  and
conditions of this Lease. In consideration of the mutual promises herein, Lessor
and Lessee agree as follows:

                                    SECTION 1
                                   DEFINITIONS

      Terms used in this Lease have the respective meanings specified in Exhibit
A.

                                    SECTION 2
                              LEASE AND CONDITIONS

(1) Lessor hereby agrees,  subject to  satisfaction  of the conditions set forth
herein,  to lease the Aircraft to Lessee,  and Lessee hereby agrees to lease the
Aircraft from Lessor, on the terms of this Lease.

(2)  Lessor's  obligation  to lease the  Aircraft  hereunder  to Lessee shall be
conditioned upon (i) the absence of any Default hereunder and the absence of any
materially adverse change in Lessee's financial  condition or prospects from the
date  hereof  to the  Delivery  Date,  and (ii) the  receipt  by  Lessor  of the
following  documents  on or before  the  Delivery  Date,  all of which  shall be
reasonably  satisfactory in form and substance to Lessor: (1) a Lease Supplement
executed by Lessee,  and effective as of the Delivery  Date;  (2) such officer's
certificates  and legal  opinions  relating to due authority to enter into,  the
enforceability  of, and  absence of  Defaults  under this Lease as Lessor  shall
require; (3) an Approved Insurance Broker's report as to the due compliance with
the insurance  provisions of Section 11 hereof; (4) a certificate of an Approved
Insurance Broker evidencing the insurance as required by Section 11 hereof;  (5)
a  certificate  in the form of Exhibit D completed,  executed  and  delivered by
Lessee  setting  forth the status of the  Aircraft  and Engines on the  Delivery
Date;  and (6) such other  documents  and matters  incident to the  foregoing as
Lessor may reasonably request. (1)

<PAGE>


                                    SECTION 3
                          DELIVERY AND ACCEPTANCE; TERM

(3) Delivery;  Place of Delivery and Acceptance.  The Aircraft is expected to be
available for delivery on or about the  Estimated  Delivery  Date,  and shall be
delivered to and accepted by Lessee at the Delivery Location.

(4)  Casualty  to the  Aircraft  Preceding  Delivery;  Excusable  Delay.  Upon a
Casualty  Occurrence  taking  place prior to delivery of the Aircraft to Lessee,
this Lease shall  terminate.  If an Excusable Delay prevents the delivery of the
Aircraft beyond April 15, 1999,  Lessor shall notify Lessee in writing  thereof,
and at the option of Lessee,  this Lease shall  terminate.  Lessor  shall not be
responsible  for  the  failure  to  deliver  the  Aircraft  hereunder  due to an
Excusable Delay.

(5)  Pre-Delivery  Check  Flight.  Prior to the Delivery  Date,  Lessee shall be
permitted to assign up to two  representatives  (one of whom may sit in the jump
seat in the cockpit) to participate as observers in a functional check flight of
not more than two (2) hour's duration,  at Lessor's expense, to enable Lessee to
verify that the Aircraft satisfies the conditions set forth in Exhibit E hereto.
Lessor will provide the pilots and insurance for the functional check flight.

(6) Correction of Deficiencies.  If the  pre-delivery  check flight reveals that
the Aircraft does not fulfill the conditions  described in Exhibit E, Lessor and
Lessee  shall  attempt in good faith to agree upon a list of  deficiencies  with
respect to the Aircraft. If the parties are unable to agree upon such list, then
this Lease  shall  terminate.  If the  parties are able to agree upon such list,
then Lessor shall cure such deficiencies listed thereon during which time Lessee
may have a reasonable  number of  representatives  to observe  such  corrections
being  made.  Upon  correction  of  such  deficiencies,  Lessee  shall  promptly
re-inspect  the  Aircraft  and if the  Aircraft is then in  compliance  with the
conditions described in Exhibit E, Lessee shall accept delivery of the Aircraft.

(7)  Acceptance  of Aircraft.  Except as may  otherwise  be  expressly  provided
pursuant to the terms of this Lease,  the Aircraft is to be leased to Lessee "AS
IS,"  "WHERE  IS" and  SUBJECT  TO EACH AND EVERY  DISCLAIMER  OF  WARRANTY  AND
REPRESENTATION AS SET FORTH IN SECTION 5(a) HEREOF.  Upon tender of the Aircraft
for delivery hereunder by Lessor, if the Aircraft is in the condition  specified
in Exhibit E, Lessee shall  immediately  accept  delivery of the Aircraft.  Upon
acceptance  of the  Aircraft  Lessee  shall  thereupon  indicate and confirm its
irrevocable  acceptance of the Aircraft by delivery to Lessor of a duly executed
Lease Supplement, dated the Delivery Date.



<PAGE>


(8) Term of Lease.  The Term of this Lease shall  commence on the Delivery  Date
and shall continue until the  Expiration  Date;  provided that this Lease may be
earlier terminated or renewed pursuant to the provisions hereof.  Throughout the
Term and until  redelivery of the Aircraft in accordance with Section 12 hereof,
Lessee shall bear all risks of loss, theft,  damage and destruction of or to the
Aircraft and every Part thereof,  and no such loss, theft, damage or destruction
nor any other event,  circumstance  or change in Law shall impair,  discharge or
frustrate  any  obligation  of  Lessee  under  this  Lease  (including,  without
limitation,  as to Rent or other payments),  so that all such obligations shall,
save as  expressly  provided  in Section 10 hereof,  continue  in full force and
effect.

                                    SECTION 4
                                RENT AND RESERVES

(9) Rent. Lessee covenants and agrees to pay to Lessor, or its assigns:  (i) the
Initial  Basic Rent  Payment  Amount on the  Delivery  Date,  (ii) Basic Rent in
consecutive  installments on each Basic Rent Payment Date; (iii) the Final Basic
Rent Payment Amount on the Final Basic Payment Date; and (iv)  Supplemental Rent
as the same  becomes due. If a Basic Rent Payment Date shall fall on a day which
is not a Business  Day, any payment due on such Basic Rent Payment Date shall be
made on the next  succeeding  Business Day. All Rent and other  amounts  payable
under this Lease shall be paid in immediately  available  funds,  at the Payment
Location or at such other location as Lessor shall designate in writing.



<PAGE>


(10) Reserves.  Separate reserve accounts shall be established by Lessor for the
Airframe,  each Engine and each landing  gear. On the tenth (10) calendar day of
each month during the Term,  Lessee shall pay Lessor an amount calculated as the
product of the number of Flight  Hours of  operation  during the prior  calendar
month,  and the  Airframe  Reserve  Rate,  Landing  Gear Reserve Rate and Engine
Reserve Rate, as applicable. Subject to receipt of satisfactory invoices, Lessor
shall use amounts  deposited in each reserve account to reimburse Lessee for the
actual  out-of-pocket costs incurred by Lessee in completing a "C7"Check (or its
equivalent) in the case of the Airframe,  overhaul or replacement in the case of
landing gear, and Engine Overhauls in the case of an Engine; provided,  however,
such reimbursable costs shall not include, without limitation,  costs associated
with the auxiliary power unit. Lessee shall provide Lessor with written evidence
reasonably  satisfactory to Lessor as to completion of such check or overhaul in
accordance  with the  Maintenance  Program.  No portion of any reserve  shall be
applied to the cost of repairing damage resulting from any accident or incident,
abuse or misuse,  foreign object damage or to the cost of complying with any FAA
airworthiness directive.  Lessee shall bear the cost of any check or overhaul to
the extent such cost  exceeds  the  balance  then  available  in the  applicable
reserve; provided,  however, (A) in the event the Aircraft requires a "C7" Check
within the first two and one-half (2 1/2) years of the Term, or (B) in the event
an Engine is removed within the first fifteen (15) months following the Delivery
Date due to a condition  which would require such removal in accordance with the
Engine Manufacturer's maintenance manual, Lessor shall bear the cost of any "C7"
Check or the first Engine  overhaul of such Engine,  as the case may be, only to
the extent that such cost exceeds the balance then  available in the  applicable
reserve.  Lessor  shall be  entitled  to  commingle  money  held in the  reserve
accounts  from  time to time  with its  other  assets  and  Lessee  shall not be
entitled to any interest on such amounts.  Any amounts  remaining in the reserve
accounts  at the Return  Occasion  shall be applied  first to reduce any payment
obligation  of Lessee  pursuant  to Exhibit C (with the  balance of any  reserve
account available only to offset a payment  obligation with respect to the check
or overhaul for which such reserve was established),  and then the balance shall
be retained by Lessor.  Lessee  agrees that if Lessee  Defaults have occurred or
are occurring,  Lessor shall be entitled, but not required, to apply any amounts
held as reserves against such default.

(11) Prohibition Against Setoff,  Counterclaim,  Etc. This Lease is a net lease,
and Lessee,  except as otherwise expressly provided herein, shall be responsible
for the cost of delivery, possession, importation, registration, use, operation,
management,  return,  maintenance,  repair and  modification of the Aircraft and
compliance with applicable laws,  regulations and airworthiness  directives from
the Delivery  Date until the Aircraft is returned to Lessor in  accordance  with
Section  12  hereof.  Lessee's  obligation  to pay all Rent  hereunder  shall be
absolute  and  unconditional  and  shall  not  be  affected  or  reduced  by any
circumstances  whatsoever  (including,  without  limitation any right of setoff,
counterclaim,  recoupment,  defense or other right which Lessee may have against
Lessor,  the  Manufacturer,  the  Engine  Manufacturer,  any seller of or person
providing  services  with respect to the Aircraft or any other  Person,  for any
reason whatsoever), it being the express intention of Lessor and Lessee that all
Rent payable hereunder shall be payable in all events,  unless the obligation to
pay the same shall be  terminated  pursuant  to the express  provisions  of this
Lease.  Lessee hereby waives, to the extent permitted by applicable Law, any and
all rights which it may now have or which at any time hereafter may be conferred
upon it, by Law or otherwise,  to terminate this Lease or any obligation imposed
upon Lessee  hereunder or in relation hereto except upon the terms expressly set
forth in this Lease.  Nothing  contained in this Section shall be construed as a
waiver of  Lessee's  right to seek a separate  recovery  of any  payment of Rent
which is not due and  payable  in  accordance  with the  terms of this  Lease or
monies or payments  which are due and payable by Lessor  under the terms of this
Lease.

                                    SECTION 5
                         REPRESENTATIONS AND WARRANTIES



<PAGE>


(12)  Warranties  and  Disclaimer  of  Warranties.  EXCEPT AS SET OUT IN SECTION
5(b)(i), LESSOR HAS NOT AND SHALL NOT BE DEEMED TO HAVE MADE OR GIVEN AND LESSOR
HEREBY SPECIFICALLY DISCLAIMS, ANY TERM, CONDITION, COVENANT,  REPRESENTATION OR
WARRANTY,  EXPRESS OR IMPLIED, AS TO THE TITLE,  AIRWORTHINESS,  VALUE, QUALITY,
DURABILITY, DESCRIPTION,  CONDITION, DESIGN, OPERATION,  MERCHANTABILITY, OR THE
ABSENCE  OF  ANY  INFRINGEMENT  OF  ANY  PATENT,  COPYRIGHT,  DESIGN,  OR  OTHER
PROPRIETARY  RIGHT, OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT,
THE  ABSENCE  THEREFROM  OF LATENT,  INHERENT OR OTHER  DEFECTS,  WHETHER OR NOT
DISCOVERABLE, OR AS TO ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,  EXPRESS
OR IMPLIED  (INCLUDING ANY IMPLIED WARRANTY ARISING FROM A COURSE OF PERFORMANCE
OR DEALING OR USAGE OF TRADE),  WITH RESPECT TO THE AIRCRAFT;  AND LESSEE HEREBY
WAIVES,  RELEASES,  RENOUNCES AND DISCLAIMS  EXPECTATION OF OR RELIANCE UPON ANY
SUCH WARRANTY OR WARRANTIES, IT BEING UNDERSTOOD THAT ALL CONDITIONS, WARRANTIES
AND  REPRESENTATIONS  (OR  OBLIGATION  OR  LIABILITY  IN CONTRACT OR IN TORT) IN
RELATION TO ANY OF THOSE MATTERS,  EXPRESSED OR IMPLIED, STATUTORY OR OTHERWISE,
ARE, EXCEPT AS PROVIDED IN SECTION 5(b)(i), EXPRESSLY EXCLUDED.

(13) LESSOR  REPRESENTS  AND WARRANTS  (IN LIEU OF ALL OTHER  EXPRESS OR IMPLIED
WARRANTIES  WHATSOEVER)  THAT: (i) title to the Aircraft is vested in Lessor and
the Aircraft is free and clear of any and all Lessor's  Liens;  (ii) Lessor is a
corporation  duly organized and validly  existing under the Laws of the State of
Utah and is a "citizen of the United  States" as defined in section 40102 of the
Transportation  Code, and has the power and authority to perform its obligations
under this Lease;  (iii) the making and performance by Lessor of this Lease have
been duly authorized by all necessary corporate action on the part of Lessor and
will not violate any  provision of Law or its charter  documents;  and (iv) this
Lease has been duly  entered into and  delivered by Lessor,  and that this Lease
does,  and the Lease  Supplement  when  executed and delivered  hereunder  will,
constitute  legal,  valid and  binding  obligations  of Lessor,  enforceable  in
accordance with their respective terms.

(14) Manufacturers' Warranties.  Lessor hereby authorizes Lessee to exercise for
the account of Lessor such rights as Lessor may have under any warranty, express
or  implied,  with  respect to the  Aircraft  to the extent that the same may be
assigned or otherwise made available to Lessee; provided,  however, that upon an
Event of Default all such rights shall  immediately  revert to Lessor  including
all claims thereunder whether or not perfected.



<PAGE>


(15) Lessee's Representations and Warranties.  Lessee hereby makes the following
representations  and  warranties,  which  representations  and warranties  shall
survive  the  execution  and  delivery  of this  Lease and the  delivery  of the
Aircraft:  (i) Lessee is a  corporation  duly  organized,  existing  and in good
standing under the Laws of Colorado and has the corporate power and authority to
carry on its  business as  presently  conducted  and to perform its  obligations
under this  Lease;  (ii) this Lease has been duly  authorized  by all  necessary
corporate  action on the part of Lessee,  and neither the execution and delivery
hereof  nor  the  consummation  of  the  transactions  contemplated  hereby  nor
compliance by Lessee with any of the terms hereof will contravene any applicable
Law or result in any breach of, or constitute  any default  under,  or result in
the creation of any Lien upon any property of Lessee under, any credit agreement
or instrument,  corporate  charter or by-law or other agreement or instrument to
which Lessee is a party or by which Lessee or its properties or assets are bound
or affected; (iii) Lessee has received every consent, approval or authorization,
and has given every  notice,  that is required for Lessee to execute and deliver
this Lease, and to perform the transactions contemplated hereby and all of which
remain valid and effective; (iv) this Lease has been duly executed and delivered
by Lessee,  and this Lease does,  and the Lease  Supplement  when  executed  and
delivered by Lessee will,  constitute  legal,  valid and binding  obligations of
Lessee,  enforceable in accordance with their  respective  terms, but subject to
bankruptcy,  insolvency,  or other  similar  laws  affecting  creditors'  rights
generally;  (v) the consolidated  financial statements of Lessee,  including the
balance  sheets and  unaudited  statements  of income and  retained  earnings of
Lessee, for the current year and if available,  the immediately preceding fiscal
year, copies of which have been furnished to Lessor,  are prepared in accordance
with generally accepted accounting principles,  and present fairly the financial
position and operations of Lessee,  and subsequent to the conclusion of the last
such  period,  there has been no  material  adverse  change in such  position or
operations;  (vi) the chief executive office or chief place of business (as such
terms  are used in  Division  9 of the  Uniform  Commercial  Code) of  Lessee is
located at 12015 E. 46th Avenue,  #200,  Denver,  Colorado 80239;  (vii) each of
this Lease and any other document,  certificate or statement furnished to Lessor
by or on  behalf  of Lessee in  connection  with the  transactions  contemplated
hereby or thereby does not contain any untrue  statement  of a material  fact or
omit to  state a  material  fact  necessary  in  order  to make  the  statements
contained  herein and therein not misleading;  and there is no fact, to the best
knowledge  of Lessee,  which has not been  disclosed  to Lessor in writing on or
before  the date of  execution  of this  Lease  and which  materially  adversely
affects or will  materially  adversely  affect the ability of Lessee to carry on
its business or to perform its obligations  under this Lease;  and (viii) Lessor
shall be entitled to the benefits of a lessor under Title 11 U.S.C.
Section 1110 as in effect on the date hereof



                                    SECTION 6
                         POSSESSION, USE AND MAINTENANCE


(16) Sublease,  Assignment and Transfer. Without Lessor's prior written consent,
Lessee  will not  assign  this  Lease or sublet or  transfer  possession  of the
Aircraft,  Airframe  or any Engine or install any Engine or permit any Engine to
be installed on any airframe  other than the Airframe,  provided that so long as
no Default shall have occurred and be continuing then Lessee,  without the prior
written  consent of Lessor,  may: (i) deliver  possession of the  Aircraft,  the
Airframe or any Engine to any  organization  for service,  repair,  maintenance,
testing or overhaul work;  (ii) install an Engine on an airframe (other than the
Airframe) owned by Lessee free and clear of all Liens except Permitted Liens and
those which by their terms would not attach to such Engine; and (iii) install an
Engine  on an  airframe  leased  to  Lessee  or owned  by  Lessee  subject  to a
conditional sale or other security agreement,  provided, that: (A) such airframe
is free and clear of all Liens  except the rights of the parties to the lease or
conditional sale or other security  agreement  covering such airframe and except
Permitted  Liens and the lien of any mortgage which by its terms would not apply
to such Engine; and (B) the lessor or secured party of such airframe has made an
agreement  substantially similar in effect to the agreement of Lessor in Section
6(b) below  whereby such lessor or secured  party agrees that neither it nor its
successors or assigns will acquire or claim any right,  title or interest in any
Engine by reason of such Engine being installed on such airframe.  The rights of
any  transferee  that receives  possession by reason of a transfer  permitted by
this  Section  6(a) shall be subject  and  subordinate  to all the terms of this
Lease; Lessee shall remain primarily liable hereunder for the performance of all
of the  terms of this  Lease  to the same  extent  as if such  transfer  had not
occurred;  and no  relinquishment  of  possession  pursuant to the terms of this
Section 6(a) shall in any way discharge or diminish any of Lessee's  obligations
to Lessor hereunder.

(17) Reciprocal  Recognition of Rights.  In the event Lessee shall have received
from the lessor or secured  party of any  airframe  leased to Lessee or owned by
Lessee  subject to a  conditional  sale or other  security  agreement  a written
agreement complying with Section (B) of Section 6(a)(iii) hereof, and such lease
or  conditional  sale or other  security  agreement  covering such airframe also
covers an engine or engines owned by the lessor under such lease or subject to a
security  interest in favor of the secured party under such  conditional sale or
other security agreement, Lessor hereby agrees for the benefit of such lessor or
secured  party that Lessor will not acquire or claim,  as against such lessor or
secured party, any right,  title or interest in any such engine as the result of
such engine  being  installed  on the  Airframe at any time while such engine is
subject to such lease or conditional sale or other security  agreement and owned
by such lessor or subject to a security interest in favor of such secured party.
Lessor also hereby  agrees for the benefit of the  mortgagee  under any mortgage
complying  with Section (A) of Section  6(a)(iii)  hereof,  that Lessor will not
acquire or claim, as against such mortgagee, any right, title or interest in any
engine  subject to the lien of such  mortgage as the result of such engine being
installed  on the  Airframe at any time while such engine is subject to the lien
of such mortgage.

(18)  Lawful  Insured  Operations.  Lessee  will not permit the  Aircraft  to be
maintained, used or operated in violation of any Law of any Governmental Entity,
or in violation of any  airworthiness  certificate,  or license or  registration
issued  by any such  authority,  or  contrary  to the  Manufacturer's  or Engine
Manufacturer's  operating  manuals  or  instructions  for  the  Aircraft  or the
Engines.  In the event that any such Law requires  alteration  of the  Aircraft,
Lessee shall ensure  compliance  therewith and shall ensure that the Aircraft is
maintained in proper condition for operation under such Laws.  Lessee agrees not
to operate the  Aircraft or permit the  Aircraft to be operated  during the Term
unless the  Aircraft  is covered by  insurance  as  required  by the  provisions
hereof.



<PAGE>


(19)  Maintenance.  Lessee shall, at its own expense:  (i) perform all mandatory
service, inspections,  repair, maintenance,  airworthiness directives,  overhaul
and testing,  (A) as may be required under  applicable FAA rules and regulations
for compliance  therewith during the Term and for a period of one hundred eighty
(180) days thereafter and in compliance with the Maintenance Program, (B) in the
same  manner and with the same care as shall be the case with  similar  aircraft
and  engines   owned  by  or  operated  by  or  on  behalf  of  Lessee   without
discrimination and (C) so as to keep the Aircraft in as good operating condition
as when delivered to Lessee, ordinary wear and tear excepted; provided, however,
in the  event  the  cost of  performing,  or  causing  the  performance  of,  an
inspection  resulting in the modification or terminating  action being performed
pursuant to any  Airworthiness  Directive  exceeds one hundred  thousand dollars
($100,000),  Lessor will reimburse  Lessee for an amount equal to the AD Sharing
Formula for such cost, provided that (A) no Event of Default has occurred and is
continuing,  and (B) Lessee provides evidence  satisfactory to Lessor of payment
and completion of the relevant work; (ii) keep the Aircraft in such condition as
is necessary to maintain the airworthiness certification of the Aircraft in good
standing;  and (iii) maintain all records, logs and other materials required by,
and in a manner acceptable to, the FAA.

(20)  Registration  and  Insignia.  The  Aircraft  shall  be  and  shall  remain
registered under the Transportation Code in the name of Lessor or such Person as
Lessor may designate.  Upon delivery of the Aircraft, Lessee agrees to place the
Lease  Identification  in the cockpit in a prominent  location  and to place the
Lease  Identification on each Engine.  Lessee agrees to make such changes to the
Lease  Identification  as Lessor may request from time to time.  Lessee will not
exercise  any control or dominion  over the  Aircraft or operate or permit to be
operated  the  Aircraft  until  such  Lease  Identification  has been so  placed
thereon.  Lessee will promptly  replace any such marking which has been removed,
defaced or destroyed.

(21) Replacement of Parts. Lessee will promptly replace all Parts which may from
time to time become worn out, lost, stolen, seized, confiscated,  damaged beyond
repair or  permanently  rendered  unfit for use for any  reason  whatsoever.  In
addition,  Lessee may remove any Parts,  whether or not worn out, damaged beyond
repair or permanently rendered unfit for use, provided that Lessee replaces such
Parts as promptly as practicable.  All replacement Parts shall be free and clear
of all Liens,  other than Permitted  Liens, and shall be in as good an operating
condition  as,  and have a  utility  value  and  remaining  warranty  reasonably
approximating,  the Parts  replaced  (assuming  such replaced  Parts were in the
condition  and repair in which they were  required to be maintained by the terms
hereof).  All Parts  owned by  Lessor  which  are at any time  removed  from the
Aircraft  shall  remain the  property  of Lessor and subject to this Lease until
such time as such Parts shall be replaced by Parts which have been  incorporated
or installed in to the Aircraft and which meet the  requirements for replacement
Parts  specified   above.   Immediately   upon  any  replacement  Part  becoming
incorporated or installed into the Aircraft as above provided,  (i) title to the
removed  Part shall  thereupon  vest in Lessee,  free and clear of all rights of
Lessor,  (ii) title to such  replacement  Part shall  thereupon  vest  solely in
Lessor and (iii) such replacement Part shall become subject to this Lease and be
deemed a Part for all  purposes  hereof to the same  extent as the Part which it
has replaced.



<PAGE>


(22)  Alterations,   Modifications   and  Additions.   Lessee  shall  make  such
alterations and  modifications  and additions to the Aircraft as may be required
from time to time to meet the applicable  standards of the FAA or to comply with
any Law,  rule,  directive,  bulletin,  regulation or order of any  Governmental
Entity or of the manufacturer of the Aircraft, Engines or Parts. Lessee may from
time  to  time  make  alterations  and  modifications  in and  additions  to the
Aircraft,  provided no such alteration,  modification or addition diminishes the
remaining warranty, value or utility, or impairs the condition or airworthiness,
of the Aircraft.  Title to all Parts incorporated or installed in or attached or
added to the Aircraft as the result of such alteration, modification or addition
shall vest  immediately in Lessor and become subject to this Lease,  without the
necessity for any further act of transfer, document or notice.

                                    SECTION 7
                           INFORMATION AND INSPECTION

      Lessee agrees to furnish Lessor:  (a) within one hundred twenty (120) days
after the close of each fiscal year of Lessee, its audited balance sheet, profit
and loss statement, and statement of stockholders' equity of Lessee (prepared on
a consolidated  basis), as of the close of such fiscal year; (b) within ten (10)
calendar  days  following  the end of each  calendar  month during the Term,  an
Airframe  Usage  Report;  and (c) from time to time such  other  information  as
Lessor  may  reasonably   request,   including  interim,   unaudited   financial
information regarding Lessee and information concerning the location, condition,
use and operation of the Aircraft. Lessee shall permit Lessor or its designee on
three (3) days' prior  written  notice to visit and inspect  the  Aircraft,  its
condition, use and operation and the records maintained in connection therewith.
During such  inspection,  Lessor may take copies of the Aircraft  Documents  and
other operational records relating to the Aircraft. Lessor shall have no duty to
make any such  inspection.  Lessor's  failure  to  object  to any  condition  or
procedure observed or observable in the course of an inspection  hereunder shall
not be deemed to waive or modify any of the terms of this Lease with  respect to
such condition or procedure.

                                    SECTION 8
                           CERTAIN COVENANTS OF LESSEE



<PAGE>


(23) Maintenance of Existence, Status and Consents. Lessee will (i) preserve and
maintain its corporate  existence and such of its rights,  privileges,  licenses
and  franchises in any  jurisdiction  where failure to obtain such  licensing or
qualification  would have a material  adverse effect upon Lessee;  (ii) maintain
and  operate  the  Aircraft  at all times as a  Certificated  Air Carrier and be
otherwise  certificated  and  registered  to the extent  necessary to provide to
Lessor  the  benefits  contemplated  by  Section  1110 of Title 11 of the United
States Code or any successor provision thereof; and (iii) maintain in full force
and effect  all  governmental  consents,  licenses,  authorizations,  approvals,
declarations,  filings and registrations obtained or effected in connection with
this  Lease and take such  additional  action as may be proper or  advisable  in
connection  herewith.  Lessee further  undertakes to obtain or effect any new or
additional   governmental   consents,   licenses,   authorizations,   approvals,
declarations,   filings  or  registrations  as  may  become  necessary  for  the
performance of any of the terms and conditions of this Lease.  Without the prior
written  consent of Lessor,  which consent shall not be  unreasonably  withheld,
Lessee shall not consolidate  with, merge with or merge into any other Person or
convey,  transfer or lease substantially all of its assets as an entirety to any
other Person. Without prior written notice to Lessor, Lessee will not change its
principal place of business or chief executive office.

(24)  Payment of Taxes.  Lessee will pay or cause to be paid all Taxes which are
payable by Lessee upon any property  belonging to it, prior to the date on which
penalties attach thereto and prior to the date on which any lawful claim, if not
paid, would become a Lien upon any of the material property of Lessee.

(25) Liens. Lessee shall not directly or indirectly create,  incur, or suffer to
exist any Lien on the  Aircraft or any Engine or any interest  therein,  except:
(a) the respective rights of Lessor and Lessee as herein provided;  (b) Lessor's
Liens;  (c) Liens for Taxes either not yet due or being  contested in good faith
by appropriate  proceedings and so long as adequate reserves are maintained with
respect to such Liens; and (d) inchoate  materialmen's,  mechanics',  workmen's,
repairmen's,  employees' or other like Liens  arising in the ordinary  course of
business,  which either are not delinquent or are being  contested in good faith
by  Lessee,  so long as the  Aircraft  or such  Engine is not in danger of being
lost,  sold,  confiscated,  forfeited  or seized  as a result of any such  Lien.
Lessee shall promptly take such action as may be necessary to duly discharge any
Lien (except for the Liens referred to in Sections (a) and (b) above) arising at
any time with respect to the Aircraft or any Engine.  Lessee shall  promptly pay
and  discharge  when due,  or make  adequate  provision  for all debts,  claims,
liabilities or obligations  whatsoever  created by it, or arising as a result of
any matter concerning it, which may give rise to any Lien.

(26) Perfection of Title and Further  Assurances.  If the filing or recording of
this Lease or any other  document  or  instrument  is  reasonably  necessary  to
protect  the  interest of Lessor,  Lessee,  at its own cost and expense and upon
request  by Lessor,  shall  cause the same to occur.  At the  request of Lessor,
Lessee  shall  furnish  to  Lessor  an  opinion  of  counsel  or other  evidence
satisfactory  to Lessor  of each such  filing or  refiling  and  recordation  or
re-recordation. Lessee will promptly and duly execute and deliver to Lessor such
further  documents and assurances  and take such further  actions as it may from
time to time  reasonably  request  in order to more  effectively  carry  out the
intent and  purpose of this Lease and to  establish  and  protect the rights and
remedies created or intended to be created in favor of Lessor hereunder.




                                    SECTION 9
                                 INDEMNIFICATION
<PAGE>


(27) General Indemnity. Lessee agrees to defend, indemnify and hold harmless the
Indemnitees on demand from and against any and all Expenses  (regardless of when
the  same are made or  incurred):  (i)  which  may at any  time be  suffered  or
incurred  directly  or  indirectly  as a  result  of or  connected  with (A) the
possession,   performance,   management,   ownership,   registration,   control,
maintenance,  condition, service, repair, overhaul, leasing, use or operation of
the  Aircraft,  any Engine or any Part,  (B) the delivery or  redelivery  of the
Aircraft,  any Engine or Part, or (C) the occurrence of any Default,  whether or
not the Expenses may be attributable  to any defect in the Aircraft,  any Engine
or any Part or to its design,  testing or use or  otherwise,  and  regardless of
whether  they arise out of or are  attributable  to any act or  omission  of any
Indemnitee;  and/or  (ii) which may at any time be  suffered  or  incurred  as a
consequence  of any design,  article or material in the Aircraft,  any Engine or
any  Part or its  operation  or use  constituting  an  infringement  of  patent,
copyright,  trademark,  design or other  proprietary  right,  or a breach of any
obligation  of  confidentiality  owed to any  Person  in  respect  of any of the
matters referred to in this paragraph; but excluding any Expenses in relation to
a  particular  Indemnitee  to the  extent  that such  Expenses  (A) are  covered
pursuant to another  indemnity  provision of this Lease or (B) arise solely as a
result of the gross  negligence or wilful  misconduct of that  Indemnitee or (C)
arise  solely as a result  of a Lessor  Lien.  The  foregoing  indemnities  will
continue in full force following the Expiration Date  notwithstanding any breach
or  repudiation  by Lessor or Lessee  of this  Lease or any  termination  of the
leasing of the Aircraft hereunder.




<PAGE>
(28)     Tax Indemnity.


          (1)  Indemnity.   All  payments  by  Lessee  to  or  on  behalf of any
Indemnitee  shall be free of  withholdings  of any nature  whatsoever(including,
without  limitation,  withholding taxes,  monetary transfer fees, sales, use and
excise taxes,  VAT,  income taxes (other than that, on the net income of Lessor)
and any similar taxes and charges) and in the event any withholding is required,
Lessee shall pay an additional amount such that the net amount actually received
by the person entitled to receive such payment will under any  circumstances and
in any event, after such withholding,  equal the full amount of the payment then
due. Lessee shall pay when due and indemnify and hold each  Indemnitee  harmless
from all Taxes,  howsoever levied or imposed,  whether levied or imposed upon or
asserted  against Lessor,  Lessee,  the Aircraft or any part thereof or interest
therein,  or otherwise,  by any federal,  state or local taxing authority in the
United  States of America or by any  government  or taxing  authority of or in a
foreign country or of or in a territory or possession of the United States or by
any  international  taxing  authority,  upon or with respect to or based upon or
measured by or as a result of or in connection with (i) the Aircraft or any part
thereof or interest therein, (ii) the use, operation,  maintenance,  possession,
condition, control, occupancy, servicing, installation, transportation, storage,
substitution,   sale,  recording,   documentation,   importation,   exportation,
modification,    location,   repair,   abandonment,    replacement,    delivery,
registration,  deregistration,  repossession,  improvement,  ownership, leasing,
subleasing,  manufacture,  rental,  settlement of any insurance  claim,  return,
transfer of title, transfer of possession,  or other disposition of the Aircraft
or any part thereof or interest therein, (iii) the rentals,  receipts,  earnings
or gains arising from the Aircraft or any part thereof or interest therein, (iv)
any amount payable pursuant to the Lease or any related agreement, (v) the Lease
or any related agreement or any future amendment,  supplement, waiver or consent
with  respect  to  any  thereof,  or  the  execution,   delivery,  recording  or
performance of any thereof or (vi) otherwise arising from, with respect to or in
connection  with the  transactions  contemplated  by the  Lease  or any  related
agreement,  except to the extent  provided  in  Section  9(b)(ii)  hereof.  Each
payment or indemnity  payable  hereunder  shall include any amount  necessary to
hold the  recipient of the payment or indemnity  harmless on an after-tax  basis
from all  Taxes  required  to be paid by such  recipient  with  respect  to such
payment or indemnity.

<PAGE>


          (2)  Exclusions. Lessee   shall  not be  required to pay any indemnity
pursuant to Section  9(a) with respect to any of the  following:  (i) any Tax to
the extent  attributable  solely to an event or circumstance  occurring prior to
the  Delivery  Date;  (ii) any Tax imposed as a result of a voluntary  transfer,
assignment  or other  disposition  by Lessor of the Aircraft or the Lease unless
such transfer,  assignment or other disposition shall occur (x) at any time when
an Event of Default under the Lease shall have  occurred and be  continuing  (or
would be continuing  but for the exercise of remedies),  or (y) in connection or
as a result of with any  termination  of the Lease;  (iii) any Tax to the extent
attributable  solely to any event,  circumstance  or period of time that  occurs
after the Aircraft has been  redelivered to Lessor pursuant to Section 12 hereof
(under  circumstances  not  involving a  repossession  pursuant to Section 13(b)
hereof) unless any such act or event shall itself result from or be attributable
to an act or omission of Lessee which occurred prior to or concurrently with the
redelivery of the Aircraft and the discharge of Lessee's  obligations  under the
Lease;  and (iv) any Tax that is  imposed  by any state or local  government  or
taxing  authority in the United States and that is imposed on or measured by the
gross  or net  income,  gross  or net  receipts,  capital  or  net  worth  of an
Indemnitee;  provided that the  exclusion  described in this  subparagraph  (iv)
shall  not  apply to (A) Taxes  that are or are in the  nature  of  sales,  use,
rental,  value-added,  license,  excise or property Taxes, or (B) any Tax to the
extent incurred by such Indemnitee as a result of (1) the use or location of the
Aircraft or any Engine or any part of any thereof in the  jurisdiction  imposing
the Tax or (2) the situs of organization,  any place of business or any activity
of Lessee,  any affiliate of Lessee or any Person having custody,  possession or
use of the Aircraft or any Engine or any part of any thereof  through  Lessee in
the  jurisdiction  imposing  the Tax or (3)  the  execution,  delivery,  filing,
registration,  recording  or  enforcement  of  the  Lease,  or  any  instrument,
certificate  or  other  document   executed   pursuant  to  the  Lease,  in  the
jurisdiction imposing the Tax.

          (3)  Payment.  All Taxes indemnified  under this Section 9(b) shall be
paid by Lessee (to the extent  permitted by  applicable  Law,  unless  otherwise
directed  by  the  relevant  Indemnitee)  directly  to  the  appropriate  taxing
authority  on or before the time (and in the manner)  prescribed  by  applicable
Law. All other amounts shall be paid to the relevant  Indemnitee  within 30 days
after receipt of a written demand therefor from such Indemnitee accompanied by a
written statement describing in reasonable detail the Taxes that are the subject
of such indemnity and the computation of the indemnity being demanded.

          (4)  Miscellaneous.  In case  any report  or return is  required to be
made with  respect to any Tax for which Lessee would be required to indemnify an
Indemnitee  under this  Section  9(b),  Lessee  will  either make such report or
return in such manner as will show the  ownership  of the Aircraft in Lessor and
send a copy of such report or return to the affected  Indemnitee  or will notify
the affected  Indemnitee of such  requirement  and make such report or return in
such manner as shall be reasonably  satisfactory to such  Indemnitee.  If actual
notice is given by any  taxing  authority  to Lessor  that a report or return is
required to be filed with respect to any such Taxes  referred to in this Section
9(b),  Lessor shall  promptly  notify Lessee of such required  report or return.
Lessor  agrees to respond to any  reasonable  request of Lessee for  information
within the control of Lessor with respect to the filing of any report or return,
but  Lessee  agrees  to pay any  reasonable  costs,  fees or  other  charges  of
independent counsel or independent  accountants incurred in connection with such
request.  Lessee  agrees  that  within  sixty  (60) days after the close of each
fiscal year of Lessor it shall provide  Lessor with any  information  reasonably
requested by Lessor, including information regarding the use and location of the
Aircraft during such fiscal year.


                                   SECTION 10
                              CASUALTY OCCURRENCES



<PAGE>




(29)  Casualty  Occurrence  with Respect to the  Airframe.  Within five (5) days
after a Casualty  Occurrence  with  respect to the  Airframe and any Engine then
installed  thereon,  Lessee shall give Lessor written notice of such occurrence.
On or before  thirty (30) days after the date of the  Casualty  Occurrence  with
respect to the  Aircraft,  Lessee shall pay to Lessor in  immediately  available
funds the sum of (i) the Casualty Value of the Aircraft  computed as of the date
of payment less an amount equal to the daily  equivalent of Basic Rent (computed
on the basis of a 365-day year) for each day during the period  commencing  with
the day after  payment of such Casualty  Value and extending to, but  excluding,
the Basic Rent  Payment  Date  immediately  following  payment of such  Casualty
Value,  and (ii) all  Supplemental  Rent,  other than amounts  paid  pursuant to
Section  (i),  computed  as of the date of  payment.  Upon such  payment (A) the
obligation  of Lessee to make  further  payments of Basic Rent  hereunder  shall
terminate,  (B) this Lease shall  terminate with respect to the Aircraft and (C)
Lessor will transfer to Lessee,  without  recourse or warranty,  all of Lessor's
right,  title and interest,  if any, in and to the Airframe and Engines (if any)
suffering the Casualty  Occurrence,  as well as all of Lessor's right, title and
interest  in and to any  Engine  constituting  part  of  the  Aircraft  but  not
installed thereon at the time of the Casualty Occurrence.

(30) Casualty  Occurrence with Respect to an Engine.  Upon a Casualty Occurrence
with respect to an Engine only,  Lessee shall give Lessor prompt  written notice
thereof and shall, within forty-five (45) days after such occurrence,  convey to
Lessor, as replacement for the Engine suffering a Casualty Occurrence,  title to
a Replacement Engine. Each Replacement Engine shall be free of all Liens (except
Permitted  Liens).  Upon  full  compliance  by  Lessee  with  the  terms of this
paragraph, Lessor will transfer to Lessee title to the Engine which suffered the
Casualty Occurrence. Prior to or at the time of any such conveyance,  Lessee, at
its own expense,  will promptly (i) furnish  Lessor with a full warranty bill of
sale, in form and substance  reasonably  satisfactory to Lessor, with respect to
such Replacement  Engine;  (ii) cause a supplement hereto, in form and substance
reasonably  satisfactory to Lessor,  subjecting such Replacement  Engine to this
Lease, to be duly executed by Lessee,  and recorded  pursuant to applicable Law;
(iii) furnish Lessor with such legal opinions and other  documents as Lessor may
reasonably  request in  connection  with the  consummation  of the  transactions
contemplated  by this  Section  10(b),  in  each  case  in  form  and  substance
satisfactory  to Lessor.  Upon full  compliance by Lessee with the terms of this
Section  10(b),  Lessor  will  transfer  to Lessee all of the  right,  title and
interest  in the  Engine  which  suffered  the  Casualty  Occurrence,  and  such
Replacement Engine shall be deemed an "Engine" as defined herein.

(31) Application of Proceeds and Payments.  Any payments received at any time by
Lessor or by Lessee from any insurer  under any policy of insurance  (other than
liability insurance) shall be applied in the manner specified in Sections 11(m),
11(n) or 11(o) hereof as applicable. Any payments received at any time by Lessor
or Lessee with respect to a Casualty Occurrence will be applied as follows:  (i)
if such payments are received as a result of a Casualty  Occurrence with respect
to the  Aircraft,  such payment up to the amount of the Casualty  Value shall be
paid to Lessor,  or if Lessee has already paid Lessor the Casualty  Value,  such
payment shall be applied by Lessor to reimburse Lessee; or (ii) if such payments
are  received  as a result of a Casualty  Occurrence  with  respect to an Engine
which is being replaced  pursuant to Section 10(b),  such payments shall be paid
over to, or retained by,  Lessee if Lessee shall have fully  performed the terms
of Section 10(b) hereof.



<PAGE>


(32)  Application in Default.  Any amount  referred to in Section (i) or (ii) of
Section 11(c) which is otherwise  payable to Lessee shall not be paid to Lessee,
or, if it has been previously  paid to Lessee,  and not yet applied by Lessee as
permitted or required hereunder, shall be delivered from Lessee to Lessor, if at
the time of such payment a Default  shall have  occurred and be  continuing.  In
such case,  all such amounts shall be paid to and held by Lessor as security for
the obligations of Lessee, or, at the option of Lessor, applied by Lessor toward
payment of any of Lessee's obligations at the time due hereunder,  as Lessor may
elect. At such time as there shall not be continuing any such Default,  all such
amounts at the time held by Lessor in excess of the amount, if any, which Lessor
has elected for application as provided above, shall be paid to Lessee.

                                   SECTION 11
                                    INSURANCE

(33)  Obligation to Insure.  From the Delivery Date until the termination of the
Lease and  redelivery of the Aircraft to Lessor,  Lessee shall,  at its own cost
and expense,  effect and maintain or cause to be effected and maintained in full
force and effect  insurances  with respect to the Aircraft  that comply with the
provisions  of this  Section 11.  Lessee  agrees that such  insurances  shall be
carried with Approved Insurers. Lessee further agrees that such insurances shall
reflect prudent practices in the international aviation insurance market for air
carriers operating the same type of aircraft as the Aircraft on similar routes.

(34) Public  Liability  and  Property  Damage  Insurance.  Lessee will carry and
maintain in effect, at its own expense, comprehensive public liability insurance
covering  aircraft  liability  including  bodily  injury  and  property  damage,
passenger,  baggage,  cargo and mail, and general liability  (including products
and completed  operation)  for a combined  single limit on any one occurrence of
not less than the amount  applicable to similar  passenger  aircraft and engines
which comprise  Lessee's fleet,  and in any event not less than the amount under
"Public  Liability  and  Property  Damage  Insurance"  as set forth on Exhibit A
hereto  (or such  higher  amounts  as Lessor  may from  time to time  reasonably
require).  Lessee shall not discriminate  against the Aircraft in providing such
insurance.

(35) Required Policy  Designations  Relating to  Comprehensive  Public Liability
Insurance.  The policies  evidencing the insurance  required under Section 11(b)
shall be endorsed to include  paragraph  2 of AVN67B  with each  Indemnitee  and
Lender  named as a contract  party in AVN67B,  shall cover "war risks and allied
perils" in accordance with extended coverage endorsement AVN52C and shall to the
extent not in conflict with AVN67B:

          (1)  provide   that  all  the provisions thereof, except the limits of
               liability, shall operate to give each Additional Insured the same
               protection  as if there  were a  separate  policy  covering  each
               insured; and

          (2)  be primary and without right of contribution from other insurance
               that may be available to any other Additional Insured or Lessee.

<PAGE>



(36) Insurance with Respect to the Aircraft.  Lessee,  at its own expense,  will
maintain in effect:

          (1)  "hull all risks" insurance  for loss of or damage to the Aircraft
               (including  all flight and ground risks) on an agreed value basis
               in an amount not less than the Casualty Value;

          (2)  "all risks" and "war risks and allied  perils"  insurance  on the
               Engines  and Parts  while not  installed  on the  Airframe  on an
               agreed  value  basis  in an  amount  not  less  than  their  full
               replacement value; and

          (3)  "hull war and allied  perils"  insurance on the Aircraft covering
               risks  excluded  from the "hull all risks"  policy to the fullest
               extent  available  from  the  leading   international   insurance
               markets,  including  confiscation  or requisition by the state of
               registration,  on an agreed  value  basis for an amount  not less
               than the Casualty Value.

(37) Required Policy  Designations and Provisions  Relating to Insurance Against
Loss or  Damage.  Each and any  policy  of  insurance  obtained  and  maintained
pursuant to Section 11(d),  and each and any policy  obtained in substitution or
replacement  for any such policies,  shall be provided by policies that shall be
endorsed  to include  paragraph  1 of AVN67B  with Lessor and Lender as contract
parties and shall to the extent not in conflict with AVN67B:

          (1)  include a loss  payable  clause  that provides that all insurance
               proceeds in the event of a Casualty  Occurrence  shall be payable
               to Lessor or its designee and that all other  insurance  proceeds
               shall be paid in accordance  with the terms of this Lease to such
               parties as may be necessary to repair the Aircraft;

          (2)  provide  in  the  event  of  separate  insurances  being arranged
               to cover the "hull all-risks"  insurance and the "hull war-risks"
               insurance  that the  underwriters  subscribing  to such insurance
               agree  that in the event of any  dispute as to whether a claim is
               covered by the "hull all-risks" or "hull war-risks" policy,  such
               claim be settled on a 50/50  claim  funding  basis in  accordance
               with  AVS103  (or its  equivalent)  or  under  either  the  "hull
               all-risks" or "hull war-risks" policy;

          (3)  be subject to  such  exclusions and  deductibles  as  Lessor  may
               reasonably   approve,   provided  that  in  no  event  shall  the
               deductible  under  the  "hull  all-risks"  and  "hull  war-risks"
               insurance exceed the Deductible Amount; and

          (4)  provide that all insurance proceeds shall be payable in Dollars.


<PAGE>



(38) Revised Policy Designations and Provisions  Relating to All Insurance.  The
policies  evidencing  the  insurance  required  under  this  Section 11 shall be
endorsed to include paragraph 3 of AVN67B with Lessor and Lender with respect to
hull insurance and each Additional  Insured with respect to liability  insurance
be named as contract parties in AVN67B,  shall name the Additional  Insureds and
shall, to the extent not in conflict with AVN67B:

          (1)  designate the Additional Insureds as additional insureds and loss
               payees;

          (2)  provide that the insurance  shall not be  invalidated,  so far as
               concerns  any  Additional  Insured,  by any action or inaction or
               omission (including  misrepresentation  and nondisclosure) of any
               person or party that  results in a breach of any term,  condition
               or warranty of such policy; provided, that the Additional Insured
               so protected has not caused, contributed to or knowingly condoned
               the action, inaction or omission, as the case may be;

          (3)  specifically reference this Lease;

          (4)  provide  for  worldwide coverage (subject only to such exceptions
               as are  customary in insurance  coverage  carried by air carriers
               operating aircraft of the same type as the Aircraft);

          (5)  provide  that upon  payment of any loss or claim to or on  behalf
               of any Additional  Insured,  the respective  insurer shall to the
               extent and in respect of such  payment be thereon  subrogated  to
               all  legal  and  equitable  rights  of  the  Additional   Insured
               indemnified   hereby  (but  not  against  any  other   Additional
               Insured);  provided,  that such insurer  shall not exercise  such
               rights without the consent of the indemnified Additional Insured,
               such consent not to be reasonably withheld;

          (6)  provide  that  neither  Lessor nor Lender shall be liable for any
               premiums in respect thereof and that the insurers shall waive any
               right of set-off or counterclaim  against Lessor or Lender except
               in respect of unpaid premiums in respect of the Aircraft; and
<PAGE>


          (7)  provide that the insurers shall promptly notify Lessor and Lender
               in the event of  cancellation  of, or any material change in, the
               insurance  or  any  act  or  omission  or any  event  that  might
               invalidate or render unenforceable the insurances or in the event
               that any  premium  shall not have been paid when due and that the
               insurances  shall  continue  unaltered  for the  benefit  of each
               Additional  Insured for at least  thirty (30) days after  written
               notice by registered mail of such cancellation,  change, event or
               non-payment of premium thereof shall have been received by Lessor
               and  Lender  except in the case of war risks for which  seven (7)
               day notice (or such  period as may be  customarily  available  in
               respect of war risks or allied perils) will be given.

(39)     Information.

          (1)  On or before the Delivery Date and promptly after each renewal of
               the  insurances,  Lessee  shall  provide  Lessor and Lender  with
               certificates  of insurance and a broker's  letter of  undertaking
               that (i) name  each of  Triton  Aviation  Services  V LLC,  First
               Security Bank,  N.A.,  NationsBank,  N.A.,  and their  respective
               officers, directors, shareholders, agents and employees and their
               respective successors and assigns as "additional insureds",  (ii)
               evidence to the  satisfaction  of Lessor that the  insurances are
               and will  continue in full force after the  Delivery  Date or the
               renewal  date (as the case may be) for such  period as shall then
               be  stipulated  and (iii) contain such other  certifications  and
               undertakings   as  are   customarily   provided  to  lessors  and
               mortgagees by insurance brokers acting for air carriers.

          (2)  Lessee  shall  from  time  to  time  upon request from Lessor (i)
               provide to it evidence reasonably satisfactory to it that any and
               all premiums  payable in respect of the insurances have been paid
               in  accordance  with the terms of the  relevant  policy  and (ii)
               provide  or cause its  broker to  provide a list of the  insurers
               with whom the insurances  are carried and the coverages  provided
               by each of them.

          (3)  Lessee  shall  furnish  such  information regarding the status of
               renewal  negotiations  as may  from  time to  time be  reasonably
               requested by Lessor.  In addition,  Lessee shall  arrange for its
               brokers  (i) to  confirm  to Lessor  not later than five (5) days
               prior to the renewal date of the  insurances,  that  negotiations
               for such  renewal are at an  advanced  state and that there is no
               reason to suppose that the insurances  will not be renewed at the
               relevant  date in terms that will comply with the  provisions  of
               this  Lease  and (ii) to  furnish  to  Lessor  on or prior to the
               renewal date, the renewal certificates of insurance,  reinsurance
               (if  applicable)  and brokers'  letters of  undertaking,  each in
               English and in form and substance satisfactory to Lessor.



<PAGE>


          (4)  Lessee  shall  furnish,  or cause to  be furnished, to Lessor and
               Lender on the Delivery  Date and  thereafter as and when required
               by Lessor and upon each transfer of the Aircraft or assignment of
               rights  hereunder as permitted  by this Lease,  certificates  and
               brokers letter of undertaking (and, if further requested,  of its
               insurers) that confirm that the  requirements  of this Section 11
               are being complied with.

          (5)  Lessee  shall, at  the  request  of  Lessor,  make  copies of the
               policies and endorsements and any amendments thereto with respect
               to  the  insurance   available  to  Lessor  (or  its   authorized
               representatives)  for inspection by any  representative of Lessor
               at the office of Lessee or its  insurance  brokers  during normal
               business hours.

(40)     Additional Insurance; No Lien.

          (1)  Lessee shall not,  without the prior  written  consent of Lessor,
               maintain  insurances  with respect to the Aircraft or any Engine,
               other than as  required  under  this Lease if it would  prejudice
               recovery under the insurance required hereunder.

          (2)  Lessor may from time to time require Lessee at no cost to  Lessor
               to effect such other insurances,  or such variations to the terms
               of the existing  insurances,  as Lessor may reasonably require in
               order to fully protect the interests of the Additional Insureds.

          (3)  Lessee  shall  not  create  or  permit to exist any Lien over the
               insurances required by this Lease, or its interest therein,  save
               as constituted by this Lease.

(41)  Failure to Insure.  If at any time Lessee  fails to maintain in full force
and effect  insurances  in  compliance  with any  provision  of this Section 11,
Lessor  shall be entitled  but not  obligated  (without  prejudice  to any other
rights that it may have or acquire under this Lease by reason of such failure):

          (1)  to pay  any  premiums due or  to  effect  or  maintain insurances
               satisfactory  to Lessor or otherwise  remedy such failure in such
               manner  as  Lessor  considers   appropriate,   and  Lessee  shall
               immediately  reimburse  Lessor in full for any amount so expended
               by Lessor; and/or

          (2)  at  any  time  while  such failure is continuing,  to require the
               Aircraft to remain at any airport, or to proceed to and remain at
               any airport designated by Lessor until such failure is remedied.


<PAGE>


(42)  Assignment.  If Lessor  transfers  the  Aircraft  or  assigns  its  rights
hereunder as  permitted  by this Lease,  Lessee  will,  upon  request,  promptly
procure that the  transferee or assignee  (including,  without  limitation,  any
lender)  shall be added as a  further  named  insured  to any of the  insurances
referred to in this Section 11 so as to enjoy the same rights and  protection as
Lessor may have from time to time under such insurances.  In addition, if Lessor
transfers  the  Aircraft  or such rights and  thereafter  ceases to be Lessor (a
"Transferor"),  Lessee shall,  at the request of such  Transferor and at Lessees
expense,  effect and maintain for the benefit of such  Transferor  the insurance
required  by  Section  11(c) for such  period  (not  exceeding  two years) as in
Transferor may request and shall ensure that the Transferor shall be named as an
additional insured thereunder.

(43) Reinsurance. Any reinsurance will be maintained with reinsurers and brokers
approved by Lessor.  Such  reinsurance  will contain each of the following terms
and will in all other respects (including amount) be satisfactory to Lessor.

          (1)  the same terms as the original insurance;

          (2)  a cut through and assignment clause satisfactory to Lessor; and

          (3)  payment  will  be  made   notwithstanding  (A)  any   bankruptcy,
               insolvency,  liquidation  or  dissolution  of any of the original
               insurers  and/or  (B) that the  original  insurers  have  made no
               payment under the original insurance policies.

(44)  Settlement of Claims.  Lessee will not settle or permit  settlement of any
claims arising under any of the insurances referred to in Section 11 without the
prior  written  consent of Lessor or its  designee and will not settle or permit
settlement of any claims under such  insurance  without such consent if an Event
of Default has occurred and is continuing.

(45) Application of Insurance Proceeds for a Casualty  Occurrence.  It is agreed
that  insurance  payments  which arise from any policy of  insurance  carried by
Lessee and  received as the result of the  occurrence  of a Casualty  Occurrence
shall be applied as follows: (i) if such payments are received with respect to a
Casualty Occurrence relating to the Airframe and Engines or engines installed on
the Airframe, so much of such payments as shall not exceed the amounts due under
Section  10(a)  hereof shall be paid to Lessor,  and the balance to Lessee;  and
(ii) if such  payments  are  received  with  respect  to a  Casualty  Occurrence
relating to an Engine under circumstances  contemplated by Section 11(d) hereof,
such  payment  shall be  adjusted  with  Lessee  (provided  that  Lessee has not
breached any  warranty,  declaration  or condition  contained in the  applicable
insurance policy) and paid over to Lessee, provided that Lessee shall have fully
performed the terms of Section 10(b) hereof.



<PAGE>


(46) Application of Insurance Proceeds for Other than a Casualty Occurrence. The
insurance  payments for any  property  damage loss to the Airframe or any Engine
not constituting a Casualty  Occurrence,  or to any Part, will be held by Lessor
until Lessee  furnishes  Lessor with  satisfactory  evidence that the repairs or
replacement  property Lessee is required to perform or obtain in accordance with
the terms of Section  6(f) of this Lease have been made or  obtained  by Lessee.
Upon receipt of such evidence of repair or replacement,  Lessor shall pay Lessee
the amount of the insurance payment received with respect to such loss.

(47) Application in Default. Any amount referred to in Sections 11(e)(i),  11(m)
or 11(n) which is otherwise  payable to Lessee shall not be paid to Lessee,  or,
if it has been  previously  paid to  Lessee,  and not yet  applied  by Lessee as
permitted or required  hereunder,  shall be delivered by Lessee to Lessor, if at
the time of such payment,  a Default shall have occurred and be  continuing.  In
such  case,  all  such  amounts  shall be held by  Lessor  as  security  for the
obligations  of Lessee,  or, at the option of Lessor,  applied by Lessor  toward
payment of any of Lessee's  obligations at the time due hereunder.  At such time
as there shall not be continuing any such Default,  all such amounts at the time
held by Lessor in excess of the  amount,  if any,  which  Lessor has elected for
application as provided above, shall be paid to Lessee.

                                   SECTION 12
                         RETURN OF AIRCRAFT AND RECORDS

(48) Return. On the Expiration Date,  Lessee,  at its own expense,  shall return
the  Aircraft to Lessor in the  condition  specified  on Exhibit C hereto at the
Return  Location,  fully  equipped  with all required  Parts and  Engines,  duly
installed  thereon,  together with the Aircraft  Documents and records which are
complete  and  acceptable  to the FAA,  and at no cost to  Lessor,  all  service
bulletin kits furnished without charge by a manufacturer for installation on the
Aircraft which have not been so installed.

(49) Records.  Six months prior to the  Expiration  Date (and in an updated form
upon the Return Occasion), Lessee will provide Lessor with a technical report in
form and  substance  reasonably  requested  by Lessor,  and, in  addition,  upon
Lessor's request, will make copies of (i) drawings of the interior configuration
of the Aircraft both as it presently exists and as it will exist at return, (ii)
the  airworthiness  directive status list, (iii) service bulletin  incorporation
list, (iv) rotable  controlled,  hard-time and life limited component  listings,
(v) listing of  Lessee-initiated  modifications  and alterations,  (vi) interior
material burn  certificates,  (vii)  Maintenance  Program,  (viii) complete work
scope for the  checks,  inspections  and  other  work to be  performed  prior to
return,  (ix)  current  Engine  disk  sheets  and (x) any  other  data  which is
reasonably  requested by Lessor.  In addition to the foregoing,  upon the Return
Occasion, Lessee shall deliver to Lessor all Aircraft Documentation.



<PAGE>


(50) Final Inspection.  Upon the Return Occasion, Lessee shall make the Aircraft
available to Lessor for a functional  check flight and detailed  inspection,  at
Lessee's expense, in order to verify that the condition of the Aircraft complies
with the  requirements set forth herein (the "Final  Inspection").  Lessee shall
give Lessor not less than ten (10) days prior written notice of the commencement
date of the "C" Check  required  by  Exhibit C.  Lessor  shall have the right to
appoint a  representative  who may  observe (i) the Final  Inspection,  (ii) any
inspections conducted in accordance with Exhibit C, and/or (iii) the maintenance
conducted in connection  with or as a consequence of any such  inspections.  The
functional  test  flight  shall  be  conducted,  at  Lessee's  expense,  using a
qualified pilot and not more than three (3) technical  representatives  selected
by Lessor (one of whom may sit in the jump seat in the cockpit),  in conjunction
with Lessee's flight crew, shall be up to two (2) hours duration,  shall conform
with Lessee's standard  operation check flight  procedures,  shall be covered by
Lessee's  insurance policy required  pursuant to Section 11, and shall otherwise
be of such  scope  as is  necessary  to  demonstrate  the  airworthiness  of the
Aircraft  and  proper  functioning  of all  systems  and  components.  The Final
Inspection shall commence on or before the Expiration Date and shall continue on
consecutive  days until all activity  required above to be conducted  during the
Final Inspection has been concluded. To the extent that any portion of the Final
Inspection  extends beyond the Expiration Date, the Term shall be deemed to have
been automatically  extended, and the obligation to pay Rent hereunder continued
on a daily basis until the Final Inspection shall have been concluded.

(51) Corrections and Subsequent Corrections. If the Aircraft or any Engine fails
upon the Return  Occasion to conform to any  requirement  imposed by this Lease,
Lessor,  at its option,  may continue the Lease in effect in the manner provided
for in Section 12(c) above with regard to automatic extension until such time as
the Aircraft is brought up to the  condition  required by this Lease,  or accept
the  return  of  the  Aircraft  and  thereafter  have  any  such  nonconformance
corrected.  Any expense  incurred  by Lessor for such  correction  shall  become
Supplemental  Rent payable by Lessee upon demand.  Lessee's  obligations  to pay
such Supplemental Rent shall survive the passage of the Expiration Date or other
termination of this Lease.

                                   SECTION 13
                              DEFAULT AND REMEDIES

(52) Events of Default.  Any one or more of the following  occurrences or events
shall constitute an Event of Default:  (i) Lessee shall fail to make any payment
of Rent to Lessor when due and such payment shall be overdue for a period of two
(2) Business  Days;  (ii) Lessee shall fail to obtain and maintain any insurance
required  under the  provisions  of  Section  11 hereof,  or shall  operate  the
Aircraft outside of the scope of the insurance coverage so maintained; (iii) any
representation  or  warranty  made  by  Lessee  herein  or in  any  document  or
certificate  furnished  Lessor in  connection  herewith or therewith or pursuant
hereto  is  incorrect  at the  time  given  in any  material  respect;  (iv) any
bankruptcy,  insolvency or similar proceeding is commenced by or against Lessee;
or (v) Lessee shall fail to perform or observe any other covenant,  condition or
agreement  hereunder  and such failure  shall  continue for a period of five (5)
Business Days after written notice thereof is given by Lessor to Lessee.



<PAGE>


(53)  Remedies.  Upon the  occurrence of any Event of Default Lessor may, at its
option and  without  notice to  Lessee,  exercise  one or more of the  following
remedies as Lessor in its sole discretion  shall elect:  (i) demand that Lessee,
and Lessee  shall upon the  written  demand of Lessor and at  Lessee's  expense,
immediately  return  the  Aircraft  to Lessor in the  manner  specified  in such
notice;  (ii) enter upon the  premises  where the  Aircraft  is located and take
immediate  possession of and remove the same;  (iii) cancel  Lessee's  leasehold
interest in the Aircraft  under this Lease  effective  upon  dispatch of written
notice to Lessee, and store, sell or lease to others the Aircraft,  all free and
clear of any rights of Lessee;  (iv) demand that  Lessee,  and Lessee shall upon
the written  demand of Lessor,  pay as damages  for the breach  hereof an amount
equaling  the sum of: (1) all Rent due and payable  hereunder;  (2) all Expenses
incurred  by Lessor as a result of Lessee's  breach of this Lease;  and (3) such
additional  amount as shall be  sufficient  to place Lessor in the same economic
position,  on an  after-tax  basis,  as Lessor  would have been in if Lessee had
timely performed each of its obligations under this Lease; and/or (v) proceed by
appropriate  court  action or  actions,  either at Law or in equity,  to enforce
performance  by Lessee of the  applicable  covenants of this Lease and to obtain
the benefit of any remedies  available to Lessor  hereunder or under  applicable
Law for breach hereof.

      In addition to the  foregoing,  Lessor shall be entitled to exercise  such
other rights and remedies as may be available  under  applicable  Law and Lessee
shall be liable on an after-tax  basis for, and shall pay Lessor on demand:  (1)
interest on all unpaid amounts at the Interest Rate, from the due date until the
date of  payment in full;  (2) all  reasonable  legal fees and other  reasonable
costs and expenses  incurred by Lessor by reason of the  occurrence of any Event
of Default or the exercise of Lessor's  remedies with respect  thereto;  and (3)
all  reasonable  expenses,  disbursements,   costs  and  fees  incurred  in  (A)
repossessing,   storing,  preserving,   shipping,  maintaining,   repairing  and
refurbishing  the Aircraft,  the  Airframe,  any Engine or Part to the condition
required by Section 12 hereof and (B) preparing the Aircraft,  the Airframe,  an
Engine or Part for sale or lease, advertising the sale or lease of the Aircraft,
the  Airframe,  an Engine or Part and selling or  releasing  the  Aircraft,  the
Airframe, an Engine or Part.

      No remedy  referred to in this Section  13(b) is intended to be exclusive,
but, to the extent permissible  hereunder or under applicable Law, each shall be
cumulative  and in addition to any other  remedy  referred to above or otherwise
available  to Lessor at Law or in  equity;  and the  exercise  or  beginning  of
exercise by Lessor of any one or more of such  remedies  shall not  preclude the
simultaneous  or later exercise by Lessor of any or all of such other  remedies.
No express or implied  waiver by Lessor of any Default or Event of Default shall
in any way be,  or be  construed  to be, a waiver of any  future  or  subsequent
Default or Event of Default.

                                   SECTION 14
                                   ALIENATION



<PAGE>


      Lessor  shall have the right to assign,  sell or encumber  any interest of
Lessor in the Aircraft or this Lease and/or the proceeds  hereof  subject to the
rights of Lessee under the provisions of this Lease;  provided,  however, in the
case of  assignment  for  security,  Lessee  shall be  reimbursed  for any costs
reasonably incurred by Lessee in connection  therewith.  To effect or facilitate
any  such  assignment,  sale or  encumbrance,  Lessee  agrees  to  provide  such
agreements, consents, conveyances or documents as may be reasonably requested by
Lessor, which in the case of an assignment other than for security shall include
an  unrestricted  release  of  Lessor  from its  obligations  hereunder.  Lessee
acknowledges  that an  assignment,  sale or  encumbrance  of  Lessor's  interest
hereunder would not have the effect of altering the terms of this Lease relating
to the rights and  obligations of Lessee.  Lessee agrees that it will not assert
against an assignee any claim or defense which it may have against  Lessor.  The
agreements,  covenants, obligations, and liabilities contained herein including,
but not limited to, all  obligations to pay Rent and indemnify  each  Indemnitee
are made for the benefit of each Indemnitee and their respective  successors and
assigns.

                                   SECTION 15
                                  MISCELLANEOUS

(54)  Severability  and  Construction.  Any  provision  of this  Lease  which is
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating the remaining  provisions  hereof.  To the extent permitted by Law,
Lessee hereby waives any provisions of Law which renders any  provisions  hereof
prohibited  or  unenforceable  in any respect.  This Lease shall  constitute  an
agreement of lease, and nothing herein shall be construed as conveying to Lessee
any right,  title or interest in the  Aircraft or any Engine or Part except as a
lessee only. Lessor and Lessee agree that this Lease is to be treated as a lease
for U.S. federal income tax purposes.

(55) Governing Law;  Jurisdiction.  This Lease shall in all respects be governed
by, and  construed  in  accordance  with,  the Laws of the State of  California.
Lessee hereby  irrevocably  consents that any legal action or proceeding against
it or any  of its  assets  with  respect  to the  Lease  may be  brought  in any
jurisdiction  where Lessee or any of its assets may be found, or in any court of
the State of  California  or any Federal  court of the United  States of America
located in San Francisco,  California, as Lessor may elect, and by execution and
delivery of this Lease,  Lessee hereby  irrevocably  submits to and accepts with
regard to any such  action or  proceeding,  for  itself  and in  respect  of its
assets, generally and unconditionally, the jurisdiction of the aforesaid courts.
Lessee further irrevocably  consents to the service of process out of any of the
aforementioned  courts in any such action or proceeding by the mailing of copies
thereof by registered or certified  airmail,  postage prepaid,  to Lessee at its
address set forth on Exhibit A hereto. The foregoing,  however,  shall not limit
the rights of Lessor to serve process in any other manner permitted by Law or to
bring any legal action or proceeding  or to obtain  execution of judgment in any
jurisdiction.  Lessee hereby irrevocably waives, to the fullest extent permitted
by Law, any  objection  which Lessee may now or hereafter  have to the laying of
venue of any suit, action or proceeding arising out of or relating to this Lease
brought in the State of California,  and hereby further  irrevocably  waives any
claim  that  any  such  suit,  action  or  proceeding  brought  in the  State of
California has been brought in an inconvenient forum.



<PAGE>


(56) Notices.  All notices required under the terms and provisions  hereof shall
be in writing,  shall be sent to Lessor or Lessee at their respective  addresses
set forth on  Exhibit A hereto  (or such  other  addresses  as the  parties  may
designate  from  time to time in  writing)  and,  except as  otherwise  provided
herein,  shall become effective upon the earlier of actual receipt or (i) in the
case of a letter,  the fifth day  following  posting,  and (ii) in the case of a
facsimile transmission on the day immediately following the date of dispatch.

(57) Lessor's Right to Perform for Lessee.  If Lessee fails to perform or comply
with any covenant,  agreement or obligation contained herein,  Lessor shall have
the right but not the  obligation  to so perform or comply for  Lessee,  and the
reasonable  expenses of Lessor incurred in connection  therewith,  together with
interest  thereon at the Interest Rate, shall be payable by Lessee to Lessor (as
Supplemental  Rent) upon  demand.  The taking of any such action by Lessor shall
not constitute a waiver or release of any obligation of Lessee under this Lease,
nor a waiver of any Default  which may arise out of Lessee's  nonperformance  of
such  obligation,  nor an  election  or waiver by Lessor of any  remedy or right
available to Lessor hereunder.

(58) Counterparts.  This Lease may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.  To the extent, if any, that this Lease constitutes
chattel  paper (as such term is defined  in the  Uniform  Commercial  Code as in
effect in any applicable jurisdiction) no security interest in this Lease may be
created  through the transfer or  possession of any  counterpart  other than the
counterpart which has been marked "Original" on the signature page thereof.

(59) Quiet Enjoyment. Lessor covenants that so long as an Event of Default shall
not have occurred and be continuing, Lessee shall quietly enjoy the Aircraft and
all rents, revenues, profits and income thereto, without interference by Lessor,
or by any Person lawfully claiming by or through Lessor.

(60) Brokers. Neither Lessor nor Lessee have utilized the services of any agent,
broker or similar third party representation in connection with the transactions
contemplated by this Lease and each party agrees to indemnify and hold the other
harmless from and against any and all claims, suits, damages, costs and expenses
(including,  but not  limited to  reasonable  attorneys'  fees)  asserted by any
agent, broker or other third party for any commission or compensation based upon
the lease of the Aircraft,  if such claim, damage, cost or expense arises out of
any action or alleged action by the indemnifying party, its employees or agents.

(61) Time is of the Essence. Time and strict and punctual performance are of the
essence with respect to each provision of this Lease.



<PAGE>


(62)  DISCLAIMER OF  CONSEQUENTIAL  DAMAGES.  LESSEE AGREES THAT IT SHALL NOT BE
ENTITLED  TO  RECOVER,  AND  HEREBY  DISCLAIMS  AND WAIVES ANY RIGHT THAT IT MAY
OTHERWISE  HAVE TO  RECOVER,  CONSEQUENTIAL  DAMAGES (AS SUCH TERM IS DEFINED IN
SECTION 10520(B) OF THE CALIFORNIA  UNIFORM  COMMERCIAL CODE) AS A RESULT OF ANY
BREACH OR ALLEGED BREACH BY LESSOR OF ANY OF THE AGREEMENTS,  REPRESENTATIONS OR
WARRANTIES OF LESSOR CONTAINED IN THIS LEASE OR THE OTHER RELATED AGREEMENTS.

(63)  Security  Deposit.  Lessor hereby  acknowledges  the receipt of an initial
security  deposit in the Initial Amount and Lessee hereby agrees to deposit with
Lessor on or before  thirty (30) days prior to the  Estimated  Delivery  Date, a
final  installment  of the  security  deposit in the Further  Additional  Amount
(collectively,   the  "Security   Deposit").   The  Security  Deposit  shall  be
non-refundable during the Term hereof;  provided that the Security Deposit shall
be promptly  refunded by Lessor to Lessee in the event that Lessor shall fail to
tender the Aircraft for delivery in  accordance  with Section 3 of this Lease on
or prior to May 30, 1999,  despite  Lessee's  satisfaction  of all conditions to
such tender,  and Lessee elects to terminate this Lease.  Such sums are received
by Lessor as security for the timely and faithful  performance  by Lessee of all
of Lessee's  obligations  under this Lease,  and Lessee  hereby  grants Lessor a
security  interest  therein and in all other sums  deposited  under this Section
15(j). Lessor shall be entitled to commingle the Security Deposit with its other
funds,  and Lessee  shall not be  entitled  to any  interest  or other  earnings
thereon.  If Lessee is in Default  hereunder,  in addition  to all other  rights
Lessor  shall have under the  California  Uniform  Commercial  Code as a secured
party,  Lessor  may use,  apply or retain  all or any  portion  of the  Security
Deposit  in partial  payment  for sums due to Lessor by  Lessee,  to  compensate
Lessor for any sums it may in its discretion advance as a result of a Default by
Lessee,  or to apply toward  losses or expenses  Lessor may suffer or incur as a
result of Lessee's Default. If Lessor uses or applies all or any portion of such
Security  Deposit,  such application shall not be deemed a cure of any Defaults,
and Lessee shall within five days after written  demand  therefore  deposit with
Lessor in cash an amount  sufficient  to  restore  the  Security  Deposit to its
original  sum and the  failure of Lessee to do so shall be a material  breach of
this Lease by Lessee.  Provided  Lessee is not in Default under this Lease,  the
principal amount of such Security Deposit,  without interest, and less any costs
incurred by Lessor in connection  with the termination of the Lease or return of
the  Aircraft  and any  amounts  owed by Lessee to Lessor  under  this  Lease or
otherwise,  shall be returned to Lessee on the  Expiration  Date,  provided that
Lessee shall have returned the Aircraft in compliance with Section 12 hereof.

(64) Costs.  Except as otherwise  provided herein,  Lessor and Lessee each shall
pay its own costs and  expenses  incurred in  connection  with the  negotiation,
documentation and performance of its obligations under this Lease.

(65) Entire Agreement;  Modification or Revision. This Lease is intended to be a
complete and  exclusive  statement of the terms of the  agreement of the parties
hereto,  and this  Lease  supersedes  any prior or  contemporaneous  agreements,
whether oral or in writing. Neither this Lease nor any term of this Lease may be
modified,  rescinded,  changed,  waived,  discharged or  terminated  except by a
writing signed by the party to be charged.  Lessor and Lessee  acknowledge their
agreement to the provisions of this Section 15(l) by their signatures below.


<PAGE>




      IN WITNESS  WHEREOF,  Lessor and Lessee,  each pursuant to due  authority,
have each caused this Lease to be executed by their duly authorized  officers as
of the day and year first above written.

                                              LESSOR:

                                              FIRST SECURITY BANK, N.A.,
                                              not in its individual capacity
                                              but solely as owner trustee


                                              By:______________________________

                                              Name:____________________________

                                              Its:_____________________________



                                              LESSEE:

                                              FRONTIER AIRLINES, INC.


                                              By:______________________________

                                              Name:____________________________

                                              Its:_____________________________



CERTAIN  PROCEEDS  OF THIS  LEASE ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
NATIONSBANK, N.A., AS AGENT, AND ANY SUCCESSOR AGENT, FOR ONE OR MORE  FINANCIAL
INSTITUTIONS


<PAGE>





                                    EXHIBIT A
                                       to
                            Aircraft Lease Agreement

                             DEFINITIONS AND VALUES

Part I -- General


Additional Insureds shall mean Lessor, Beneficiary,  Lender and their respective
officers,  directors,  shareholders,  agents and employers and their  respective
successors and assigns.

Aircraft shall mean the Airframe  together with (a) the Engines,  whether or not
installed on the Aircraft,  (b) all Parts or components thereof, (c) spare parts
or ancillary  equipment or devices furnished with the Aircraft under this Lease,
(d) all Aircraft Documents, and (e) all substitutions, replacements and renewals
of any and all thereof.

Aircraft  Documents shall mean the items  identified on Schedule 2 to Exhibit D,
together with all additions and replacements.

Airframe shall mean (a) the Boeing model 737-200A aircraft having Manufacturer's
serial number 23007, but not including any engine installed thereon, and (b) any
and all  Parts so long as the same  shall be  incorporated  or  installed  on or
attached to the  Airframe,  or so long as title  thereto  shall remain vested in
Lessor in accordance with the terms hereof, after removal from the Airframe.

Airframe Usage Report shall mean a monthly report  furnished to Lessor by Lessee
in  substantially  the form  attached  hereto as Exhibit F showing the number of
Flight Hours of operation for the Aircraft during the preceding month.

Approved  Insurance Broker shall mean any reputable aviation insurance broker of
internationally recognized responsibility and standing approved by Lessor in its
sole discretion.

Approved   Insurer   shall   mean  any   reputable   aviation   underwriter   of
internationally recognized responsibility and standing approved by Lessor in its
sole discretion.

Basic Rent Payment Date shall mean the 5th calendar day of each month during the
Term commencing  with the date of the first  occurring  calendar day of the Term
but excluding the Final Basic Rent Payment Date.



<PAGE>


Beneficiary  shall mean Triton  Aviation  Services V LLC, a  California  limited
liability company, and its successors and assigns.

Business  Day shall mean any day other than a  Saturday,  Sunday or other day on
which  banking  institutions  in San  Francisco,  California  are  authorized or
required by Law to be closed.

"C" Check shall mean a "C" check in accordance with the Maintenance Program.

"C7" Check  shall  mean the  heaviest  maintenance  inspection,  complete  block
overhaul,  including the twenty  thousand  (20,000) hour  structural  inspection
items.  For purposes of this Lease,  the "C7" Check shall be the equivalent of a
"D" check.

Casualty  Occurrence  shall mean any of the following events with respect to the
Aircraft,  Airframe or any Engine:  (a) the actual or constructive total loss of
such  property  (including  any  damage to such  property  which  results  in an
insurance  settlement  on the basis of a total loss, or  requisition  for use or
hire which results in an insurance settlement on the basis of a total loss); (b)
such property being  destroyed,  damaged  beyond repair or permanently  rendered
unfit for normal use for any reason whatsoever; (c) the requisition of title, or
other compulsory acquisition,  capture,  seizure,  deprivation,  confiscation or
detention  for any  reason  of  such  property  by any  Governmental  Entity  or
purported  Governmental  Entity  (whether  de  jure  or de  facto);  or (d)  the
hijacking, theft, condemnation,  confiscation, seizure or requisition for use or
hire of such property which deprives any Person  permitted by this Lease to have
possession  and/or use of such property of such  possession  and/or use for more
than 30 days. A Casualty Occurrence with respect to the Aircraft shall be deemed
to have occurred if a Casualty Occurrence occurs with respect to the Airframe. A
Casualty  Occurrence  with respect to any Engine shall not,  without loss of the
Airframe, be deemed a Casualty Occurrence with respect to the Aircraft.

Certificated Air Carrier means any Person (except the United States  Government)
that is a citizen of the United  States of America (as defined in Section  40102
of the Transportation Code) holding an air carrier operating  certificate issued
pursuant to Chapter 447 of the Transportation Code for the operation of aircraft
capable of carrying ten or more individuals or 6,000 pounds or more of cargo.

Component  shall  mean  each  time  controlled,  cycle  controlled  or  calendar
controlled component of the Aircraft.

Default shall mean an Event of Default or event which would  constitute an Event
of Default but for the lapse of time or the giving of notice or both.

Delivery  Conditions  shall mean the  conditions  in respect of the Aircraft set
forth on Exhibit E.

Delivery  Date shall mean the date on which the  Aircraft  is  delivered  to and
accepted by Lessee for purposes of this Lease.



<PAGE>


Delivery Location: Dalfort Aerospace in Dallas, Texas.

Dollars shall mean lawful currency of the United States of America.

Engine  shall mean each of the two (2) Pratt & Whitney  model  JT8D-15A  engines
installed on or furnished with the Aircraft on the Delivery Date, bearing Engine
Manufacturer's  serial  numbers  717108  and  709092,   respectively,   and  any
Replacement Engine which may from time to time be substituted  therefor pursuant
to Section  10;  together  in each case with any and all Parts  incorporated  or
installed in or attached thereto or any and all Parts removed  therefrom so long
as title thereto  remains  vested in Lessor in accordance  with the terms hereof
after removal from such Engine.  Except as otherwise  set forth herein,  at such
time as a Replacement Engine shall be so substituted, such replaced Engine shall
cease to be an Engine  hereunder.  The term "Engines"  means,  as of any date of
determination, all Engines then leased hereunder.

Engine Manufacturer: Pratt & Whitney.

Engine  Overhaul  shall mean a complete  overhaul  (hot  section or cold section
refurbishment and life limited part replacement) of an Engine.

Estimated Delivery Date:  April 15, 1999.

Event of Default shall have the meaning  specified in any one or more clauses in
Section 13(a).

Excusable  Delay shall mean any of the following  causes:  (a) act of God or the
public enemy, (b) fires, floods, explosions,  earthquakes, strikes, epidemics or
quarantine restrictions, (c) inability of a maintenance facility to complete its
maintenance  activities,  or (d) any other  cause to the extent it is beyond the
control of Lessor and not  occasioned by its fault or  negligence,  but only for
such length of time as the delivery of the Aircraft is  reasonably  prevented by
such cause or causes.

Expenses means any claims, proceedings,  losses,  liabilities,  damages (whether
direct,  indirect,  special,  incidental or  consequential),  suits,  judgments,
costs,  expenses,  fees, penalties or fines (whether civil or criminal) of every
nature and kind,  including  any of the  foregoing  arising  or imposed  with or
without Indemnitee's fault or negligence, whether passive or active or under the
doctrine of strict liability.

Expiration Date shall mean the fifth (5th) anniversary of the Delivery Date.

FAA  shall  mean  the  Federal  Aviation  Administration  of the  United  States
Department of Transportation or any successor.

Final Basic  Payment Date shall mean the last  occurring 5th calendar day of the
Term.



<PAGE>


Flight Hours shall mean (i) in the case of the Airframe  and landing  gear,  the
actual number of hours or fractions thereof that the Aircraft is in flight (from
takeoff to landing) as recorded in the Aircraft's log book, and (ii) in the case
of an  Engine,  the actual  number of hours or  fractions  of thereof  that such
Engine is in  operation  (from  takeoff to landing of the Airframe on which such
Engine is installed) as recorded in the Aircraft's log book.

Governmental  Entity  shall mean and include  (a) any  national  government,  or
political  subdivision  thereof or local  jurisdiction  therein;  (b) any board,
commission,  department,  division, organ, instrumentality,  court, or agency of
any entity described in (a) above, however constituted; and (c) any association,
organization,  or institution of which any entity  described in (a) or (b) above
is a member or to whose  jurisdiction  any such  entity is  subject  or in whose
activities  any such entity is a  participant  but only  (except for purposes of
defining Law below) to the extent that any of the  preceding  have  jurisdiction
over the Aircraft or its operations.

Indemnitee shall mean Lessor,  Beneficiary,  each affiliate and Tax Affiliate of
Lessor and  Beneficiary,  each successor and assign of each of the foregoing and
each director, officer, employee and agent of each of the foregoing.

Law shall mean and include (a) any statute,  decree,  constitution,  regulation,
order,  judgment or other directive of any Governmental  Entity; (b) any treaty,
pact, compact or other agreement to which any Governmental Entity is a signatory
or party; (c) any judicial or  administrative  interpretation  or application of
any Law described in (a) or (b) above;  and (d) any amendment or revision of any
Law described in (a), (b) or (c) above.

Lease shall mean this Lease, each Lease Supplement,  and any and all amendments,
revisions, supplements and modifications thereto.

Lease  Identification:  "OWNED BY AND LEASED FROM FIRST SECURITY BANK,  N.A., AS
OWNER TRUSTEE AT 79 SOUTH MAIN STREET,  SALT LAKE CITY, UTAH 84111,  U.S.A., AND
SUBJECT TO SECURITY  INTEREST IN FAVOR OF NATIONSBANK,  N.A., AS AGENT,  AND ANY
SUCCESSOR AGENT, FOR ONE OR MORE FINANCIAL INSTITUTIONS."

Lease Supplement shall mean the Lease  Supplement,  substantially in the form of
Exhibit B hereto, entered into between Lessor and Lessee.

Lender shall mean NationsBank,  N.A., as agent, and any successor agent, for one
or more financial institutions.






<PAGE>


Lessee's Address:                             Frontier Airlines, Inc.
----------------
                                              12015 E. 46th Avenue, #200
                                              Denver, Colorado 80239
                                              Telephone: (303) 371-7400
                                              Facsimile: (303) 371-7007
                                              Attn:  Director, Aircraft Mngmt


Lessor's Address:                             First Security Bank, N.A.
----------------
                                              79 South Main Street
                                              Salt Lake City, Utah  84111
                                              Telephone: (801) 246-5819
                                              Facsimile: (801) 246-5053
                                              Attn: Corporate Trust Department


with a copy to:                               Triton Aviation Services V LLC
                                              c/o Triton Aviation Services Ltd
                                              55 Green Street, Suite 500
                                              San Francisco, CA 94111
                                              Telephone: (415) 956-6311
                                              Facsimile: (415) 398-9184
                                              Attn: Mr. John E. Flynn

Lessor's Liens shall mean Liens arising as a result of (a) claims against Lessor
not  related to the  transactions  contemplated  by this  Lease;  or (b) acts of
Lessor, not contemplated and expressly  permitted under this Lease; or (c) Taxes
imposed against Lessor which are not  indemnified  against by Lessee pursuant to
Section 9(b); or (d) claims against Lessor arising out of the voluntary transfer
by Lessor of all or any part of its  interests  in the  Aircraft  or this Lease,
other than a transfer pursuant to Sections 10 or 13(b) of this Lease.

Lien shall mean any mortgage, pledge, lien, charge, encumbrance, lease, exercise
of rights, security interest, claim or right of detention or sale.

Maintenance  Program shall mean Lessee's FAA approved  maintenance program as in
effect from time to time for the Aircraft.

Manufacturer: The Boeing Company.



<PAGE>


Parts shall mean all appliances, components, parts, instruments,  appurtenances,
accessories,  furnishings  and other  equipment of whatever  nature  (other than
complete Engines or engines), which may now or from time to time be incorporated
or installed  in or attached to the Airframe or any Engine.  Except as otherwise
set forth herein,  at such time as a replacement part shall be substituted for a
Part in accordance  with Section 10 hereof,  the Part so replaced shall cease to
be a Part hereunder.

Payment Location:  Bank of America Illinois, 231 South La Salle Street, Chicago,
Illinois 60697,  for the account of Triton Aviation  Services V LLC, Account No.
79-51523, ABA 071-000039.

Permitted Liens shall mean Liens which are permitted by Section 8(c) hereof.

Person  shall mean and  include  any  individual  person,  corporation,  limited
liability company,  partnership,  trust,  estate,  unincorporated  organization,
association or Governmental Entity.

Rent shall mean the Initial Rent  Payment  Amount,  Basic Rent,  the Final Basic
Rent and Supplemental Rent collectively.

Replacement  Engine  shall mean an engine of the same  Engine  Manufacturer  and
model, and having equivalent value, utility, modification and remaining warranty
status as the Engine it is intended to replace under  Section 10(b) hereof,  or,
at Lessee's option, an engine of the same Engine Manufacturer as such Engine but
of an improved  model,  and  otherwise  of an  equivalent  value and utility and
suitable for installation and use on the Airframe without impairing the value or
utility of the Airframe.

Return Location: such location as may be agreed to between Lessor and Lessee.

Return Occasion shall mean the event that occurs when possession of the Aircraft
is  returned  from Lessee to Lessor at the end of the Term of this Lease or upon
Lessor taking possession pursuant to Section 13(b).

Security Deposit has the meaning ascribed thereto in Section 15(j).

Supplemental  Rent shall mean any and all amounts,  liabilities  and obligations
(other than Basic  Rent)  which  Lessee  assumes or agrees to pay  hereunder  to
Lessor, including without limitation, (a) any payment of Casualty Value; (b) any
payment of indemnity  required by Section 9 hereof;  (c) any payment of reserves
pursuant to Section 4(b) hereof;  and (d) to the extent  permitted by applicable
Law,  interest accruing daily at the Interest Rate (all computations of interest
under this Lease to be made on the basis of a 365-day year for the actual number
of  days  elapsed,  compounded  monthly)  calculated:  (i)  on any  part  of any
installment  of Basic Rent not paid on the due date  thereof  for the period the
same  remains  unpaid  and  (ii) on any  Supplemental  Rent  not  paid  when due
hereunder until the same is paid.



<PAGE>


Tax Affiliate  shall mean (a) in the case of the entity that is the  Beneficiary
on the  Delivery  Date and in the case of any  successor  or direct or  indirect
transferee  thereof  that is (or is  treated  as) a  partnership  for the United
States Federal income tax purposes,  each general  partner,  limited  partner or
member (as the case may be) of the  Beneficiary  and (b) in the case of any such
general partner,  limited partner or member which itself is (or is treated as) a
partnership for United States Federal income tax purposes, each general partner,
limited partner or member thereof (as the case may be).

Taxes  shall mean any and all  present and future  taxes,  levies,  assessments,
duties,  imposts,  fees,  withholdings  and other  government  charges or of any
nature,  together with any penalties,  additions to tax,  fines,  charges and/or
interest thereon or computed by reference thereto.

Term  shall  mean the term of this  Lease  specified  in the  Lease  Supplement,
commencing on the Delivery Date and ending on the Expiration Date.

Transportation Code means Title 49 of the United States Code.



<PAGE>


Part II -- Certain Proprietary and Confidential Terms and Values.

AD Sharing Formula shall be as follows:     P= C x (N-R)
                                                  N
                Where  "N"  equals  the  Term  in  months;  "R"  represents  the
                remainder  of  the  Term  in  months  after  completion  of  the
                modification/termination  action;  "C"  equals  the  cost of the
                modification/termination  action in excess of *  and "P"  equals
                the Lessor's share of any cost.

Airframe Reserve Rate:  *  Airframe Flight Hour.

Basic Rent Payment Amount: *  per month in advance.

Casualty Value: *

Deductible Amount:  *

Engine Reserve Rate:  *  per Engine, per Engine Flight Hour.

Final Basic Rent Payment  Amount:  The Dollar amount obtained by multiplying the
Per Diem Rent Rate by the number of days from and including the Final Basic Rent
Payment Date to and including the Expiration Date.

Further Additional Amount:  *  payable in cash but as may be exchanged by Lesse
at any time  prior to the day  immediately  preceding  the  Delivery  Date for a
letter of credit of equal amount issued from a financial institution  acceptable
to Beneficiary.

Initial Amount:  *  paid  in  cash,  receipt  of which is hereby acknowledged by
Lessor,  but as  may be  exchanged  by  Lessee  at any  time  prior  to the  day
immediately  preceding  the Delivery Date for a letter of credit of equal amount
issued from a financial institution acceptable to Beneficiary.

Initial Basic Rent Payment Amount: The Dollar amount obtained by multiplying the
Per Diem Rent Rate by the number of days from  Delivery  Date to the first Basic
Rent Payment Date.

Interest Rate:  Citibank, N.A.'s prime rate plus 3% per annum, but not to exceed
the maximum amount permitted by Law.



<PAGE>


Landing Gear Reserve Rate:  *  per Airframe Flight Hour.

Per Diem Rent Rate: *

Public  Liability  and  Property  Damage Insurance: *


<PAGE>




                                    EXHIBIT B
                                       to
                            Aircraft Lease Agreement

                             LEASE SUPPLEMENT NO. 1



      LEASE  SUPPLEMENT NO. 1, dated , 1999,  between FIRST SECURITY BANK, N.A.,
not in its  individual  capacity  but solely as Owner  Trustee  ("Lessor"),  and
FRONTIER AIRLINES, INC., a Colorado corporation ("Lessee").

      Lessor and Lessee have previously entered into that certain Aircraft Lease
Agreement  dated as of  February  26,  1999  (herein  called the "Lease" and the
defined terms therein being  hereinafter used with the same meaning).  The Lease
provides for the execution and delivery from time to time of a Lease  Supplement
substantially  in the form  hereof  for the  purpose  of  leasing  the  aircraft
described  below  under the Lease as and when  delivered  by Lessor to Lessee in
accordance with the terms thereof.

      The Lease  relates to the  Aircraft,  Parts and Engines as more  precisely
described  below. A counterpart  of the Lease is attached  hereto and this Lease
Supplement and the Lease shall form one document.

      In   consideration   of  the  premises  and  other  good  and   sufficient
consideration, Lessor and Lessee hereby agree as follows:

      1. Lessor hereby  delivers and leases to Lessee under the Lease and Lessee
hereby accepts and leases from Lessor under the Lease, that certain Boeing model
737-200A   commercial   jet   aircraft,   comprised  of  the   Airframe   having
Manufacturer's  serial number 23007 and the two Pratt & Whitney JT8D-15A Engines
having Engine  Manufacturer's  serial  numbers  717108 and 709092,  respectively
(collectively, the "Delivered Aircraft").

      2. The Delivery Date of the  Delivered  Aircraft is the date of this Lease
Supplement set forth in the opening paragraph hereof.

      3. The Term for the Delivered Aircraft shall commence on the Delivery Date
and shall end on the Expiration  Date,  which shall be , 2004. The Initial Basic
Rent  Payment  Amount is due and  payable on the date hereof and the Final Basic
Rent Payment Date shall be _________________ 5, 2004.



<PAGE>



      4. Lessee hereby  confirms to Lessor that (i) the  Delivered  Aircraft and
each Engine  installed  thereon or  belonging  thereto  have been duly marked in
accordance with the terms of Section 6(e) of the Lease, (ii) Lessee has accepted
the  Delivered  Aircraft  for all  purposes  hereof and of the Lease,  and (iii)
Lessee has inspected the Delivered Aircraft and the Delivered Aircraft satisfies
the conditions set forth in the Lease.

      5. All of the terms and provisions of the Lease are hereby incorporated by
reference  in this  Lease  Supplement  to the same  extent as if fully set forth
herein.

      6. This Lease  Supplement  may be executed in any number of  counterparts,
each of such  counterparts,  except as provided  in Section  15(e) of the Lease,
shall for all  purposes be deemed to be an original;  and all such  counterparts
shall together constitute but one and the same Lease Supplement.

      IN WITNESS  WHEREOF,  Lessor and Lessee have caused this Lease  Supplement
No. 1 to be duly executed as of the day and year first above written.



                                              LESSOR,

                                              FIRST SECURITY BANK, N.A.
                                              not in its individual capacity
                                              but solely as owner trustee



                                              By:_______________________________
                                              Name:_____________________________
                                              Its:______________________________



                                              LESSEE,

                                              FRONTIER AIRLINES, INC.


                                              By:_______________________________
                                              Name:_____________________________
                                              Its:______________________________



CERTAIN   PROCEEDS  OF THIS LEASE ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF
NATIONSBANK, N.A., AS  AGENT, AND ANY SUCCESSOR AGENT, FOR ONE OR MORE FINANCIAL
INSTITUTIONS


<PAGE>




                                    EXHIBIT C
                                       to
                            Aircraft Lease Agreement

                          RETURN CONDITION REQUIREMENTS


A.  Certificate of Airworthiness Matters.

              Upon the Return  Occasion,  the Aircraft shall possess a valid FAA
Certificate  of  Airworthiness  and meet  the  requirements  for  U.S.  domestic
operation  under  FAR  Part  121,  without   restriction   (including,   without
limitation, compliance with Stage III requirements).

B.  General Condition of Aircraft At Return.

              (1) All  Aircraft  documentation  will  have  been  maintained  in
English and in accordance with the rules and regulations of the FAA.

              (2) The  Aircraft  shall  be in  working  order,  with  all  pilot
discrepancies and deferred maintenance items cleared.

              (3) The Aircraft  interior  will be clean by scheduled  commercial
airline  standards and shall  otherwise be returned in the same  condition as at
the Delivery Date. The cockpit shall be "touched up" in accordance with standard
international airline practice and placards replaced as required.

              (4)  The  Aircraft  will  be  airworthy   and  all   airworthiness
directives  requiring compliance prior to return and for a period of one hundred
eighty (180) days  thereafter  will have been performed on the Aircraft prior to
the Expiration Date.

              (5)  The   Aircraft   will  be  in  full   compliance   with   the
Manufacturer's  Corrosion  Prevention and Control Program ("CPCP") specified for
the model type by the Manufacturer.

C. Checks  Prior to Return.  Immediately  prior to the return of the Aircraft to
Lessor, Lessee at its expense will:

              (1) At the option of Lessor, either (i) perform at an FAA-approved
repair  station,  the next due full and complete  zonal,  systems and structural
check  ("C" or its  equivalent)  in  accordance  with the  Maintenance  Program,
sufficient to clear the Aircraft for operation until the next scheduled full and
complete zonal,  systems and structural check under the Maintenance  Program, or
(ii) pay Lessor an amount in Dollars  representing  the  average of two (2) bids
given for the cost of  conducting  such check(s)  from two (2)  independent  FAA
repair stations.



<PAGE>



              (2) Remove  Lessee's  exterior  markings,  including  all exterior
paint, by stripping (or, at Lessor's option,  pneumatically  scuff/sanding)  the
paint from the Airframe and properly strip,  clean,  reseal,  refinish,  prepare
(including  application of alodine or another corrosion inhibitor) and prime the
surfaces to be painted,  all in  accordance  with the  Manufacturer's  and paint
manufacturer's  recommendations.  Lessee will then repaint the  Airframe  white.
Such painting will be  accomplished in such a manner as to result in a uniformly
smooth and cosmetically  acceptable  aerodynamic  surface.  As an alternative to
repainting the Airframe white as required hereunder, Lessee may instead elect to
pay an amount equal to the cost of such repainting. All external placards, signs
and markings will be properly attached, free from damage, clean and legible.

              (3) Clean the exterior and interior of the Aircraft.

              (4) Perform full and  complete hot section and cold section  video
borescope  on  each  Engine  and its  modules  in  accordance  with  the  Engine
Manufacturer's  maintenance manual, with Lessor or its representatives  entitled
to be present.  Lessee will provide evidence (photographic or video) to Lessor's
satisfaction  that such  inspection  does not reveal any  condition  which would
cause the Engine or any module to be unserviceable. Lessee will, at its expense,
correct any  discrepancies  which may be  discovered  during such  inspection in
accordance  with the  guidelines set out by the Engine  Manufacturer.  No Engine
will be on watch for any reason.

              (5)  If  the  Engine   historical  and  technical  records  and/or
condition trend  monitoring  data, of any Engine  (including the auxiliary power
unit),  indicate an acceleration in the rate of deterioration in the performance
of an Engine or an increase in oil consumption, Lessee will correct, to Lessor's
satisfaction,  such  conditions  which are  determined to have  exceeded  Engine
Manufacturer's  maintenance  manual  tolerances  or  otherwise  be causing  such
accelerated rate of deterioration.

              (6)  In  accordance  with   Manufacturer's   maintenance   manual,
accomplish  a  maximum  power  assurance  run  on  the  Engines  and  accomplish
condition, acceleration and bleed valve scheduling checks on the Engines. Lessee
will  record  and  evaluate  the  Engine  performance  with  Lessor  and/or  its
representative  entitled  to be  present.  The  performance  and  all  operating
parameters  of  each  Engine  will  be  within  the  limits   specified  in  the
Manufacturer's  maintenance  manual  so as to  ensure  that  the  Engine  can be
operated on-wing for a period of at least as great a duration as that shown with
respect to such Engine on the  Delivery  Status  Certificate  as of the Delivery
Date, regardless of the operating environment of the Engine.

              (7) In the event the  Engine  historical  and  technical  records,
borescope inspection,  trend monitoring and other checks specified in paragraphs
(5),  (6) and (7) above  result in a dispute  with  respect to whether an Engine
meets the  requirements  of this Lease,  Lessee and Lessor will consult with the
Engine  Manufacturer  and  follow  the  Engine  Manufacturer's   recommendations
(including the  accomplishment  of an Engine test cell  operational  check) with
regard to  determining  if such Engine  complies with the  requirements  of this
Lease and the manner in which any  discrepancies  from the  requirements of this
Lease will be rectified.


<PAGE>


D. Part Lives.  The condition of the Aircraft and  installed  systems will be as
follows:

              (1) The  Aircraft  shall be  returned  with no more time since the
last "C7" Check  including the 20,000 hour  structural  inspection  items or the
equivalent heaviest maintenance inspection (complete block overhaul) as provided
at the Delivery  Date.  Lessee may return the Aircraft with more time since last
"C7" Check provided Lessee pays Lessor the difference between the time since the
last "C7" Check upon  delivery and the actual time since "C7" Check upon return,
times the Airframe  Maintenance  Reserve Amount.  However, in no event shall the
Aircraft  have less than one "C" Check  interval  remaining  until the next "C7"
Check. Airframe Maintenance Reserves may be used to offset this amount.

              (2) Each Engine shall be returned with the same time  remaining or
more time remaining  until the next  restriction  as at the Delivery Date.  Each
Engine  shall have no more time since last heavy shop  visit,  last hot  section
refurbishment  and last cold  section  refurbishment  as at the  Delivery  Date.
Engine disk sheets shall be used for reference.

              (3) Each landing gear will be serviceable. Each landing gear shall
be returned with the same amount of time remaining or more time remaining  until
the next  restriction as at the Delivery Date.  Lessee may return a landing gear
with less time remaining until the next restriction  provided Lessee pays Lessor
the  difference  between  the time  remaining  until the next  restriction  upon
delivery and the time remaining until the next restriction upon return times the
Landing Gear  Reserve  Rate.  Landing  Gear  Reserves may be used to offset this
amount.  However,  in no event shall any single  landing gear have less than one
(1) "C" Check interval remaining.

              (4) Each APU will be returned in  serviceable  condition and shall
pass borescope.

              (5) Each  Component  (excluding  the  Engines  but  including  any
components  thereon)  will be returned in  serviceable  condition  with at least
3,000  hours or  cycles or  twelve  (12)  months  remaining,  whichever  is more
limiting.




<PAGE>


                                    EXHIBIT D
                                       to
                            Aircraft Lease Agreement

                      CERTIFICATE AS TO STATUS OF AIRCRAFT

              FIRST SECURITY BANK,  N.A.,  not in its individual  capacity,  but
solely as owner  trustee  ("Lessor"),  and FRONTIER  AIRLINES,  INC., a Colorado
corporation ("Lessee"), hereby certify as follows:

              1. Lessor and Lessee are parties to that  certain  Aircraft  Lease
Agreement  dated  February  26, 1999 (the  "Lease"),  with respect to the Boeing
737-200A commercial jet aircraft bearing  manufacturer's serial number 23007 and
current Federal Aviation Administration  registration number N237TR. Capitalized
term not otherwise  defined  herein shall have the meanings  assigned to them in
the Lease.

              2. Lessor and Lessee  acknowledge and agree that the status of the
Airframe  and the  Engines on the  Delivery  Date are as set forth in Schedule 1
hereto,  that the Aircraft,  together with the Aircraft  Documents  described on
Schedule 2 hereto,  are  delivered  by Lessor to Lessee in  accordance  with the
Lease  on the  date of this  Certificate  and that  the  Aircraft  and  Aircraft
Documents  have been  technically  accepted  by Lessee  in  accordance  with the
provisions of the Lease.

              INWITNESS WHEREOF,  Lessor and Lessee have caused this Certificate
                to be duly executed as of this day of , 1999.
LESSOR,

                                              FIRST SECURITY BANK, N.A.,
                                              not in its individual capacity
                                              but solely as owner trustee

                                              By:__________________________
                                              Name:________________________
                                         Its:___________________________

LESSEE,
FRONTIER AIRLINES, INC.

                                              By:___________________________
                                              Name:_________________________
                                         Its:____________________________


<PAGE>



                                   SCHEDULE 1

                                       TO

                      CERTIFICATE AS TO STATUS OF AIRCRAFT


                                 Aircraft Status
                              on The Delivery Date


Airframe Heaviest Check ("C7" Check or Equivalent):

              Interval:  _____ Hrs. (____ months)
              Time Remaining:  _________ Hrs.


Airframe "C" Check (or Equivalent):

              Interval:  ______ Hrs.
              Time Remaining:  ______ Hrs.


Landing Gear Overhaul:

              Interval:
              ______ cycles Left Gear
              ______ cycles Right Gear
              ______ cycles Nose Gear
              ______ cycles Center Gear


              Time Remaining:
              _____ cycles Left Gear
              _____ cycles Right Gear
              _____ cycles Nose Gear
              _____ cycles Center Gear


<PAGE>



Engines Time Remaining to First Restriction:

              See attached engine disk sheets attached as Schedule 3 for Engines
delivered on the Delivery Date.


   APU                      TT                     TC                  TSO
SN P_____                 _____ hr               _____ cy             ____ hrs



              CSO                           Limiter




Fuel on Board at Delivery:
             _____ Gal. U.S.


<PAGE>




                                   SCHEDULE 2

                                       TO

                      CERTIFICATE AS TO STATUS OF AIRCRAFT


                         AIRCRAFT DOCUMENTS (Estimated)


A.       CERTIFICATES

         o        FAA Certificate of Airworthiness

B.       AIRCRAFT STATUS RECORDS

         o        Log Books
         o        Airframe Maintenance Status Report
         o        Supplemental Structural Inspection Document Status
                  (if applicable)
         o        Manufacturer's Service Bulletin Status Report
         o        Airworthiness Directive Compliance Report
                  (terminated and repetitive)
         o        Modification Status Report List
                  (documents will be provided upon request)
         o        Last Weighing Report
         o        List of Life Limited Components with remaining
                  hours/cycles

C.       AIRCRAFT MAINTENANCE RECORDS (last heavy maintenance visits)

         o        Test Flight Reports
         o        X-ray pictures
         o        Last annual check and heaviest maintenance check Work Cards

D.       AIRCRAFT HISTORY RECORDS

         o        Aircraft Maintenance History Cards
         o        Service Difficulty Report
         o        Accident or Incident Report (Major Structural Repair)




<PAGE>




E.       ENGINE RECORDS (for each engine)

         o        Engine time and cycle records
         o        Last overhaul and repair documents
                  (including FAA Forms 337)
         o        Airworthiness Directive Compliance Report
                  (terminated and repetitive)
         o        Manufacturer's Service Bulletin Status Report
         o        List of Time Controlled Components with remaining
                  hours and cycles
         o        Modification Status Report
         o        Engine Disc Sheets
         o        Engine Build Specifications

F.       APU RECORDS

         o        Last Overhaul and Repair Documents
                  (including modification status)
         o        Airworthiness Directive Compliance Report
                  (terminated and repetitive)
         o        Manufacturer's Service Bulletin Status Report
         o        List of Time Controlled Components with remaining
                  hours/cycles
         o        Modification Status Report

G.       COMPONENT RECORDS

         o        Time Controlled Component Historical Records with Installation
                  and Serviceability Tags

H.       MANUALS

         o        Airplane Flight Manual
                  (Manufacturer Approved, FAA Approved)
         o        Flight Crew Operating Manual
         o        Weight and Balance Manual
         o        Wiring Diagram Manual
                  (microfilm and hard copy if available)
         o        Illustrated Parts Catalog (microfilm)
         o        Aircraft Maintenance Manual (microfilm)
         o        Manufacturer's Engine Maintenance Manual and any
                  approved engineering changes, as applicable


<PAGE>





I.       MISCELLANEOUS TECHNICAL DOCUMENTS

         o        Maintenance Program Specifications
         o        Interior Configuration Drawings
         o        Original Delivery Documents
         o        Loose Equipment Inventory



<PAGE>




                                   SCHEDULE 3

                                       TO

                      CERTIFICATE AS TO STATUS OF AIRCRAFT
























<PAGE>




                                    EXHIBIT E
                                       to
                            Aircraft Lease Agreement

                         DELIVERY CONDITION REQUIREMENTS



                  On the Delivery  Date,  the Aircraft shall be delivered in "as
is"  condition;  provided,  however,  the  Aircraft  shall  meet  the  following
conditions:

(1) The  Aircraft  shall be in  compliance  with the  requirements  for domestic
operation  in the United  States,  will meet the  requirements  of FAA Part 121,
shall have a current and valid FAA Certificate of  Airworthiness,  will have LGW
Stage III (Nordam hushkit) installed thereon, and will have flight data recorder
systems  installed  which conform to the  requirements of FAR  121.344(b)(1)  or
(b)(2), as applicable.

(2) The  records  required  for Lessee to operate  the  Aircraft  and bridge the
Aircraft onto Lessee's maintenance program will be in English.

(3) The  Aircraft  will  be  in  working  order with all pilot discrepancies and
deferred maintenance items cleared.

(4) The Aircraft  will be airworthy  and all AD's  requiring  compliance  on the
Delivery Date and for a period of one hundred eighty (180) days thereafter, will
be accomplished. The Aircraft will be in full compliance with the CPCP program.

(5) The Aircraft shall be clean by scheduled  commercial airline standards.  The
interior will be delivered in a one hundred  nineteen  (119) seat standard class
passenger  configuration  with a minimum  seat pitch of 31 inches.  Lessor  will
install  galleys  recommended  by  Lessee  subject  to timing  and  availability
thereof.

(6) The Aircraft  shall have next  scheduled  "C" Check  performed in accordance
with the Boeing MPD maintenance  program.  The Aircraft will be bridged onto the
Boeing MPD maintenance program.

(7) Each Engine shall be delivered in serviceable  condition.  Each Engine shall
have at  least  three  thousand  (3,000)  hours  or  cycles  (whichever  is more
limiting) of life remaining as described on the engine disk sheets.



<PAGE>


(8) Each Engine  shall have had a full and complete hot section and cold section
video borescope  performed on such Engine and its modules in accordance with the
Engine   Manufacturer's   maintenance  manual.   Lessor  will  provide  evidence
(photographic or video) to Lessee's  satisfaction  that such inspection does not
reveal  any  condition  which  would  cause  the  Engine  or  any  module  to be
unserviceable.  Lessor will, at its expense, correct any discrepancies which may
be discovered  during such  inspection in accordance with the guidelines set out
by the Engine Manufacturer. No Engine will be on watch for any reason.

(9) If the Engine  historical  and  technical  records  and/or  condition  trend
monitoring data, of any Engine (including the auxiliary power unit), indicate an
acceleration in the rate of  deterioration in the performance of an Engine or an
increase in oil consumption, Lessor will correct, to Lessee's satisfaction, such
conditions   which  are  determined  to  have  exceeded  Engine   Manufacturer's
maintenance  manual  tolerances or otherwise be causing such accelerated rate of
deterioration.

(10) In accordance with Manufacturer's  maintenance manual, accomplish a maximum
power assurance run on the Engines and accomplish  condition,  acceleration  and
bleed valve  scheduling  checks on the Engines.  Lessor will record and evaluate
the Engine  performance  with Lessee  and/or its  representative  entitled to be
present.  The  performance  and all operating  parameters of each Engine will be
within the limits specified in the  Manufacturer's  maintenance  manual so as to
ensure that the Engine can be operated on-wing for a period of at least as great
a duration  as that shown with  respect to such  Engine on the  Delivery  Status
Certificate as of the Delivery Date,  regardless of the operating environment of
the Engine.

(11) In the  event  the  Engine  historical  and  technical  records,  borescope
inspection,  trend  monitoring and other checks specified in paragraphs (8), (9)
and (10) above  result in a dispute  with respect to whether an Engine meets the
requirements  of this  Lease,  Lessee and Lessor  will  consult  with the Engine
Manufacturer and follow the Engine Manufacturer's recommendations (including the
accomplishment  of an  Engine  test  cell  operational  check)  with  regard  to
determining if such Engine complies with the  requirements of this Lease and the
manner in which any  discrepancies  from the  requirements of this Lease will be
rectified.

(12) Each  landing  gear shall have no less than three  thousand  (3,000)  hours
remaining to the next  scheduled  overhaul and no landing gear  component  shall
have less than fifteen thousand (15,000) cycles remaining life.

(13) Each  APU  will be  delivered  in  serviceable  condition  and  shall  pass
borescope inspection.

(14) Each Component (excluding the engines but including any components thereon)
will be delivered in serviceable  condition with at least three thousand (3,000)
hours or cycles or twelve (12) months remaining, whichever is more limiting.

(15) The Aircraft shall be delivered painted in Lessee's livery.


<PAGE>



(16) Lessor will  increase  the MTOW to one hundred  twenty  thousand  (120,000)
pounds and the MLW to one hundred seven thousand  (107,000)  pounds (the "Weight
Increases").  It is understood the Weight Increases are produced by Manufacturer
and may not be available on the Delivery Dates.  Lessor will use best efforts to
obtain the Weight Increases (which were ordered by Lessee in November,  1998) in
a timely fashion.




<PAGE>





                                    EXHIBIT F
                                       to
                            AIRCRAFT LEASE AGREEMENT

                              AIRFRAME USAGE REPORT
                                 dated __/__/__
                          in respect of the period from
                              __/__/__ to __/__/__



                         Number of Hours Operated      Number of Cycles Operated

Airframe

Engine # 1
Serial Number:___________


Engine #2
Serial Number:___________


Landing Gear





<PAGE>




                                TABLE OF CONTENTS

SECTION 1    DEFINITIONS.....................................................1

SECTION 2    LEASE AND CONDITIONS............................................1

SECTION 3    DELIVERY AND ACCEPTANCE; TERM ..................................2

SECTION 4    RENT AND RESERVES...............................................3

SECTION 5    REPRESENTATIONS AND WARRANTIES..................................4

SECTION 6    POSSESSION, USE AND MAINTENANCE.................................6

SECTION 7    INFORMATION AND INSPECTION .....................................9

SECTION 8    CERTAIN COVENANTS OF LESSEE ....................................9

SECTION 9    INDEMNIFICATION ...............................................10

SECTION 10   CASUALTY OCCURRENCES...........................................13

SECTION 11   INSURANCE......................................................15

SECTION 12   RETURN OF AIRCRAFT AND RECORDS.................................21

SECTION 13   DEFAULT AND REMEDIES...........................................22

SECTION 14   ALIENATION.....................................................23

SECTION 15   MISCELLANEOUS..................................................24

EXHIBIT A..................................................................A-1

EXHIBIT B..................................................................B-1

EXHIBIT C..................................................................C-1

EXHIBIT D..................................................................D-1

EXHIBIT E..................................................................E-1

EXHIBIT F..................................................................F-1