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                                                                     EXHIBIT 4.4

                                                                  EXECUTION COPY

                                PLEDGE AGREEMENT

            This PLEDGE AGREEMENT (the "Pledge Agreement") is made and entered
into as of March 21, 2003 by Alaska Air Group, Inc., a Delaware corporation (the
"Pledgor"), having its principal office at 19300 Pacific Highway South, Seattle,
Washington 98188, in favor of U.S. Bank National Association, in its capacity as
trustee (the "Trustee") for the holders from time to time (the "Holders") of the
Notes (as defined herein), issued by the Pledgor under the Indenture referred to
below. Capitalized terms used and not defined in this Pledge Agreement have the
meanings set forth or referred to in the Indenture.

                               W I T N E S S E T H

            WHEREAS, the Pledgor and Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Goldman, Sachs & Co. (collectively, the "Initial
Purchasers") are parties to a Purchase Agreement dated March 18, 2003 (the
"Purchase Agreement"), pursuant to which the Pledgor will issue and sell to the
Initial Purchasers $150,000,000 aggregate original principal amount of Senior
Convertible Notes due 2023 (the "Initial Notes") and pursuant to which the
Pledgor has granted to the Initial Purchasers options to purchase all or any
part of an additional $25,000,000 aggregate original principal amount of the
Notes (the "Option Notes" and together with the Initial Notes, the "Notes");

            WHEREAS, the Pledgor and the Trustee have entered into that certain
indenture dated as of the date hereof (as amended, restated, supplemented or
otherwise modified from time to time, the "Indenture"), pursuant to which the
Pledgor is issuing the Initial Notes on the date hereof;

WHEREAS, the Pledgor is the beneficial owner of, and desires to pledge the
security entitlements (the "Pledged Security Entitlements") with respect to, (i)
the United States Treasury securities identified by CUSIP number in Schedule I
hereto, and credited to the account with U.S. Bank National Association (the
"Account Holder"), ABA No. 042000013, Routing Symbol CINTI/1050, for Account No.
221169000, in the name of "U.S. Bank National Association, as Trustee for the
benefit of the holders of the Senior Convertible Notes due 2023 of Alaska Air
Group, Collateral Pledge Account" (the "Pledged Account") and (ii) all other
financial assets credited from time to time to the Pledged Account (collectively
with the assets described in clause (i) above, the "Pledged Financial Assets");

            WHEREAS, to secure the obligation of the Pledgor under the Indenture
and the Notes to pay all or a portion of each of the first twelve scheduled
interest payments on the Notes when due and to secure repayment of the original
principal amount and interest on the Notes in the event that the Notes become
due and payable prior to such time as the first twelve scheduled

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interest payments thereon shall have been paid in full (collectively, the
"Obligations"), the Pledgor has agreed (i) to pledge to the Trustee for its
benefit and the ratable benefit of the Holders of the Notes, a security interest
in the Collateral (as defined herein) securing the payment and performance by
the Pledgor of all of the Obligations and (ii) to execute and deliver this
Pledge Agreement;

            WHEREAS, it is a condition precedent to the initial purchase of the
Notes by the initial Holders thereof that the Pledgor shall have executed and
delivered this Pledge Agreement; and

            WHEREAS, unless otherwise defined herein or in the Indenture, terms
used in Article 8 or 9 of the Uniform Commercial Code as in effect in the State
of New York ("UCC") and/or in the Federal Book Entry Regulations (as defined
below) are used in this Pledge Agreement as such terms are defined in such
Article 8 or 9 and/or the Federal Book Entry Regulations. The term "Federal Book
Entry Regulations" means (a) the federal regulations contained in Subpart B
("Treasury/Reserve Automated Debt Entry System (TRADES)") governing book-entry
securities consisting of U.S. Treasury bonds, notes and bills and Subpart D
("Additional Provisions") of 31 C.F.R. Part 357, 31 C.F.R. ss. 357.2, ss. 357.10
through ss. 357.14 and ss. 357.41 through ss. 357.44 and (b) to the extent
substantially identical to the federal regulations referred to in clause (a)
above (as in effect from time to time), the federal regulations governing other
book-entry securities.

                                    AGREEMENT

            NOW, THEREFORE, in consideration of the premises herein contained,
and in order to induce the initial Holders of the Notes to purchase the Notes,
the Pledgor hereby agrees with the Trustee, for the benefit of the Trustee and
for the ratable benefit of the Holders of the Notes, as follows:

            SECTION 1. Pledge and Grant of Security Interest. The Pledgor hereby
pledges to the Trustee, for its benefit and for the ratable benefit of the
Holders of the Notes, and hereby grants to the Trustee, a security interest and
continuing lien in, all of the Pledgor's right, title and interest in and to the
property set out in paragraphs (a) through (d) below (in each case, whether now
owned or hereafter acquired or created by the Pledgor, wherever located and
whether now or hereafter existing or arising and whether consisting of security
accounts, securities (including Treasury Securities), security entitlements,
financial assets and other investment property, deposit accounts, payment
intangibles and other general intangibles or any other property) (hereinafter
collectively referred to as the "Collateral"):

            (a) the Pledged Financial Assets and the certificates, if any,
      representing the Pledged Financial Assets, and all dividends, interest,
      money (as defined in the UCC), instruments (as defined in the UCC, the
      "Instruments") and other property from time to time received, receivable
      or otherwise distributed or distributable in respect of or in exchange for
      any or all of such Pledged Financial Assets;

            (b) the Pledged Account and all security entitlements with respect
      thereto, all Pledged Security Entitlements with respect to all Pledged
      Financial Assets from time to

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      time credited, or required to be credited thereto (including, without
      limitation, pursuant to Section 4(i) of this Pledge Agreement), to the
      Pledged Account, any and all securities accounts in which the Pledged
      Security Entitlements are carried, and all dividends, interest, cash,
      instruments and other property from time to time received, receivable or
      otherwise distributed or distributable in respect of or in exchange for
      any or all of such Pledged Security Entitlements;

            (c) all other securities, securities entitlements and other
      financial assets hereafter acquired by the Pledgor pursuant to Article 13
      of the Indenture; and

            (d) all proceeds of any and all of the Collateral (including,
      without limitation, proceeds that constitute property of the types
      described in clauses (a), (b) and (c) of this Section 1) all investments
      of the Collateral and, to the extent not otherwise included, all cash
      proceeds.

            SECTION 2. Security for Obligations. This Pledge Agreement secures,
and the Collateral is collateral security for, the prompt and complete payment
and performance when due (whether at stated maturity, by acceleration or
otherwise) of all the Obligations or other obligations of the Pledgor, whether
for principal, interest, fees or otherwise, now or hereafter existing, under
this Pledge Agreement, the Notes or the Indenture (all such obligations being
the "Secured Obligations"). Without limiting the generality of the foregoing,
this Pledge Agreement secures, and the Collateral is collateral security for,
the payment of all amounts that constitute part of the Secured Obligations and
would be owed by the Pledgor to the Trustee or the Holders under the Notes or
the Indenture but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding involving
the Pledgor.

            SECTION 3. Maintaining the Pledged Account. So long as any Secured
Obligation shall remain outstanding:

            (a) The Pledgor will maintain separately the Pledged Account with
      the Account Holder.

            (b) It shall be a term and condition of the Pledge Agreement,
      notwithstanding any term or condition to the contrary in any other
      agreement relating to the Pledged Account, and except as otherwise
      provided by the provisions of Section 5 and Section 18 hereof, that no
      funds shall be paid or released to or for the account of, or withdrawn by
      or for the account of, the Pledgor or any other Person from the Pledged
      Account.

            The Pledged Account shall be subject to such applicable laws, and
      such applicable regulations of the Board of Governors of the Federal
      Reserve System and of any other appropriate banking or governmental
      authority, as may now or hereafter be in effect.

            SECTION 4. Delivery of Collateral. (a) All cash, certificates or
instruments representing or evidencing the Pledged Financial Assets, the Pledged
Security Entitlements or the Pledged Account shall be delivered to and held by
or on behalf of the Trustee pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the

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Trustee. The Trustee shall have the right, at any time in its discretion and
without notice to the Pledgor, to transfer to or to register in the name of the
Trustee or any of its nominees any or all of the Collateral. In addition, the
Trustee shall have the right at any time to exchange certificates or instruments
representing or evidencing any or all of the Collateral for certificates or
instruments of smaller or larger denominations. Also, the Trustee shall have the
right at any time to convert Collateral consisting of financial assets credited
to the Pledged Account to Collateral consisting of financial assets held
directly by the Trustee, and to convert Collateral consisting of financial
assets held directly by the Trustee to Collateral consisting of financial assets
credited to the Pledged Account.

            (b) With respect to any Collateral in which the Pledgor has any
right, title or interest and that constitutes an uncertificated security, the
Pledgor shall cause the issuer thereof either (i) to register the Trustee as the
registered owner of such security or (ii) to agree in writing with the Pledgor
and the Trustee that such issuer will comply with instructions with respect to
such security originated by the Trustee without further consent of the Pledgor,
such agreement to be in form and substance satisfactory to the Trustee.

            (c) With respect to any Collateral in which the Pledgor has any
right, title or interest and that constitutes a security entitlement, the
Pledgor shall cause the securities intermediary with respect to such security
entitlement either (i) to identify in its records the Trustee as the entitlement
holder of such security entitlement against such securities intermediary or (ii)
to agree in writing with the Pledgor and the Trustee that such securities
intermediary will comply with entitlement orders (that is, notifications
communicated to such securities intermediary directing transfer or redemption of
the financial asset to which the Pledgor has a security entitlement) originated
by the Trustee without further consent of the Pledgor, such agreement to be in
substantially the form of Annex A hereto or otherwise in form and substance
satisfactory to the Trustee.

            (d) With respect to any Collateral that constitutes a securities
account, the Pledgor will comply with subsection (c) of this Section 4 with
respect to all security entitlements carried in such securities account.

            (e) Prior to or concurrently with the execution and delivery hereof
and prior to the transfer to the Trustee of the Pledged Security Entitlements,
as provided in subsections (a) through (c) of this Section 4, the Trustee shall
establish the Pledged Account with the Account Holder. Upon transfer of the
Pledged Financial Assets to the Trustee, as confirmed to the Trustee by the
securities intermediary, the Trustee shall make appropriate book entries
indicating that the Pledged Financial Assets have been credited to and are held
in the Pledged Account. Subject to the other terms and conditions of this Pledge
Agreement, all funds or other property held by the Trustee pursuant to this
Pledge Agreement shall be held in the Pledged Account subject (except as
expressly provided in Sections 5(a), (b) and (c) hereof) to the exclusive
dominion and control of the Trustee and exclusively for the benefit of the
Trustee and for the ratable benefit of the Holders of the Notes and segregated
from all other funds or other property otherwise held by the Trustee.

            (f) All Collateral shall be retained in the appropriate Pledged
Account pending disbursement pursuant to the terms hereof.

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            (g) Concurrently with the execution and delivery of this Pledge
Agreement, the Trustee is delivering to the Pledgor a duly executed Control
Agreement (the "Control Agreement"), in the form of Annex A hereto.

            (h) Concurrently with the execution and delivery of this Pledge
Agreement, the Pledgor is delivering to the Trustee acknowledgment copies or
stamped receipt copies of proper financing statements, duly filed on or before
the Closing Date under the UCC, covering the Collateral described in this Pledge
Agreement.

            (i) The Pledgor covenants and agrees with the Trustee and the
Holders of the Notes that in the event of a Registration Default, as defined in
the Registration Rights Agreement, and the interest rate on the Notes is
increased as provided in Section 2(e) of the Registration Rights Agreement, the
Company shall purchase and deliver free to the Trustee additional Pledged
Security Entitlements in such amount as will be, in the Opinion of the Company,
sufficient upon receipt of scheduled interest and/or principal payments of all
Pledged Security Entitlements thereafter held in the Pledged Account, to provide
payment for the first twelve scheduled interest payments due on the Notes
(assuming the additional interest requirement remains in effect for the entire
period). The Trustee as calculation agent shall report to the Initial Purchasers
and the Company, the results of agreed-upon procedures to verify the
mathematical accuracy of the Company's computations. The additional Pledged
Security Entitlements shall be pledged by the Pledgor to the Trustee for the
benefit of the Holders and shall be held by the Trustee in the Pledged Account.

            SECTION 5. Disbursements. (a) Three business days prior to the due
date of any of the first twelve scheduled interest payments on the Notes, the
Pledgor may, pursuant to written instructions given by the Pledgor to the
Trustee (an "Issuer Order"), direct the Trustee to release from the Pledged
Account and pay to the Holders of the Notes proceeds to provide for payment, in
whole or in part, of such interest then due on the Notes. Upon receipt of an
Issuer Order, the Trustee will (i) issue a Payment Order (as defined in the
Control Agreement) to the Account Holder for the release from the Pledged
Account of such funds to the Trustee in accordance with such Issuer Order and
(ii) pay such funds to the Holders of the Notes in accordance with the Indenture
and the Notes. In the event that the funds released from the Pledged Account
prior to any interest payment date are not sufficient to pay in full the
interest due on the Notes on such interest payment date (a "Shortfall"), nothing
in this Section 5 shall relieve the Pledgor of its obligations under the Notes
and the Indenture to pay such Shortfall to the Holders of the Notes on such
interest payment date; provided, however, that no such Shortfall shall be paid
from proceeds of the Collateral unless such proceeds constitute a Surplus (as
defined below). In the event that the funds available for release from the
Pledged Account prior to any interest payment date exceed the interest due on
the Notes on such interest payment date (a "Surplus"), such Surplus shall be
retained in the Pledged Account and may be applied to the next Shortfall(s), if
any. Nothing in this Section 5 shall affect the Trustee's rights to apply the
Collateral to the payments of amounts due on the Notes upon acceleration
thereof.

            (b) If the Pledgor makes any of the first twelve scheduled interest
payments on the Notes or portion of such an interest payment from a source of
funds other than the Pledged Account ("Pledgor Funds"), the Pledgor may, after
payment in full of such interest payment, direct the Trustee pursuant to an
Issuer Order to issue a Payment Order (as defined in the Control

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Agreement) to the Account Holder for the release to the Pledgor or to another
party at the direction of the Pledgor (the "Pledgor's Designee") proceeds from
the Pledged Account in an amount less than or equal to the amount of Pledgor
Funds applied to such interest payment; provided, however, that the foregoing
shall not apply in the event that such payment of Pledgor Funds is made in order
to compensate for any Shortfall. Upon receipt by the Trustee of such Issuer
Order and provided the Trustee has received such interest payment, the Trustee
shall direct the Account Holder pursuant to a Payment Order to pay over to the
Pledgor or the Pledgor's Designee, as the case may be, the requested amount from
proceeds in the Pledged Account as soon as practicable.

            (c) At least three Business Days prior to the due date of each of
the first twelve scheduled interest payments on the Notes, the Pledgor shall
give the Trustee notice (by Issuer Order) as to whether such interest payment
will be made pursuant to Section 5(a) or 5(b) above and the respective amounts
of interest that will be paid from the Pledged Account and from Pledgor Funds.
Any Pledgor Funds to be used to make any interest payment shall be delivered to
the Trustee, in immediately available funds, prior to 10:00 a.m. (New York City
time) on such interest payment date. If no such notice is given or such Pledgor
Funds have not been so delivered, the Trustee will act pursuant to Section 5(a)
above as if it had received an Issuer Order pursuant thereto for the payment of
the interest then due from the Pledged Account.

            (d) The Trustee shall instruct the Account Holder to liquidate
Collateral in the Pledged Account (pursuant to written instructions from
Pledgor) in order to make any of the scheduled payments of interest on the
Notes, unless there are sufficient funds in the Pledged Account on such interest
payment date. The Trustee shall be entitled to instruct the Account Holder to
sell any Collateral as contemplated hereunder prior to the maturity of such
Collateral and shall not be responsible for any costs and expenses of such sale.

            (e) Nothing contained in this Pledge Agreement shall (i) afford the
Pledgor any right to issue entitlement orders with respect to any of the Pledged
Security Entitlements or any securities account in which any such security
entitlement may be carried, or otherwise afford the Pledgor control of any
Pledged Security Entitlement or (ii) otherwise give rise to any rights of
Pledgor with respect to the Pledged Financial Assets or any securities account
in which any such security entitlement may be carried, other than the Pledgor's
rights under this Pledge Agreement as the beneficial owner of collateral pledged
to and subject to the exclusive dominion and control (except as expressly
provided in Sections 5(a) and (b) hereof) of the Trustee in its capacity as such
(and not as a securities intermediary) before the payment in full, when due, of
the first twelve scheduled interest payments on the Notes. The Pledgor
acknowledges, confirms and agrees that the Trustee is an entitlement holder of
the Pledged Security Entitlements solely as Trustee for the Holders of the Notes
and not as a securities intermediary.

            SECTION 6. Investing of Amounts in the Pledged Account. If requested
and as directed by the Pledgor, the Trustee will, subject to the provisions of
Sections 3, 5 and 13 of this Pledge Agreement, from time to time, instruct the
Account Holder to invest interest paid on the Pledged Financial Assets and
reinvest other proceeds of any Pledged Financial Assets that may mature or be
sold, in each case, in (i) identified United States Treasury securities or (ii)
selected shares of a money market fund registered under the Investment Company
Act of 1940, as

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amended, the portfolio of which consists of United States Treasury securities,
in each case credited to the Pledged Account.

            SECTION 7. Representations and Warranties. The Pledgor hereby
represents and warrants that:

            (a) This Pledge Agreement has been duly authorized, validly executed
      and delivered by the Pledgor and constitutes a valid and binding agreement
      of the Pledgor, enforceable against the Pledgor in accordance with its
      terms, except as (i) the enforceability hereof may be limited by
      bankruptcy, insolvency, fraudulent conveyance, preference, reorganization,
      moratorium or similar laws now or hereafter in effect relating to or
      affecting creditors' rights or remedies generally, (ii) the availability
      of equitable remedies may be limited by equitable principles of general
      applicability, (iii) the exculpation provisions and rights to
      indemnification hereunder may be limited by U.S. federal and state
      securities laws and public policy considerations and (iv) the waiver of
      rights and defenses contained in Section 13(b), Section 19.8 and Section
      19.12 hereof may be limited by applicable law.

            (b) The Pledgor's exact legal name, as defined in Section 9-503(a)
      of the UCC, is Alaska Air Group, Inc. The Pledgor is located (within the
      meaning of Section 9-307 of the UCC) in the State of Delaware and has its
      chief executive office in the State of Washington.

            (c) The Pledgor is the legal and beneficial owner of the Collateral
      free and clear of any Lien, claim, option or right of others (except for
      the security interests created by this Pledge Agreement). No effective
      financing statement or instrument similar in effect covering all or any
      part of the Collateral or listing the Pledgor or any trade name of the
      Pledgor with respect to all or any part of the Collateral is on file in
      any public or recording office, other than the financing statements filed
      pursuant to this Pledge Agreement.

            (d) All filings and other actions (including, without limitation,
      (A) actions necessary to obtain control of the Collateral as provided in
      Sections 9-104, 9-105, 9-106 and 9-107 of the UCC and (B) actions
      necessary to perfect the Trustee's security interest with respect to the
      Collateral evidenced by a certificate of ownership) necessary to perfect
      the security interest in the Collateral created under this Pledge
      Agreement have been duly made or taken and are in full force and effect,
      and this Pledge Agreement creates in favor of the Trustee for its benefit
      and the ratable benefit of the Holders of the Notes a valid and, together
      with such filings and other actions, perfected first priority security
      interest in the Collateral, securing the payment of the Secured
      Obligations.

            (e) The execution and delivery by the Pledgor of, and the
      performance by the Pledgor of its obligations under, this Pledge Agreement
      will not contravene any provision of applicable law or the Certificate of
      Incorporation of the Pledgor or any material agreement or other material
      instrument binding upon the Pledgor or any judgment, order or decree of
      any governmental body, agency or court having jurisdiction over the

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      Pledgor, or result in the creation or imposition of any Lien on any assets
      of the Pledgor, except for the security interests granted under this
      Pledge Agreement.

            (f) No consent of any other person and no approval, authorization,
      order of, action by notice to, filing or qualification with, any
      governmental authority, regulatory body, agency or other third party is
      required for (i) the grant by the Pledgor of the assignment, pledge and
      security interest granted under this Pledge Agreement, (ii) the execution
      or delivery by the Pledgor of, or the performance by the Pledgor of its
      obligations under, this Pledge Agreement, (iii) the perfection or
      maintenance of the assignment, pledge and security interest created
      hereunder (including the first priority nature of such assignment, pledge
      or security interest), except for the filing of financing and continuation
      statements under the UCC, which financing statements have been duly filed
      and are in full force and effect, or (iv) for the exercise by the Trustee
      of its voting or other rights provided for in this Pledge Agreement or the
      remedies in respect of the Collateral pursuant to this Pledge Agreement,
      except as may be required in connection with the disposition of any
      portion of the Collateral by laws affecting the offering and sale of
      securities generally.

            (g) There are no legal or governmental proceedings pending or, to
      the best of the Pledgor's knowledge, threatened to which the Pledgor is a
      party or to which any of the properties of the Pledgor is subject that
      would materially adversely affect the power or ability of the Pledgor to
      perform its obligations under this Pledge Agreement or to consummate the
      transactions contemplated hereby.

            (h) The pledge of the Collateral pursuant to this Pledge Agreement
      is not prohibited by law or governmental regulation (including, without
      limitation, Regulations G, T, U and X of the Board of Governors of the
      Federal Reserve System) applicable to the Pledgor.

            (i) No Event of Default (as defined below) exists.

            (j) The jurisdiction (for purposes of Section 8-110(e) of the UCC)
      of the securities intermediary that maintains the Pledged Account and all
      securities accounts carrying the Pledged Securities Entitlements is New
      York.

            SECTION 8. Further Assurances. (a) The Pledgor agrees that from time
to time, at the expense of the Pledgor, the Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, and that the Trustee may reasonably request, in
order to perfect and protect any pledge or security interest granted or
purported to be granted hereunder or to enable the Trustee to exercise and
enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, the Pledgor will: (i) if any
Collateral shall be evidenced by a promissory note or other instrument, deliver
and pledge to the Trustee hereunder such note or instrument, duly endorsed and
accompanied by duly executed instruments of transfer or assignment, all in form
and substance satisfactory to the Trustee; (ii) execute and file such financing
or continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as the Trustee may reasonably
request, in order to

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perfect and preserve the pledge and security interest granted or purported to be
granted hereby; (iii) deliver and pledge to the Trustee for its benefit and the
ratable benefit of the Holders of the Notes certificates representing Collateral
that constitutes certificated securities, accompanied by undated stock or bond
powers executed in blank; and (iv) deliver to the Trustee evidence that all
other action that the Trustee may deem reasonably necessary or desirable in
order to perfect and protect the security interest created by Pledgor under this
Pledge Agreement has been taken.

            (b) The Pledgor hereby authorizes the Trustee to file one or more
financing or continuation statements, and amendments thereto, with respect to
the Collateral, in each case without the signature of the Pledgor, and
regardless of whether any particular asset described in such financing
statements falls within the scope of UCC. A photocopy or other reproduction of
this Pledge Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where permitted by
law. The Pledgor ratifies its authorization for the Trustee to have filed such
financing statements, continuation statements or amendments filed prior to the
date hereof.

            (c) The Pledgor will furnish to the Trustee from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Trustee may
reasonably request, all in reasonable detail.

            (d) The Pledgor will promptly pay all reasonable costs incurred in
connection with any of the foregoing within 45 days of receipt of an invoice
therefor. The Pledgor also agrees, whether or not requested by the Trustee, to
take all actions that are necessary to perfect or continue the perfection of, or
to protect the first priority of, the Trustee's security interest in and to the
Collateral, including the filing of all necessary financing and continuation
statements, and to protect the Collateral against the rights, claims or
interests of third persons (other than any such rights, claims or interests
created by or arising through the Trustee).

            SECTION 9. Covenants. (a) The Pledgor covenants and agrees with the
Trustee and the Holders of the Notes that from and after the date of this Pledge
Agreement until the earlier of payment in full in cash of (x) each of the first
twelve scheduled interest payments on the Notes when due under the terms of the
Indenture or (y) all obligations due and owing under the Indenture and the Notes
in the event such obligations become due and payable prior to the payment of the
first twelve scheduled interest payments on the Notes:

            (i) that (A) it will not (and will not purport to) sell, assign or
      otherwise dispose of, or grant any option or warrant with respect to, any
      of the Collateral or its beneficial interest therein, and (B) it will not
      create or suffer to exist any Lien or other adverse interest upon or with
      respect to any of the Collateral or its beneficial interest therein
      (except for the security interests granted under this Pledge Agreement);

            (ii) that it will not (A) enter into any agreement or understanding
      that restricts or inhibits or purports to restrict or inhibit the
      Trustee's rights or remedies hereunder, including, without limitation, the
      Trustee's right to sell or otherwise dispose of the Collateral or (B) fail
      to pay or discharge any tax, assessment or levy of any nature with respect
      to its beneficial interest in the Collateral not later than five days
      prior to the date

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      of any proposed sale under any judgment, writ or warrant of attachment
      with respect to such beneficial interest;

            (iii) that it will not change its name, type of organization,
      jurisdiction of organization, organizational identification number or
      location from those set forth in Section 7(b) hereof without first giving
      at least 30 days' prior written notice to the Trustee and taking all
      action required by the Trustee for the purpose of perfecting or protecting
      the security interest granted by this Pledge Agreement; and

            (iv) that it will, and cause the Trustee and the Account Holder to,
      execute and deliver on or prior to any Date of Delivery (as defined in
      Section 2(b) of the Purchase Agreement) a supplement to this Pledge
      Agreement, reasonably satisfactory to the Initial Purchasers, providing
      for the pledge of additional Collateral to secure all Obligations in
      respect of the Option Notes.

            SECTION 10. Power of Attorney. In addition to all of the powers
granted to the Trustee pursuant to the Indenture, the Pledgor hereby irrevocably
appoints the Trustee as the Pledgor's attorney-in-fact (with full power of
substitution), with full authority in the place and stead of the Pledgor and in
the name of the Pledgor or otherwise, from time to time in the Trustee's
discretion, to take any action and to execute any instrument that is necessary
or advisable or as the Trustee may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without limitation:

            (a) to ask for, demand, collect, sue for, recover, compromise,
      receive and give acquittance and receipts for moneys due and to become due
      under or in respect of any of the Collateral,

            (b) to receive, indorse and collect any drafts or other instruments,
      documents and chattel paper, in connection with clause (a) above,

            (c) to file any claims or take any action or institute any
      proceedings that the Trustee may deem necessary or desirable for the
      collection of any of the Collateral or otherwise to enforce the rights of
      the Trustee with respect to any of the Collateral, and

            (d) to pay or discharge taxes or Liens levied or placed upon the
      Collateral that the Pledgor has failed to pay or discharge in accordance
      herewith, the legality or validity thereof and the amounts necessary to
      discharge the same to be determined by the Trustee in its sole reasonable
      discretion, and such payments made by the Trustee to become part of the
      Obligations of the Pledgor to the Trustee, due and payable immediately
      upon demand;

provided, however, that the Trustee shall have no obligation to perform any of
the foregoing actions. The Trustee's authority under this Section 10 shall
include, without limitation, the authority to endorse and negotiate any checks
or instruments representing proceeds of Collateral in the name of the Pledgor,
execute and give receipt for any certificate of ownership or any document
constituting Collateral, transfer title to any item of Collateral, or any other
documents deemed necessary or appropriate by the Trustee to preserve, protect or
perfect the security interest in the Collateral granted hereunder and to file
the same, prepare, file and sign the

                                       10
<PAGE>

Pledgor's name on any notice of Lien, and to take any other actions arising from
or incident to the powers granted to the Trustee in this Pledge Agreement. This
power of attorney is coupled with an interest and is irrevocable by the Pledgor.

            SECTION 11. No Assumption of Duties; Reasonable Care. The powers
conferred on the Trustee hereunder are solely to protect the security interest
of the Trustee for its benefit and the ratable benefit of the Holders of the
Notes in the Collateral and shall not impose any duty on the Trustee to exercise
any such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it hereunder, the Trustee
shall have no duty as to any Collateral as to (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not the Trustee has or is deemed
to have knowledge of such matters, (ii) taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Collateral or (c) investing or reinvesting any of the Collateral or any loss on
any investment. The Trustee shall be deemed to have exercised reasonable care in
the custody and preservation of any Collateral in its possession if such
Collateral is accorded treatment substantially equal to that which it accords
its own property. The Trustee shall be entitled to all the rights, benefits,
privileges and immunities accorded to it under the Indenture.

            SECTION 12. Indemnity and Expenses. (a) The Pledgor agrees to
indemnify, defend and save and hold harmless the Trustee and its officers,
directors, employees, agents and advisors (each, an "Indemnified Party") from
and against, and shall pay on demand, any and all claims, damages, losses,
liabilities and expenses (including, without limitation, reasonable fees and
expenses of counsel) that may be incurred by or asserted or awarded against any
Indemnified Party, in each case arising out of or in connection with or
resulting from this Pledge Agreement (including, without limitation, enforcement
of this Pledge Agreement), except to the extent such claim, damage, loss,
liability or expense is found in a final, non-appealable judgment by a court of
competent jurisdiction to have resulted from such Indemnified Party's gross
negligence or willful misconduct.

            (b) The Pledgor will, within five (5) business days after demand,
pay to the Trustee the amount of any and all reasonable expenses, including,
without limitation, the reasonable fees and expenses of its counsel and of any
experts and agents, that the Trustee may incur in connection with (i) the
review, negotiation and administration of this Pledge Agreement, (ii) the
custody or preservation of, or the sale of, collection from or other realization
upon, any of the Collateral, (iii) the exercise or enforcement of any of the
rights of the Trustee or the Holders of the Notes hereunder or (iv) the failure
by the Pledgor to perform or observe any of the provisions hereof.

            SECTION 13. Remedies. If any Event of Default under the Indenture
(including, without limitation, any default hereunder constituting an Event of
Default (any such Event of Default being referred to in this Pledge Agreement as
an "Event of Default")) shall have occurred and be continuing:

            (a) The Trustee and the Holders of the Notes may exercise in respect
      of the Collateral, in addition to all other rights and remedies given by
      law or by this Pledge Agreement or the Indenture, all of the rights and
      remedies of a secured party under the

                                       11
<PAGE>

      UCC (whether or not the UCC applies to the affected Collateral) and also
      may: (i) require the Pledgor to, and the Pledgor hereby agrees that it
      will at its expense and upon request of the Trustee forthwith, assemble
      all or part of the Collateral as directed by the Trustee and make it
      available to the Trustee at a place and time to be designated by the
      Trustee that is reasonably convenient to both parties and (ii) without
      notice except as specified below, sell the Collateral or any part thereof
      in one or more parcels at any broker's board or at public or private sale,
      in one or more sales or lots, at any of the Trustee's offices or
      elsewhere, for cash, on credit or for future delivery, and upon such other
      terms as the Trustee may deem commercially reasonable. The Pledgor agrees
      that, to the extent notice of sale shall be required by law, at least ten
      days' notice to the Pledgor of the time and place of any public sale or
      the time after which any private sale is to be made shall constitute
      reasonable notification. The Trustee shall not be obligated to make any
      sale of Collateral regardless of notice of sale having been given. The
      Trustee may adjourn any public or private sale from time to time by
      announcement at the time and place fixed therefor, and such sale may,
      without further notice, be made at the time and place to which it was so
      adjourned. The purchaser of any or all Collateral so sold shall thereafter
      hold the same absolutely, free from any claim, encumbrance or right of any
      kind whatsoever created by or through the Pledgor. Any sale of the
      Collateral conducted in conformity with reasonable commercial practices of
      banks, insurance companies, commercial finance companies, or other
      financial institutions disposing of property similar to the Collateral
      shall be deemed to be commercially reasonable. The Trustee or any Holder
      of Notes may, in its own name or in the name of a designee or nominee, buy
      any of the Collateral at any public sale and, if permitted by applicable
      law, at any private sale. All expenses (including court costs and
      reasonable attorneys' fees, expenses and disbursements) of, or incident
      to, the enforcement of any of the provisions hereof shall be recoverable
      from the proceeds of the sale or other disposition of the Collateral.

            (b) Any cash held by or on behalf of the Trustee and all cash
      proceeds received by or on behalf of the Trustee in respect of any sale
      of, collection from, or other realization upon all or any part of the
      Collateral may, in the discretion of the Trustee, be held by the Trustee
      as collateral for, and/or then or at any time thereafter applied (after
      payment of any amounts payable to the Trustee pursuant to Section 12(b) of
      this Pledge Agreement) in whole or in part by the Trustee for the ratable
      benefit of the Holders of the Notes against, all or any part of the
      Secured Obligations in such order as the Trustee shall elect. Any surplus
      of such cash or cash proceeds held by or on behalf of the Trustee and
      remaining after payment in full of all the Secured Obligations shall be
      paid over to the Pledgor or to whomsoever may be lawfully entitled to
      receive such surplus.

            (c) The Trustee may, without notice to the Pledgor except as
      required by law and at any time or from time to time, charge, set-off and
      otherwise apply all or any part of the Secured Obligations against the
      Pledged Account or any part thereof.

            (d) The Pledgor agrees to (i) provide the Trustee with such
      information as may be necessary, or in the opinion of the Trustee,
      advisable to enable the Trustee to effect the sale of the Collateral and
      (ii) use its reasonable best efforts to do or cause to be done all such
      other acts and things as may be necessary to make such sale or sales of
      all or any portion of the Collateral pursuant to this Section 13 valid and
      binding and in compliance

                                       12
<PAGE>

      with any and all other applicable requirements of law. The Pledgor further
      agrees that a breach of any of the covenants contained in this Section
      13(d) will cause irreparable injury to the Trustee and the Holders of the
      Notes, that the Trustee and the Holders of the Notes have no adequate
      remedy at law in respect of such breach and, as a consequence, that each
      and every covenant contained in this Section 13(d) shall be specifically
      enforceable against the Pledgor, and the Pledgor hereby waives and agrees
      not to assert any defenses against an action for specific performance of
      such covenants except for a defense that no Event of Default has occurred
      and is continuing.

            (e) The Pledgor acknowledges the impossibility of ascertaining the
      amount of damages that would be suffered by the Trustee or any Holders of
      the Notes by reason of the failure by the Pledgor to perform any of the
      covenants contained in Section 13(d) above and, consequently, agrees that,
      if the Pledgor shall fail to perform any of such covenants, it will pay,
      as liquidated damages and not as a penalty, an amount equal to the value
      of the Collateral on the date the Trustee shall demand compliance with
      Section 13(d) above.

            SECTION 14. Security Interest Absolute. All rights of the Trustee
and the Holders of the Notes and the pledges, assignments and security interests
hereunder, and all obligations of the Pledgor hereunder, shall be irrevocable,
absolute and unconditional irrespective of, and the Pledgor hereby irrevocably
waives (to the maximum extent permitted by applicable law) any defenses it may
now have or may hereafter acquire in any way relating to, any or all of the
following:

            (a) any lack of validity or enforceability of the Indenture or Notes
      or any other agreement or instrument relating thereto;

            (b) any change in the time, manner or place of payment of, or in any
      other term of, all or any of the Secured Obligations, or any other
      amendment or waiver of or any consent to any departure from the Indenture
      or Notes or any other agreement or instrument relating thereto;

            (c) any taking, exchange or release of, or non-perfection of any
      Liens on, any Collateral or any other collateral for all or any of the
      Secured Obligations;

            (d) any manner of application of any Collateral or any other
      collateral, or proceeds thereof, to all or any of the Secured Obligations,
      or any manner of sale or other disposition of any Collateral or any other
      collateral for all or any of the Secured Obligations or any other assets
      of the Pledgor;

            (e) any change, restructuring or termination of the corporate
      structure or existence of the Pledgor; or

            (f) to the extent permitted by applicable law, any other
      circumstance (including, without limitation, any statute of limitations)
      or any existence of or reliance on any representation by the Trustee or
      any Holder of the Notes, which might otherwise constitute a defense
      available to, or a discharge of, the Pledgor in respect of the Secured
      Obligations or of this Pledge Agreement.

                                       13
<PAGE>

This Pledge Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Secured Obligations is
rescinded or must otherwise be returned by the Trustee or any Holder of the
Notes or by any other Person upon the insolvency, bankruptcy or reorganization
of the Pledgor or otherwise, all as though such payment had not been made.

            SECTION 15. Amendments, Waivers and Consents. (a) No amendment or
waiver of any provision of this Pledge Agreement, and no consent to any
departure by the Pledgor from any provision of this Pledge Agreement, shall in
any event be effective unless the same shall be in writing and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No failure on the part of
the Trustee or any Holder of the Notes to exercise, and no delay in exercising
any right hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right.

            SECTION 16. Notices. Any notice or communication given hereunder
shall be sufficiently given if in writing and delivered in person or mailed by
first class mail, commercial courier service or telecopier communication,
addressed as follows; or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties:

            if to the Pledgor:

                  Alaska Air Group, Inc.
                  19300 Pacific Highway South
                  Seattle, Washington  98188
                  Fax: (206) 431-5007
                  Attention: Amber Post

                  with a copy to:

                  O'Melveny & Myers
                  990 Marsh Road
                  Menlo Park, CA 94025
                  Fax: (650) 473-2601
                  Attention: Karen Dreyfus

            if to the Trustee:

                  U.S. Bank, National Association
                  1 Federal Street, 3 rd Floor,
                  Boston, MA 02110
                  Fax: (617) 603-6667
                  Attention: Julie A. Balerna

                  with a copy to:

                  Bingham, McCutchen LLP

                                       14
<PAGE>

                  One State Street
                  Hartford, CT 06103
                  Fax: (860) 240-2800
                  Attention: Robert Borden

All such notices and other communications shall, when mailed, delivered or
telecopied, respectively, be effective when deposited in the mails, delivered or
telecopied, respectively, addressed as aforesaid.

            SECTION 17. Continuing Security Interest. This Pledge Agreement
shall create a continuing security interest in the Collateral and (a) shall,
unless otherwise provided in this Pledge Agreement, remain in full force and
effect until the payment in full in cash of the Secured Obligations, (b) be
binding upon the Pledgor, its successors and assigns and (c) inure, together
with the rights and remedies of the Trustee hereunder, to the benefit of the
Trustee and the Holders of the Notes and their respective successors,
transferees and assigns.

            SECTION 18. Termination. So long as no Event of Default shall have
occurred and be continuing, this Pledge Agreement (other than Pledgor's
obligations under Section 12 hereof) shall terminate upon the earlier of (i) the
redemption of the Notes in whole, (ii) the payment in full of each of the first
twelve scheduled interest payments on the Notes when due, or (iii) the discharge
of the Indenture. Upon any such termination, without any necessary action on the
part of the Pledgor, (i) the Control Agreement(s) will terminate and control of
the Pledged Account and the Pledged Security Entitlements shall revert to the
Pledgor, (ii) the Trustee shall promptly obtain from the Account Holder and
deliver to the Pledgor all certificates and instruments representing any portion
of the Pledged Financial Assets constituting certificated securities and (iii)
the Trustee shall no longer have any rights in any of the Collateral.

            SECTION 19. Miscellaneous Provisions.

            Section 19.1. No Adverse Interpretation of Other Agreements. This
Pledge Agreement may not be used to interpret another pledge, security or debt
agreement of the Pledgor or any subsidiary thereof. No such pledge, security or
debt agreement (other than the Indenture) may be used to interpret this Pledge
Agreement.

            Section 19.2. Severability. The provisions of this Pledge Agreement
are severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Pledge Agreement in any jurisdiction.

            Section 19.3. Headings. The headings in this Pledge Agreement have
been inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.

            Section 19.4. Counterpart Originals. This Pledge Agreement may be
signed in two or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement. Delivery
of an executed counterpart of a

                                       15
<PAGE>

signature page to this Pledge Agreement by telecopier shall be effective as
delivery of an original executed counterpart of this Pledge Agreement.

            Section 19.5. Benefits of Pledge Agreement. Nothing in this Pledge
Agreement, express or implied, shall give to any person, other than the parties
hereto and their successors hereunder, and the Holders of the Notes and the
Account Holder, any benefit or any legal or equitable right, remedy or claim
under this Pledge Agreement.

            Section 19.6. Interpretation of Agreement. To the extent a term or
provision of this Pledge Agreement conflicts with the Indenture, the Indenture
shall control with respect to the subject matter of such term or provision.
Acceptance of or acquiescence in a course of performance rendered under this
Pledge Agreement shall not be relevant to determine the meaning of this Pledge
Agreement even though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.

            Section 19.7. Survival of Representations and Covenants. All
representations, warranties and covenants of the Pledgor contained herein shall
survive the execution and delivery of this Pledge Agreement, and shall terminate
only upon the termination of this Pledge Agreement, except as otherwise
specified in such representatives, warranties and covenants.

            Section 19.8. Waivers. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or default
with respect to any of the Obligations, and all other notices to which the
Pledgor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.

            Section 19.9. Authority of the Trustee. (a) The Trustee shall have
and be entitled to exercise all powers hereunder that are specifically granted
to the Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. The Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Except as otherwise expressly provided in this
Pledge Agreement or the Indenture, neither the Trustee nor any director,
officer, employee, attorney or agent of the Trustee shall be liable to the
Pledgor for any action taken or omitted to be taken by the Trustee, in its
capacity as Trustee, hereunder, except for its own bad faith, gross negligence
or willful misconduct, and the Trustee shall not be responsible for the
validity, effectiveness or sufficiency hereof or of any document or security
furnished pursuant hereto. The Trustee and its directors, officers, employees,
attorneys and agents shall be entitled to rely on any communication, instrument
or document believed by it or them to be genuine and correct and to have been
signed or sent by the proper person or persons.

            (b) The Pledgor acknowledges that the rights and responsibilities of
the Trustee under this Pledge Agreement with respect to any action taken by the
Trustee or the exercise or non-exercise by the Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as between the Trustee and the
Holders of the Notes, be governed by the Indenture and by such other agreements
with respect thereto as may exist from time to time among them, but, as between
the Trustee and the Pledgor, the Trustee shall be conclusively presumed to be
acting as agent for the

                                       16
<PAGE>

Holders of the Notes with full and valid authority so to act or refrain from
acting, and the Pledgor shall not be obligated or entitled to make any inquiry
respecting such authority.

            Section 19.10. Final Expression. This Pledge Agreement, together
with the Indenture and any other agreement executed in connection herewith, is
intended by the parties as a final expression of this Pledge Agreement and is
intended as a complete and exclusive statement of the terms and conditions
thereof.

            Section 19.11. Rights of Holders of the Notes. No Holder of Notes
shall have any independent rights hereunder other than those rights granted to
individual Holders of the Notes pursuant to Section 6.06 of the Indenture;
provided that nothing in this subsection shall limit any rights granted to the
Trustee under the Notes or the Indenture.

            Section 19.12. Governing Law; Submission to Jurisdiction; Waiver of
Jury Trial; Waiver of Damages. (a) This Pledge Agreement shall be governed by,
and construed in accordance with, the laws of the state of New York.

            (b) The Pledgor agrees that the Trustee shall, in its capacity as
trustee or in the name and on behalf of any Holder of Notes, have the right, to
the extent permitted by applicable law, to proceed against the Pledgor or the
Collateral in a court in any location reasonably selected in good faith (and
having personal or in rem jurisdiction over the Pledgor or the Collateral, as
the case may be) to enable the Trustee to realize on the Collateral, or to
enforce a judgment or other court order entered in favor of the Trustee. The
Pledgor agrees that it will not assert any counterclaims, setoffs or crossclaims
in any proceeding brought by the Trustee to realize on such property or to
enforce a judgment or other court order in favor of the Trustee, except for such
counterclaims, setoffs or crossclaims which, if not asserted in any such
proceeding, could not otherwise be brought or asserted. The Pledgor waives any
objection that it may have to the location of the court in the city of New York
once the Trustee has commenced a proceeding described in this paragraph
including, without limitation, any objection to the laying of venue or based on
the grounds of forum non conveniens.

            (c) The Pledgor agrees that neither any Holder of Notes nor (except
as otherwise provided in this Pledge Agreement or the Indenture) the Trustee in
its capacity as trustee shall have any liability to the Pledgor (whether arising
in tort, contract or otherwise) for losses suffered by the Pledgor in connection
with, arising out of, or in any way related to, the transactions contemplated
and the relationship established by this Pledge Agreement, or any act, omission
or event occurring in connection therewith, unless it is determined by a final
and nonappealable judgment of a court that is binding on the Trustee or such
Holder of Notes, as the case may be, that such losses were the result of acts or
omissions on the part of the Trustee or such Holder of Notes, as the case may
be, constituting bad faith, gross negligence or willful misconduct.

            (d) To the extent permitted by applicable law, the Pledgor waives
the posting of any bond otherwise required of the Trustee or any Holder of Notes
in connection with any judicial process or proceeding to enforce any judgment or
other court order pertaining to this Pledge Agreement or any related agreement
or document entered in favor of the Trustee or any Holder of Notes, or to
enforce by specific performance, temporary restraining order or

                                       17
<PAGE>

preliminary or permanent injunction, this Pledge Agreement or any related
agreement or document between the Pledgor on the one hand and the Trustee and/or
the Holders of the Notes on the other hand.

             [The remainder of this page intentionally left blank.]

                                       18
<PAGE>

            IN WITNESS WHEREOF, the Pledgor and the Trustee have each caused
this Pledge Agreement to be duly executed and delivered as of the date first
above written.

                                    Pledgor:

                                    ALASKA AIR GROUP, INC.

                                    By:
                                         ---------------------------------------
                                         Name:  Bradley Tilden
                                         Title: Executive Vice President/Finance
                                                & Chief Financial Officer

                                    Trustee:

                                    U.S. BANK NATIONAL ASSOCIATION
                                         as Trustee

                                    By:
                                         ---------------------------------------
                                         Name:
                                         Title:

<PAGE>

                                   SCHEDULE I

                            Pledged Financial Assets

<TABLE>
<CAPTION>
 Par Amount                  Ticker          Maturity Date         CUSIP No.
 ----------                  ------          -------------         ---------
 <S>                         <C>             <C>                   <C>
 1,452,000                     B                6/19/03            912795MS7
 1,422,000                     SP               8/15/03            912820BG1
 1,464,000                     SP               11/15/03           912820DJ3
 1,566,000                     S                2/15/04            912833CK4
 1,713,000                     S                5/15/04            912833FU9
 1,867,000                     SP               8/15/04            912820BK2
 1,987,000                     S                11/15/04           912833FV7
 2,096,000                     S                2/15/05            912833CM0
 2,247,000                     S                5/15/05            912833FW5
 2,423,000                     S                8/15/05            912833CN8
 2,377,000                     SP               11/15/05           912820BQ9
 2,322,000                     SP               2/15/06            912803AJ2
</TABLE>

<PAGE>

                                                                         ANNEX A

                                CONTROL AGREEMENT

            This CONTROL AGREEMENT (the "Agreement") dated as of March 21, 2003
by and among Alaska Air Group, Inc. (the "Pledgor") and U.S. Bank National
Association, in its capacity as trustee (the "Trustee"), and U.S. Bank National
Association, a national banking association, in its capacity as securities
intermediary and depository bank (the "Account Holder").

PRELIMINARY STATEMENTS:

            SECTION 1. The Pledgor has granted the Trustee a security interest
(the "Security Interest") in certain security entitlements (the "Pledged
Security Entitlements") with respect to certain U.S. Treasury securities (the
"Pledged Financial Assets") identified on Schedule I attached hereto maintained
by the Trustee with the Account Holder and carried from time to time in an
account with the Account Holder, ABA No. 042000013, Account No. 221169000 at the
Federal Reserve Bank, Cleveland, Ohio, in the name of "U.S. Bank, National
Association, as Trustee for the benefit of the holders of the Senior Convertible
Notes due 2023 of Alaska Air Group, Collateral Pledge Account" (the "Pledged
Account") and all additions thereto and substitutions and proceeds thereof
(collectively, the "Collateral"), pursuant to, and as more particularly
described in, a Pledge Agreement dated as of March 21, 2003, among the Pledgor
and the Trustee (as the same may hereafter be amended, supplemented or otherwise
modified from time to time, the "Pledge Agreement"; terms defined in the Pledge
Agreement and not otherwise defined herein are used herein as therein defined).
The Pledgor acknowledges having received value for such pledge of the
Collateral.

            SECTION 2. Terms defined in Article 8 or 9 of the Uniform Commercial
Code as in effect in the State of New York (the "UCC") are used in this
Agreement (including, without limitation, paragraph (1) above) as such terms are
defined in such Article 8 or 9.

            SECTION 3. The Pledgor, the Trustee and the Account Holder are
delivering this Agreement pursuant to the terms of the Pledge Agreement.

            NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the parties hereto hereby agree as follows:

            SECTION 1. Notice of Exclusive Control. The Pledgor and Trustee are
entering into this Agreement to perfect, and confirm the first priority lien of,
the Trustee's Security Interest in the Collateral. The Account Holder agrees to
promptly make all necessary entries or notations in its books and records to
reflect the Trustee's Security Interest in the Collateral and to apply any value
distributed on account of any Pledged Financial Assets as directed in writing by
the Trustee without further consent from the Pledgor. The Account Holder
acknowledges that the Trustee has exclusive control over the Pledged Account and
all Pledged Security Entitlements contained therein from time to time.

<PAGE>

            SECTION 2. The Account. The Account Holder represents and warrants
to, and agrees with, the Pledgor and the Trustee and the Holders of the Notes
that:

            (a) The Account Holder has established the Pledged Account and shall
      not change the name or account number of the Pledged Account without the
      prior written consent of the Trustee.

            (b) The Account Holder maintains the Pledged Account for the
      Trustee, and all property (including, without limitation, all funds and
      financial assets) held by the Account Holder for the account of the
      Trustee is, and will continue to be, credited to the Pledged Account. The
      Account Holder is a Securities Intermediary as defined in Section
      8-102(a)(xiv) of the UCC and is acting as such in relation to the Trustee,
      the Pledgor and the Pledged Account and with respect to all property
      credited thereto, from time to time.

            (c) To the extent that funds are credited to the Pledged Account,
      the Pledged Account is a deposit account; and to the extent that financial
      assets are credited to the Pledged Account, the Pledged Account is a
      securities account. The Account Holder is (i) the bank with which the
      Pledged Account is maintained and (ii) the securities intermediary with
      respect to financial assets held in the Pledged Account. The Trustee is
      (x) the Account Holder's customer with respect to the Pledged Account and
      (y) the entitlement holder with respect to financial assets credited from
      time to time to the Pledged Account.

            (d) All financial assets in registered form or payable to or to the
      order of and credited to the Pledged Account shall be registered in the
      name of, payable to or to the order of, or endorsed to, the Account Holder
      and in no case during the term of the Pledge Agreement will any financial
      asset credited to the Pledged Account be registered in the name of,
      payable to or to the order of, or endorsed to, the Pledgor, except to the
      extent the foregoing have been subsequently endorsed by the Pledgor to the
      Account Holder or in blank.

            (e) Notwithstanding any other agreement to the contrary, the Account
      Holder's jurisdiction with respect to the Pledged Account for purposes of
      the UCC is, and will continue to be for so long as the Security Interest
      shall be in effect, the State of New York.

            (f) The Account Holder does not know of any claim to or interest in
      the Pledged Account or any property (including, without limitation, all
      funds and financial assets) credited to the Pledged Account, except for
      claims and interests of the parties referred to in this Agreement.

            SECTION 3. Control by Trustee. (a) The Account Holder will comply
with (A) all written instructions directing disposition of the funds in the
Pledged Account (such instructions, a "Payment Order"), (B) all notifications
and entitlement orders that the Account Holder receives directing it to transfer
or redeem any financial asset in the Pledged Account and (C) all other
directions concerning the Collateral, including, without limitation, directions
to distribute to the Trustee proceeds of any such transfer or redemption or
interest on any property

                                       2
<PAGE>

in the Pledged Account (any such instruction, notification or direction referred
to in clause (A), (B) or (C) above being an "Account Direction"), in each case
of clauses (A), (B) and (C) above originated by the Trustee without further
consent by the Pledgor or any other person.

            (b) The Trustee hereby acknowledges that it shall maintain and
exercise control of the Pledged Account on behalf of the Holders of the Notes.

            (c) The Account Holder will not (i) comply with Account Directions
or other directions concerning the Collateral originated by the Pledgor or (ii)
distribute to the Pledgor interest or other distributions on or in respect of
the Collateral.

            SECTION 4. Priority of Trustee's Security Interest. (a) The Account
Holder (i) subordinates to the Security Interest and in favor of the Trustee any
security interest, lien, or right of setoff the Account Holder may have, now or
in the future, against the Pledged Account or property in the Pledged Account,
and (ii) agrees that it will not exercise any right in respect of any such
security interest or lien or any such right of setoff until the Security
Interest is terminated, except that the Account Holder will retain its prior
lien on property in the Pledged Account to secure payment for property purchased
for the Pledged Account and normal commissions and fees for the Pledged Account.

            (b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
the Pledged Account.

            SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Account Holder will send copies of all statements and confirmations for
the Pledged Account simultaneously to the Pledgor and the Trustee.

            (b) When the Account Holder knows of any claim or interest in the
Pledged Account or any property credited to the Pledged Account other than the
claims and interests of the parties referred to in this Agreement, the Account
Holder will promptly notify the Trustee and the Pledgor of such claim or
interest.

            SECTION 6. The Account Holder's Responsibility. (a) The Account
Holder will not be liable to the Pledgor or the Trustee or the Holders of the
Notes for complying with an Account Direction or other direction concerning the
Collateral originated by the Trustee, even if the Pledgor notifies the Account
Holder that the Trustee is not legally entitled to issue the Account Direction
or such other direction unless the Account Holder takes the action after it is
served with an injunction, restraining order, or other legal process enjoining
it from doing so, issued by a court of competent jurisdiction, and had a
reasonable opportunity to act on the injunction, restraining order or other
legal process.

            (b) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and in Part 5 of
Article 8 of the UCC and in Article 4 of the UCC. In particular, the Account
Holder need not investigate whether the Trustee is entitled under the Trustee's
agreements with the Pledgor to give an Account Direction or other direction
concerning the Pledged Account. The Account Holder may conclusively rely on
notices and communications it believes given by the appropriate party.

                                       3
<PAGE>

            (c) In no event shall the Account Holder or any of its affiliates,
shareholders, directors, officers, employees or agents be liable for indirect,
special, punitive, incidental or consequential damages of any kind whatsoever
even if advised of the possibility of such damages, other than such damages
caused by its own bad faith, gross negligence or willful misconduct.

            (d) Without limiting the foregoing, and notwithstanding any
provision to the contrary elsewhere, the Account Holder and its affiliates,
shareholders, directors, officers, employees or agents:

            (i) shall have no responsibilities, obligations or duties in respect
      of the subject matter hereof other than those expressly set forth in this
      Agreement, and no implied duties, responsibilities, covenants or
      obligations shall be read into this Agreement against the Account Holder.
      Without limiting the foregoing, the Account Holder shall have no duty or
      authority to determine and/or investigate whether or not an event of
      default exists under any agreement between the Pledgor and the Trustee, or
      to determine and/or investigate whether or not the Trustee is entitled to
      give any Account Direction with respect to the Collateral;

            (ii) may in any instance where the Account Holder determines that it
      lacks or is uncertain as to its authority to take or refrain from taking
      certain action hereunder, or as to any of the requirements of this
      Agreement under the circumstance before it, delay or refrain from taking
      any action unless and until it shall have received appropriate written
      instructions from the Trustee or advice from legal counsel selected by it
      (or other appropriate advisor), as the case may be, detailing the action
      required to be taken hereunder and the Account Holder may rely
      conclusively on any such instructions or advice;

            (iii) so long as it and they shall have acted (or refrained from
      acting) in good faith and within the reasonable belief that such action or
      omission is duly authorized or within the discretion or powers granted to
      it hereunder, shall not be responsible or liable for any error of judgment
      in any action taken, suffered or omitted by it or them, or for any act
      done or step taken or omitted, or for any mistake of fact or law, unless
      such action constitutes gross negligence or willful misconduct as finally
      determined by a non-appealable judgment of a court of competent
      jurisdiction on its (or their) part;

            (iv) will not be responsible or liable to the Pledgor, the Trustee,
      or any other person or entity whatsoever for the due execution, legality,
      validity, enforceability, genuineness, effectiveness or sufficiency of
      this Agreement (provided, however, that the Account Holder warrants that
      the Account Holder has legal capacity and has been duly authorized to
      enter into this Agreement) or for any statement, warranty or
      representation made by any other party in connection with this Agreement;

            (v) will not incur any responsibility or liability by acting or not
      acting in reliance upon advice of counsel, or upon any notice, consent,
      certificate, instruction,

                                       4
<PAGE>

      Account Direction, statement, wire instruction, telecopy or other writing
      reasonably and in good faith believed by it or them to be genuine and in
      conformance with this Agreement and signed or sent by the proper party or
      parties and contemplated herein; and

            (vi) shall not be required to expend or risk its or their own funds,
      or to take any action (including the institution or defense of legal
      proceedings) which in its or their reasonable judgment may cause it or
      them to incur or suffer any expense or liability, unless the Account
      Holder shall have been provided with security or indemnity, acceptable to
      Account Holder in its sole discretion, for the payment of the costs,
      expenses (including reasonable attorneys' fees) and liabilities which may
      be incurred therein or thereby.

            (e) If any Collateral subject to this Agreement is at any time
attached or levied upon, or in case the transfer or delivery of any such
Collateral shall be stayed or enjoined, or in the case of any other legal
process or judicial order affecting such Collateral, the Account Holder is
authorized to comply with any such order in any manner as the Account Holder or
its legal counsel reasonably deems appropriate. The Account Holder shall give
prompt written notice to the Pledgor and the Trustee of any such attachment,
levy, stay, injunction or legal process. If the Account Holder complies with any
process, order, writ, judgment or decree relating to the Collateral subject to
this Agreement, then the Account Holder shall not be liable or responsible to
the Pledgor, the Trustee, or any other person or entity whatsoever even if such
order, writ, judgment, decree or process is subsequently modified, vacated or
otherwise determined to have been without legal force or effect.

            (f) The Account Holder shall not be liable or responsible for any
delays or failures in performance of any of its duties hereunder which result
from events or conditions beyond its reasonable control and so long as the same
exist or continue and cannot reasonably be remedied by the Account Holder in
accordance with its normal business practices. Such events or conditions shall
include, but shall not be limited to, acts of God, strikes, lockouts, riots,
acts of war or terrorism, epidemics, nationalization, expropriation, currency
restrictions, governmental regulations superimposed after the fact, fire,
communication line failures (including the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility), power failures,
earthquakes or other disasters.

            SECTION 7. Indemnity. The Pledgor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including, without limitation,
reasonable attorney's fees and disbursements), except to the extent the claims,
liabilities or expenses are caused by the Account Holder's gross negligence or
willful misconduct as found by a court of competent jurisdiction in a final,
non-appealable judgment.

            SECTION 8. Termination; Survival. (a) This Agreement shall terminate
automatically upon receipt by the Account Holder of written notice executed by
two officers of the Trustee that (i) all of the Secured Obligations have been
paid in full in cash or otherwise satisfied or (ii) all of the Collateral has
been released, which ever is earlier, and the Account Holder shall thereafter be
relieved of all duties and obligations hereunder. The Account Holder

                                       5
<PAGE>

may terminate this Agreement on 60 days' prior notice to the Trustee and the
Pledgor, provided that before such termination the Account Holder and the
Pledgor shall make arrangements to transfer the property in the Pledged Account
to another securities intermediary that shall have executed, together with the
Trustee and the Pledgor, a control agreement in favor of the Trustee and the
Holders of the Notes in respect of such property in substantially the form of
this Agreement or otherwise in form and substance satisfactory to the Trustee.

            (b) In the event that the Trustee no longer serves as Trustee for
the Collateral, the Trustee, the Account Holder and the Pledgor shall make
arrangements for another Person to assume the rights and obligations of the
Trustee hereunder, and such Person shall have executed, together with the
Account Holder and the Pledgor, a control agreement in favor of such Person and
the Holders of the Notes in substantially the form of this Agreement or
otherwise in form and substance satisfactory to the Trustee.

            (c) Sections 7 and 8 will survive termination of this Agreement.

            SECTION 9. Conflict with Other Agreements. (a) In the event of any
conflict between this Agreement (or any portion thereof) and any other agreement
now existing or hereafter entered into, the terms of this Agreement shall
prevail;

            (b) No amendment or modification of this Agreement or waiver of any
right hereunder shall be binding on any party hereto unless it is in writing and
is signed by all of the parties hereto;

            (c) The Account Holder hereby confirms and agrees that:

            (i) There are no other agreements entered into between the Account
      Holder and the Pledgor with respect to the Pledged Account;

            (ii) It has not entered into, and until the termination of the this
      Agreement will not enter into, any agreement with any other person
      relating to the Pledged Account and/or any financial assets credited
      thereto pursuant to which it has agreed to comply with entitlement orders
      (as defined in Section 8-102(a)(8) of the UCC) of such other person; and

            (iii) It has not entered into, and until the termination of this
      Agreement will not enter into, any agreement with the Pledgor or the
      Trustee purporting to limit or condition the obligation of the Account
      Holder to comply with Account Directions as set forth in Section 3 hereof.

            SECTION 10. Permitted Investments. In accordance with the Pledge
Agreement, the Trustee shall direct the Account Holder with respect to the
selection of investments to be made with the funds in the Pledged Account.

            SECTION 11. Entire Agreement. This Agreement is the entire
agreement, and supersedes any prior agreements, and contemporaneous oral
agreements, of the parties

                                       6
<PAGE>

concerning its subject matter. The Trustee and the Account Holder shall be
entitled to all the rights, benefits, privileges and immunities accorded to the
Trustee under the Indenture.

            SECTION 12. Amendments. No modification, amendment or waiver of, nor
consent to any departure by any party from, any provision of this Agreement will
be effective unless made in writing signed by the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.

            SECTION 13. Financial Assets. The Account Holder agrees with Trustee
and the Pledgor that, to the fullest extent permitted by applicable law, all
property credited from time to time to the Pledged Account will be treated as
financial assets under Article 8 of the UCC.

            SECTION 14. Notices. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder must be in
writing and will be effective upon receipt if delivered personally, or if sent
by facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the Pledgor's and the Trustee's
addresses as set forth in the Pledge Agreement, and to the Account Holder's
address as set forth below, or to such other address as any party may give to
the others in writing for such purpose.

            SECTION 15. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Pledgor, the Trustee and the Account
Holder, and thereafter shall be binding upon and inure to the benefit of the
Pledgor, the Trustee and the Account Holder and their respective successors and
assigns.

            SECTION 16. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

            SECTION 17. Governing Law and Jurisdiction. THIS AGREEMENT WILL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. Each of the parties hereby irrevocably submits for itself and its property
in any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction and venue of the courts of the State of New York, the courts of the
United States of America in New York, and appellate courts from any thereof.

            SECTION 18. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH
PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

                                       7
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                     Pledgor:

                                     ALASKA AIR GROUP, INC.

                                     By:
                                         ---------------------------------------
                                         Name:  Bradley Tilden
                                         Title: Executive Vice President/Finance
                                                & Chief Financial Officer

<PAGE>

                                        Trustee:

                                        U.S. BANK NATIONAL ASSOCIATION
                                             as Trustee

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

<PAGE>

                                        Account Holder:

                                        U.S. BANK NATIONAL ASSOCIATION,
                                          as Account Holder

                                        By:
                                           -------------------------------------
                                           Name:
                                           Title:

<PAGE>

                                   SCHEDULE I

                            Pledged Financial Assets

<TABLE>
<CAPTION>
 Par Amount          Ticker           Maturity Date
 ----------          ------           -------------
<S>                  <C>              <C>                            <C>
 1,452,000              B               6/19/03                      912795MS7
 1,422,000              SP              8/15/03                      912820BG1
 1,464,000              SP              11/15/03                     912820DJ3
 1,566,000              S               2/15/04                      912833CK4
 1,713,000              S               5/15/04                      912833FU9
 1,867,000              SP              8/15/04                      912820BK2
 1,987,000              S               11/15/04                     912833FV7
 2,096,000              S               2/15/05                      912833CM0
 2,247,000              S               5/15/05                      912833FW5
 2,423,000              S               8/15/05                      912833CN8
 2,377,000              SP              11/15/05                     912820BQ9
 2,322,000              SP              2/15/06                      912803AJ2
</TABLE><PAGE>
                                                                     EXHIBIT 4.5

                                CONTROL AGREEMENT

            This CONTROL AGREEMENT (the "Agreement") dated as of March 21, 2003
by and among Alaska Air Group, Inc. (the "Pledgor") and U.S. Bank National
Association, in its capacity as trustee (the "Trustee"), and U.S. Bank National
Association, a national banking association, in its capacity as securities
intermediary and depository bank (the "Account Holder").

PRELIMINARY STATEMENTS:

            (1) The Pledgor has granted the Trustee a security interest (the
"Security Interest") in certain security entitlements (the "Pledged Security
Entitlements") with respect to certain U.S. Treasury securities (the "Pledged
Financial Assets") identified on Schedule I attached hereto maintained by the
Trustee with the Account Holder and carried from time to time in an account with
the Account Holder, ABA No. 042000013, Account No. 221169000 at the Federal
Reserve Bank, Cleveland, Ohio, in the name of "U.S. Bank, National Association,
as Trustee for the benefit of the holders of the Senior Convertible Notes due
2023 of Alaska Air Group, Collateral Pledge Account" (the "Pledged Account") and
all additions thereto and substitutions and proceeds thereof (collectively, the
"Collateral"), pursuant to, and as more particularly described in, a Pledge
Agreement dated as of March 21, 2003, among the Pledgor and the Trustee (as the
same may hereafter be amended, supplemented or otherwise modified from time to
time, the "Pledge Agreement"; terms defined in the Pledge Agreement and not
otherwise defined herein are used herein as therein defined). The Pledgor
acknowledges having received value for such pledge of the Collateral.

            (2) Terms defined in Article 8 or 9 of the Uniform Commercial Code
as in effect in the State of New York (the "UCC") are used in this Agreement
(including, without limitation, paragraph (1) above) as such terms are defined
in such Article 8 or 9.

            (3) The Pledgor, the Trustee and the Account Holder are delivering
this Agreement pursuant to the terms of the Pledge Agreement.

            NOW, THEREFORE, in consideration of the premises and mutual
agreements contained herein, the parties hereto hereby agree as follows:

            SECTION 1. Notice of Exclusive Control. The Pledgor and Trustee are
entering into this Agreement to perfect, and confirm the first priority lien of,
the Trustee's Security Interest in the Collateral. The Account Holder agrees to
promptly make all necessary entries or notations in its books and records to
reflect the Trustee's Security Interest in the Collateral and to apply any value
distributed on account of any Pledged Financial Assets as directed in writing by

<PAGE>

the Trustee without further consent from the Pledgor. The Account Holder
acknowledges that the Trustee has exclusive control over the Pledged Account and
all Pledged Security Entitlements contained therein from time to time.

<PAGE>

            SECTION 2. The Account. The Account Holder represents and warrants
to, and agrees with, the Pledgor and the Trustee and the Holders of the Notes
that:

            (a) The Account Holder has established the Pledged Account and shall
      not change the name or account number of the Pledged Account without the
      prior written consent of the Trustee.

            (b) The Account Holder maintains the Pledged Account for the
      Trustee, and all property (including, without limitation, all funds and
      financial assets) held by the Account Holder for the account of the
      Trustee is, and will continue to be, credited to the Pledged Account. The
      Account Holder is a Securities Intermediary as defined in Section
      8-102(a)(xiv) of the UCC and is acting as such in relation to the Trustee,
      the Pledgor and the Pledged Account and with respect to all property
      credited thereto, from time to time.

            (c) To the extent that funds are credited to the Pledged Account,
      the Pledged Account is a deposit account; and to the extent that financial
      assets are credited to the Pledged Account, the Pledged Account is a
      securities account. The Account Holder is (i) the bank with which the
      Pledged Account is maintained and (ii) the securities intermediary with
      respect to financial assets held in the Pledged Account. The Trustee is
      (x) the Account Holder's customer with respect to the Pledged Account and
      (y) the entitlement holder with respect to financial assets credited from
      time to time to the Pledged Account.

            (d) All financial assets in registered form or payable to or to the
      order of and credited to the Pledged Account shall be registered in the
      name of, payable to or to the order of, or endorsed to, the Account Holder
      and in no case during the term of the Pledge Agreement will any financial
      asset credited to the Pledged Account be registered in the name of,
      payable to or to the order of, or endorsed to, the Pledgor, except to the
      extent the foregoing have been subsequently endorsed by the Pledgor to the
      Account Holder or in blank.

            (e) Notwithstanding any other agreement to the contrary, the Account
      Holder's jurisdiction with respect to the Pledged Account for purposes of
      the UCC is, and will continue to be for so long as the Security Interest
      shall be in effect, the State of New York.

            (f) The Account Holder does not know of any claim to or interest in
      the Pledged Account or any property (including, without limitation, all
      funds and financial assets) credited to the Pledged Account, except for
      claims and interests of the parties referred to in this Agreement.

            SECTION 3. Control by Trustee. (a) The Account Holder will comply
with (A) all written instructions directing disposition of the funds in the
Pledged Account (such instructions, a "Payment Order"), (B) all notifications
and entitlement orders that the Account Holder receives directing it to transfer
or redeem any financial asset in the Pledged Account and (C) all other
directions concerning the Collateral, including, without limitation, directions
to distribute to the Trustee proceeds of any such transfer or redemption or
interest on any property

                                       2
<PAGE>

in the Pledged Account (any such instruction, notification or direction referred
to in clause (A), (B) or (C) above being an "Account Direction"), in each case
of clauses (A), (B) and (C) above originated by the Trustee without further
consent by the Pledgor or any other person.

            (b) The Trustee hereby acknowledges that it shall maintain and
exercise control of the Pledged Account on behalf of the Holders of the Notes.

            (c) The Account Holder will not (i) comply with Account Directions
or other directions concerning the Collateral originated by the Pledgor or (ii)
distribute to the Pledgor interest or other distributions on or in respect of
the Collateral.

            SECTION 4. Priority of Trustee's Security Interest. (a) The Account
Holder (i) subordinates to the Security Interest and in favor of the Trustee any
security interest, lien, or right of setoff the Account Holder may have, now or
in the future, against the Pledged Account or property in the Pledged Account,
and (ii) agrees that it will not exercise any right in respect of any such
security interest or lien or any such right of setoff until the Security
Interest is terminated, except that the Account Holder will retain its prior
lien on property in the Pledged Account to secure payment for property purchased
for the Pledged Account and normal commissions and fees for the Pledged Account.

            (b) The Account Holder will not enter into any other agreement with
any Person relating to Account Directions or other directions with respect to
the Pledged Account.

            SECTION 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Account Holder will send copies of all statements and confirmations for
the Pledged Account simultaneously to the Pledgor and the Trustee.

            (b) When the Account Holder knows of any claim or interest in the
Pledged Account or any property credited to the Pledged Account other than the
claims and interests of the parties referred to in this Agreement, the Account
Holder will promptly notify the Trustee and the Pledgor of such claim or
interest.

            SECTION 6. The Account Holder's Responsibility. (a) The Account
Holder will not be liable to the Pledgor or the Trustee or the Holders of the
Notes for complying with an Account Direction or other direction concerning the
Collateral originated by the Trustee, even if the Pledgor notifies the Account
Holder that the Trustee is not legally entitled to issue the Account Direction
or such other direction unless the Account Holder takes the action after it is
served with an injunction, restraining order, or other legal process enjoining
it from doing so, issued by a court of competent jurisdiction, and had a
reasonable opportunity to act on the injunction, restraining order or other
legal process.

            (b) This Agreement does not create any obligation of the Account
Holder except for those expressly set forth in this Agreement and in Part 5 of
Article 8 of the UCC and in Article 4 of the UCC. In particular, the Account
Holder need not investigate whether the Trustee is entitled under the Trustee's
agreements with the Pledgor to give an Account Direction or other direction
concerning the Pledged Account. The Account Holder may conclusively rely on
notices and communications it believes given by the appropriate party.

                                       3
<PAGE>

            (c) In no event shall the Account Holder or any of its affiliates,
shareholders, directors, officers, employees or agents be liable for indirect,
special, punitive, incidental or consequential damages of any kind whatsoever
even if advised of the possibility of such damages, other than such damages
caused by its own bad faith, gross negligence or willful misconduct.

            (d) Without limiting the foregoing, and notwithstanding any
provision to the contrary elsewhere, the Account Holder and its affiliates,
shareholders, directors, officers, employees or agents:

            (i) shall have no responsibilities, obligations or duties in respect
      of the subject matter hereof other than those expressly set forth in this
      Agreement, and no implied duties, responsibilities, covenants or
      obligations shall be read into this Agreement against the Account Holder.
      Without limiting the foregoing, the Account Holder shall have no duty or
      authority to determine and/or investigate whether or not an event of
      default exists under any agreement between the Pledgor and the Trustee, or
      to determine and/or investigate whether or not the Trustee is entitled to
      give any Account Direction with respect to the Collateral;

            (ii) may in any instance where the Account Holder determines that it
      lacks or is uncertain as to its authority to take or refrain from taking
      certain action hereunder, or as to any of the requirements of this
      Agreement under the circumstance before it, delay or refrain from taking
      any action unless and until it shall have received appropriate written
      instructions from the Trustee or advice from legal counsel selected by it
      (or other appropriate advisor), as the case may be, detailing the action
      required to be taken hereunder and the Account Holder may rely
      conclusively on any such instructions or advice;

            (iii) so long as it and they shall have acted (or refrained from
      acting) in good faith and within the reasonable belief that such action or
      omission is duly authorized or within the discretion or powers granted to
      it hereunder, shall not be responsible or liable for any error of judgment
      in any action taken, suffered or omitted by it or them, or for any act
      done or step taken or omitted, or for any mistake of fact or law, unless
      such action constitutes gross negligence or willful misconduct as finally
      determined by a non-appealable judgment of a court of competent
      jurisdiction on its (or their) part;

            (iv) will not be responsible or liable to the Pledgor, the Trustee,
      or any other person or entity whatsoever for the due execution, legality,
      validity, enforceability, genuineness, effectiveness or sufficiency of
      this Agreement (provided, however, that the Account Holder warrants that
      the Account Holder has legal capacity and has been duly authorized to
      enter into this Agreement) or for any statement, warranty or
      representation made by any other party in connection with this Agreement;

            (v) will not incur any responsibility or liability by acting or not
      acting in reliance upon advice of counsel, or upon any notice, consent,
      certificate, instruction,

                                       4
<PAGE>

      Account Direction, statement, wire instruction, telecopy or other writing
      reasonably and in good faith believed by it or them to be genuine and in
      conformance with this Agreement and signed or sent by the proper party or
      parties and contemplated herein; and

            (vi) shall not be required to expend or risk its or their own funds,
      or to take any action (including the institution or defense of legal
      proceedings) which in its or their reasonable judgment may cause it or
      them to incur or suffer any expense or liability, unless the Account
      Holder shall have been provided with security or indemnity, acceptable to
      Account Holder in its sole discretion, for the payment of the costs,
      expenses (including reasonable attorneys' fees) and liabilities which may
      be incurred therein or thereby.

            (e) If any Collateral subject to this Agreement is at any time
attached or levied upon, or in case the transfer or delivery of any such
Collateral shall be stayed or enjoined, or in the case of any other legal
process or judicial order affecting such Collateral, the Account Holder is
authorized to comply with any such order in any manner as the Account Holder or
its legal counsel reasonably deems appropriate. The Account Holder shall give
prompt written notice to the Pledgor and the Trustee of any such attachment,
levy, stay, injunction or legal process. If the Account Holder complies with any
process, order, writ, judgment or decree relating to the Collateral subject to
this Agreement, then the Account Holder shall not be liable or responsible to
the Pledgor, the Trustee, or any other person or entity whatsoever even if such
order, writ, judgment, decree or process is subsequently modified, vacated or
otherwise determined to have been without legal force or effect.

            (f) The Account Holder shall not be liable or responsible for any
delays or failures in performance of any of its duties hereunder which result
from events or conditions beyond its reasonable control and so long as the same
exist or continue and cannot reasonably be remedied by the Account Holder in
accordance with its normal business practices. Such events or conditions shall
include, but shall not be limited to, acts of God, strikes, lockouts, riots,
acts of war or terrorism, epidemics, nationalization, expropriation, currency
restrictions, governmental regulations superimposed after the fact, fire,
communication line failures (including the unavailability of the Federal Reserve
Bank wire or telex or other wire or communication facility), power failures,
earthquakes or other disasters.

            SECTION 7. Indemnity. The Pledgor will indemnify the Account Holder,
its officers, directors, employees and agents against claims, liabilities and
expenses arising out of this Agreement (including, without limitation,
reasonable attorney's fees and disbursements), except to the extent the claims,
liabilities or expenses are caused by the Account Holder's gross negligence or
willful misconduct as found by a court of competent jurisdiction in a final,
non-appealable judgment.

            SECTION 8. Termination; Survival. (a) This Agreement shall terminate
automatically upon receipt by the Account Holder of written notice executed by
two officers of the Trustee that (i) all of the Secured Obligations have been
paid in full in cash or otherwise satisfied or (ii) all of the Collateral has
been released, which ever is earlier, and the Account Holder shall thereafter be
relieved of all duties and obligations hereunder. The Account Holder

                                       5
<PAGE>

may terminate this Agreement on 60 days' prior notice to the Trustee and the
Pledgor, provided that before such termination the Account Holder and the
Pledgor shall make arrangements to transfer the property in the Pledged Account
to another securities intermediary that shall have executed, together with the
Trustee and the Pledgor, a control agreement in favor of the Trustee and the
Holders of the Notes in respect of such property in substantially the form of
this Agreement or otherwise in form and substance satisfactory to the Trustee.

            (b) In the event that the Trustee no longer serves as Trustee for
the Collateral, the Trustee, the Account Holder and the Pledgor shall make
arrangements for another Person to assume the rights and obligations of the
Trustee hereunder, and such Person shall have executed, together with the
Account Holder and the Pledgor, a control agreement in favor of such Person and
the Holders of the Notes in substantially the form of this Agreement or
otherwise in form and substance satisfactory to the Trustee.

            (c) Sections 7 and 8 will survive termination of this Agreement.

            SECTION 9. Conflict with Other Agreements. (a) In the event of any
conflict between this Agreement (or any portion thereof) and any other agreement
now existing or hereafter entered into, the terms of this Agreement shall
prevail;

            (b) No amendment or modification of this Agreement or waiver of any
right hereunder shall be binding on any party hereto unless it is in writing and
is signed by all of the parties hereto;

            (c) The Account Holder hereby confirms and agrees that:

            (i) There are no other agreements entered into between the Account
      Holder and the Pledgor with respect to the Pledged Account;

            (ii) It has not entered into, and until the termination of the this
      Agreement will not enter into, any agreement with any other person
      relating to the Pledged Account and/or any financial assets credited
      thereto pursuant to which it has agreed to comply with entitlement orders
      (as defined in Section 8-102(a)(8) of the UCC) of such other person; and

            (iii) It has not entered into, and until the termination of this
      Agreement will not enter into, any agreement with the Pledgor or the
      Trustee purporting to limit or condition the obligation of the Account
      Holder to comply with Account Directions as set forth in Section 3 hereof.

            SECTION 10. Permitted Investments. In accordance with the Pledge
Agreement, the Trustee shall direct the Account Holder with respect to the
selection of investments to be made with the funds in the Pledged Account.

            SECTION 11. Entire Agreement. This Agreement is the entire
agreement, and supersedes any prior agreements, and contemporaneous oral
agreements, of the parties

                                       6
<PAGE>

concerning its subject matter. The Trustee and the Account Holder shall be
entitled to all the rights, benefits, privileges and immunities accorded to the
Trustee under the Indenture.

            SECTION 12. Amendments. No modification, amendment or waiver of, nor
consent to any departure by any party from, any provision of this Agreement will
be effective unless made in writing signed by the parties hereto, and then such
waiver or consent shall be effective only in the specific instance and for the
purpose for which given.

            SECTION 13. Financial Assets. The Account Holder agrees with Trustee
and the Pledgor that, to the fullest extent permitted by applicable law, all
property credited from time to time to the Pledged Account will be treated as
financial assets under Article 8 of the UCC.

            SECTION 14. Notices. All notices, demands, requests, consents,
approvals and other communications required or permitted hereunder must be in
writing and will be effective upon receipt if delivered personally, or if sent
by facsimile transmission with confirmation of delivery, or by nationally
recognized overnight courier service, to the Pledgor's and the Trustee's
addresses as set forth in the Pledge Agreement, and to the Account Holder's
address as set forth below, or to such other address as any party may give to
the others in writing for such purpose.

            SECTION 15. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Pledgor, the Trustee and the Account
Holder, and thereafter shall be binding upon and inure to the benefit of the
Pledgor, the Trustee and the Account Holder and their respective successors and
assigns.

            SECTION 16. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of an original executed
counterpart of this Agreement.

            SECTION 17. Governing Law and Jurisdiction. THIS AGREEMENT WILL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK. Each of the parties hereby irrevocably submits for itself and its property
in any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the non-exclusive general
jurisdiction and venue of the courts of the State of New York, the courts of the
United States of America in New York, and appellate courts from any thereof.

            SECTION 18. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) OF
ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH
THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS. EACH
PARTY HERETO ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

                                       7
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.

                                    Pledgor:

                                    ALASKA AIR GROUP, INC.

                                    By:
                                       -----------------------------------------
                                       Name:  Bradley Tilden
                                       Title: Executive Vice President/Finance
                                              & Chief Financial Officer

<PAGE>

                                    Trustee:

                                    U.S. BANK NATIONAL ASSOCIATION
                                         as Trustee

                                    By:
                                      -----------------------------------------
                                      Name:
                                      Title:

<PAGE>

                                    Account Holder:

                                    U.S. BANK NATIONAL ASSOCIATION,
                                         as Account Holder

                                    By:
                                       -----------------------------------------
                                       Name:
                                       Title:

<PAGE>

                                   SCHEDULE I

                            Pledged Financial Assets

<TABLE>
<CAPTION>
 Par Amount            Ticker            Maturity Date
 ----------            ------            -------------
<S>                    <C>               <C>                       <C>
 1,452,000                B                  6/19/03               912795MS7
 1,422,000                SP                 8/15/03               912820BG1
 1,464,000                SP                 11/15/03              912820DJ3
 1,566,000                S                  2/15/04               912833CK4
 1,713,000                S                  5/15/04               912833FU9
 1,867,000                SP                 8/15/04               912820BK2
 1,987,000                S                  11/15/04              912833FV7
 2,096,000                S                  2/15/05               912833CM0
 2,247,000                S                  5/15/05               912833FW5
 2,423,000                S                  8/15/05               912833CN8
 2,377,000                SP                 11/15/05              912820BQ9
 2,322,000                SP                 2/15/06               912803AJ2
</TABLE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]