10-Q

                                                      FORM 10-Q

                                         SECURITIES AND EXCHANGE COMMISSION
                                               Washington, D.C.  20549


[X]      QUARTERLY  REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
         ACT OF 1934
         For the quarterly period ended September 30, 2003.


[   ]    TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES  EXCHANGE ACT OF
         1934


Commission file number:  0-24126



                                               FRONTIER AIRLINES, INC.
                               (Exact name of registrant as specified in its charter)



                        Colorado                                                84-1256945
(State or other jurisdiction of incorporated or organization)      (I.R.S. Employer Identification No.)


               7001 Tower Road, Denver, CO                                        80249
        (Address of principal executive offices)                                (Zip Code)


Issuer's telephone number including area code:  (720) 374-4200


Indicate by check mark whether the registrant  (1) has filed all reports  required to be
filed  by  Section  13 or  15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding  12 months (or for such  shorter  period that the  registrant  was required to
file such reports),  and (2) has been subject to such filing  requirements  for the past
90 days.  Yes  X   No     

Indicate by check mark whether the  Registrant  is an  accelerated  filer (as defined in
Rule 12b-2 of the Exchange Act). Yes  X  No     

The number of shares of the Company's  common stock  outstanding  as of November 1, 2003
was 35,190,768.






                                       TABLE OF CONTENTS

                                   PART I. FINANCIAL INFORMATION


                                                                                Page

Item 1.  Financial Information

         Financial Statements                                                    1

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                   9

Item 3.  Quantitative and Qualitative Disclosures About Market Risk             26

Item 4.  Controls and Procedures                                                27


                                   PART II. OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders                    28

Item 6.  Exhibits and Reports on Form 8-K                                       28







                                   PART I. FINANCIAL INFORMATION

Item 1.  Financial Information
FRONTIER AIRLINES, INC.
Balance Sheets


                                                     September 30, 2003       March 31, 2003


Assets
Current assets
   Cash and cash equivalents                           $ 201,332,308          $ 102,880,404
   Short-term investments                                  2,000,000              2,000,000
   Restricted investments                                 22,603,189             14,765,000
   Receivables, net of allowance for doubtful
    accounts of $241,000 and $237,000 at
    September 30, 2003 and March 31, 2003, respectively   22,186,140             25,856,692
   Income taxes receivable                                   329,823             24,625,616
   Security and other deposits                               912,399                912,399
   Prepaid expenses and other assets                       9,404,212              9,050,671
   Inventories, net of allowance of $2,478,000 at
    September 30, 2003 and March 31, 2003, respectively    5,780,345              5,958,836
   Deferred tax asset                                      7,410,930              4,788,831
         Total current assets                            271,959,346            190,838,449
   Property and equipment, net                           415,633,962            334,492,983
   Security and other deposits                            11,998,393              6,588,023
   Aircraft pre-delivery payments                         25,884,661             30,531,894
   Restricted investments                                  9,709,781              9,324,066
   Deferred loan fees and other assets, net                6,428,472             16,068,361
                                                       $ 741,614,615          $ 587,843,776
                                                     ===============        ===============
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                                    $  19,308,980          $  26,388,621
   Air traffic liability                                  77,050,721             58,875,623
   Other accrued expenses                                 40,763,309             22,913,659
   Current portion of long-term debt                      15,316,629             20,473,446
   Deferred revenue and other liabilities                  1,330,000              1,396,143
         Total current liabilities                       153,769,639            130,047,492
Long-term debt                                           279,378,528            261,738,503
Deferred tax liability                                    32,916,660             20,017,787
Deferred revenue and other liabilities                    20,096,590             17,072,868
         Total liabilities                               486,161,417            428,876,650
Stockholders' equity:
   Preferred stock, no par value, authorized 1,000,000
    shares; none issued                                       -                      -
   Common stock, no par value, stated value of $.001
    per share, authorized 100,000,000; 35,147,768 and
    29,674,050 issued and outstanding at September 30,
    2003 and March 31, 2003, respectively                     35,148                 29,674
   Additional paid-in capital                            180,663,677             96,424,525
   Unearned ESOP shares                                     (573,277)                -
   Other comprehensive loss                                 (116,690)                -
   Retained earnings                                      75,444,340             62,512,927
                                                         255,453,198            158,967,126
                                                       $ 741,614,615          $ 587,843,776
                                                     ===============        ===============

See accompanying notes to financial statements.






FRONTIER AIRLINES, INC.
Statements of Operations
(Unaudited)
                                               Three Months Ended              Six Months Ended
                                          September 30,   September 30,   September 30,    September 30,
                                              2003            2002           2003              2002     
Revenues:
   Passenger                             $ 159,964,675   $ 116,709,640   $ 298,855,237    $ 226,001,522
   Cargo                                     2,369,222       1,366,251       4,058,247        2,946,187
   Other                                     3,487,275       1,278,633       5,273,638        2,219,222 
         Total revenues                    165,821,172     119,354,524     308,187,122      231,166,931

Operating expenses:
   Flight operations                        42,267,994      38,236,779      84,433,315       75,320,183
   Aircraft fuel expense                    25,900,551      21,332,131      48,501,320       38,728,122
   Aircraft and traffic servicing           26,077,456      21,274,015      50,074,966       40,623,124
   Maintenance                              17,120,004      17,500,920      34,997,976       33,942,991
   Promotion and sales                      16,470,511      13,505,113      31,190,508       28,224,421
   General and administrative                9,784,376       6,574,920      18,720,012       12,696,791
   Depreciation and amortization             5,870,300       4,133,227      11,057,498        7,931,639 
         Total operating expenses          143,491,192     122,557,105     278,975,595      237,467,271 
         Operating income (loss)            22,329,980      (3,202,581)     29,211,527       (6,300,340)

Nonoperating income (expense):
   Interest income                             524,468         487,798         937,831        1,194,760
   Interest expense                         (4,034,387)     (1,895,668)     (7,868,780)      (3,154,979)
   Emergency Wartime Supplemental
   Appropriations Act compensation              -               -           15,024,188           -                                                                                                                                                                  15,024,188
   Early extinguishment of debt             (8,742,489)         -           (8,742,489)          -                                                                  (8,742,489)
   Aircraft lease and facility exit costs   (4,659,058)         -           (5,345,353)          -
   Loss on sale-leaseback of aircraft       (1,237,718)         -           (1,237,718)          -                                                                       (1,237,718)
   Other, net                                 (676,218)       (286,772)       (852,311)        (438,322)
         Total nonoperating expense, net   (18,825,402)     (1,694,642)     (8,084,632)      (2,398,541)

Income (loss) before income tax expense
   (benefit) and cumulative effect of
   change in method of accounting for
   maintenance                               3,504,578      (4,897,223)     21,126,895       (8,698,881)

Income tax expense (benefit)                 1,506,855      (1,842,729)      8,195,482       (3,171,966)

Income (loss) before cumulative effect of
   change in method of accounting for
   maintenance                               1,997,723      (3,054,494)     12,931,413       (5,526,915)

Cumulative effect of change in method of
   accounting for maintenance, net of tax       -               -               -             2,010,672 

Net income (loss)                          $ 1,997,723     $(3,054,494)   $ 12,931,413      $(3,516,243)
                                         ==============  ============== ===============   ==============

                                                                                                                                                                                                             (Continued)







FRONTIER AIRLINES, INC.
Statements of Operations
(Unaudited)
                                          September 30,   September 30,   September 30,   September 30,
                                              2003            2002            2003            2002      

Earnings (loss) per share:
  Basic:
   Income (loss) before cumulative effect
    of a change in accounting principle          $0.07          ($0.10)          $0.43           ($0.19)
   Cumulative effect of change in method of
    accounting for maintenance checks              -               -               -               0.07 
   Net income (loss)                             $0.07          ($0.10)          $0.43           ($0.12)
                                         ==============  ============== ===============   ==============

  Diluted:
   Income (loss) before cumulative effect
    of a change in accounting principle          $0.06          ($0.10)          $0.40           ($0.19)
   Cumulative effect of change in method of
    accounting for maintenance checks              -               -               -               0.07 
   Net income (loss)                             $0.06          ($0.10)          $0.40           ($0.12)
                                         ============== =============== ===============  ===============

Weighted average shares of
  common stock outstanding:
   Basic                                    30,440,589      29,632,898      30,133,571       29,583,870
                                         ============== =============== ===============  ===============
   Diluted                                  33,620,352      29,632,898      32,514,599       29,583,870
                                         ============== =============== ===============  ===============
See accompanying notes to financial statements.






FRONTIER AIRLINES, INC.
Statements of Stockholders' Equity and Other Comprehensive Loss
For the Year Ended March 31, 2003 and the Six Months Ended September 30, 2003



                                                                   Accumulated
                                           Additional   Unearned        Other                     Total
                                Common       paid-in      ESOP      Comprehensive   Retained   stockholders'
                                Stock        capital     shares         Loss        earnings     equity     
Balances, March 31, 2002      $ 29,422    $85,867,486 $(2,119,670)   $   -        $85,356,055  $169,133,293

Net loss                            -            -         -              -       (22,843,128)  (22,843,128)
Exercise of common stock options   252        616,695      -              -             -           616,947
Warrants issued in conjunction
   with debt agreement              -       9,282,538      -              -             -         9,282,538
Tax benefit from exercises of
   common stock options and
   warrants                         -         657,806      -              -             -           657,806
Contribution of common stock to
   employees stock ownership plan   -            -         -              -             -              -
Amortization of employee stock
   compensation                     -            -     2,119,670          -             -         2,119,670 
Balances, March 31, 2003        29,674     96,424,525      -              -        62,512,927   158,967,126 

Net income                          -            -         -              -        12,931,413    12,931,413
Other comprehensive loss -
 Unrealized loss on
 derivative instruments             -            -         -          (116,690)         -          (116,690)
Total comprehensive income                                                                       12,814,723 

Sale of common stock, net of
 offering costs of $257,000      5,050     81,080,419      -              -             -        81,085,469
Exercise of common stock
 options                            76        348,974      -              -             -           349,050
Tax benefit from exercises of
 common stock options and
 warrants                           -         516,999      -              -             -           516,999
Contribution of common stock to
 employees stock ownership plan    348      2,292,760    (2,293,108)      -             -              -
Amortization of employee stock
 compensation                       -            -        1,719,831       -             -         1,719,831 
Balances, September 30, 2003   $35,148   $180,663,677    $ (573,277) $(116,690)   $75,444,340  $255,453,198
                             ==================================================================================

See accompanying notes to financial statements.






FRONTIER AIRLINES, INC.
Statements of Cash Flows
For the Six Months Ended September 30, 2003 and 2002
(Unaudited)

                                                                  2003                2002
Cash flows from operating activities:
   Net income (loss)                                          $ 12,931,413       $ (3,516,243)
   Adjustments to reconcile net income (loss) to net cash
    provided (used) by operating activities:
      Employee stock plan compensation expense                   1,197,879          1,413,113
      Depreciation and amortization                             11,057,498          7,931,639
      Loss on disposal of equipment                              2,246,836              -
      Unrealized derivative gain                                  (358,743)             -
      Deferred tax expense                                      10,276,774          5,282,898
      Changes in operating assets and liabilities:
        Restricted investments                                  (8,841,604)        (8,434,423)
        Receivables                                              3,670,552          3,756,330
        Income taxes receivable                                 24,295,793           (311,321)
        Security, maintenance and other deposits                (2,719,470)          (450,300)
        Prepaid expenses and other assets                         (353,541)         1,680,945
        Inventories                                                178,491           (689,900)
        Deferred loan and other expenses                        10,870,936           (559,797)
        Accounts payable                                        (7,079,641)        (1,510,843)
        Air traffic liability                                   18,175,098         (3,100,527)
        Other accrued expenses                                  18,421,955         (3,104,387)
        Deferred stabilization act compensation                      -             (4,000,000)
        Accrued maintenance expense                                  -             (3,196,617)
        Deferred revenue and other liabilities                   2,957,579          2,159,384
          Net cash provided (used) by operating activities      96,927,805         (6,650,049)

Cash flows from investing activities:
   Decrease (increase) in aircraft lease and purchase
     deposits, net                                               1,956,333        (10,235,887)
   Decrease in restricted investments                              617,700            411,800
   Capital expenditures                                        (94,445,313)       (98,755,494)
          Net cash used by investing activities                (91,871,280)      (108,579,581)

Cash flows from financing activities:
   Net proceeds from issuance of common stock                   81,951,518            570,976
   Proceeds from long-term borrowings                           76,500,000         73,200,000
   Payment of financing fees                                    (1,039,347)          (988,351)
   Principal payments on long-term borrowing                   (64,016,792)        (2,542,438)
          Net cash provided by financing activities             93,395,379         70,240,187

          Net increase (decrease) in cash and cash equivalents  98,451,904        (44,989,443)

Cash and cash equivalents, beginning of period                 102,880,404         87,555,189

Cash and cash equivalents, end of period                     $ 201,332,308       $ 42,565,746
                                                           ================    ===============

See accompanying notes to financial statements.





FRONTIER AIRLINES, INC.
Notes to Financial Statements
September 30, 2003


(1)  Basis of Presentation

     The accompanying  unaudited  financial  statements have been prepared in accordance
     with generally  accepted  accounting  principles for interim financial  information
     and the  instructions  to Form 10-Q and Regulation  S-X.  Accordingly,  they do not
     include  all of the  information  and  footnotes  required  by  generally  accepted
     accounting  principles  for  complete  financial  statements  and should be read in
     conjunction  with the Company's Annual Report on Form 10-K for the year ended March
     31,  2003.  In the  opinion of  management,  all  adjustments  (consisting  only of
     normal recurring  adjustments)  considered  necessary for a fair  presentation have
     been  included.  The  results  of  operations  for the three and six  months  ended
     September  30, 2003 are not  necessarily  indicative  of the  results  that will be
     realized for the full year.

(2)  Summary of Significant Accounting Policies

     Stock-Based Compensation

     The Company follows  Accounting  Principles  Board Opinion No. 25,  "Accounting for
     Stock Issued to  Employees"  ("APB 25") and related  Interpretations  in accounting
     for its employee stock options and follows the  disclosure  provisions of Statement
     of Financial  Accounting  Standards No. 123 (SFAS 123). The Company  applies APB 25
     and  related  Interpretations  in  accounting  for  its  plans.   Accordingly,   no
     compensation  cost is recognized  for options  granted at a price equal to the fair
     market  value of the  Common  Stock on the date of  grant.  Pro  forma  information
     regarding  net income and  earnings  per share is required by SFAS 123,  which also
     requires  that the  information  be  determined as if the Company has accounted for
     its  employee  stock  options  under the fair value method of that  Statement.  Had
     compensation cost for the Company's  stock-based  compensation plan been determined
     using the fair value of the options at the grant date,  the Company's pro forma net
     income (loss) and earnings (loss) per share would be as follows:

                                               Three Months Ended             Three Months Ended
                                          September 30,   September 30,   September 30,  September 30,
                                              2003            2002            2003           2002       
         Net income (loss):
           As Reported                    $  1,997,723    $ (3,054,494)   $ 12,931,413   $   (3,516,243)
           Pro Forma                      $  1,378,809    $ (3,592,239)   $ 11,864,756   $   (6,113,647)

         Earnings (loss) per share, basic:
           As Reported                    $       0.07    $      (0.10)   $       0.43   $        (0.12)
           Pro Forma                      $       0.05    $      (0.12)   $       0.39   $        (0.21)

         Earnings (loss) per share, diluted:
           As Reported                    $       0.06    $      (0.10)   $       0.40   $        (0.12)
           Pro Forma                      $       0.04    $      (0.12)   $       0.36   $        (0.21)






FRONTIER AIRLINES, INC.
Notes to Financial Statements
September 30, 2003


     Interest Rate Hedging Program

     During the six months ending  September 30, 2003,  the Company  designated  certain
     interest  rate  swaps  as  qualifying   cash  flow  hedges.   Under  these  hedging
     arrangements,  the  Company is hedging  the  interest  payments  associated  with a
     portion of its  LIBOR-based  borrowings.  Under the swap  agreements,  the  Company
     pays a fixed  rate of  interest  on the  notional  amount of the  contracts  of $27
     million,  and it  receives a variable  rate of  interest  based on the three  month
     LIBOR  rate,  which is reset  quarterly.  Interest  expense  for the  three and six
     months  ended  September  30,  2003  includes  $93,000 and  $172,000 of  settlement
     amounts  payable to the counter party for the period.  Changes in the fair value of
     interest rate swaps  designated as hedging  instruments are reported in accumulated
     other  comprehensive  income.  These  amounts are  subsequently  reclassified  into
     interest  expense as a yield  adjustment  in the same  period in which the  related
     interest payments on the LIBOR-based  borrowings  affects  earnings.  Approximately
     $117,000 of unrealized losses are included in accumulated other  comprehensive loss
     at September 30, 2003 and are expected to be reclassified  into interest expense as
     a yield adjustment of the hedged interest payments over the next 12 months.

(3)  Government Assistance

     The Emergency Wartime Supplemental  Appropriations Act (the "Appropriations  Act"),
     enacted in April 2003, made available  approximately  $2.3 billion to U.S. flag air
     carriers  for  expenses  and revenue  foregone  related to aviation  security.  The
     payment  received by each  carrier was for the  reimbursement  of the TSA  security
     fees, the September 11th Security Fee and/or the Aviation  Security  Infrastructure
     Fee paid by the  carrier as of the date of  enactment  of the  Appropriations  Act.
     According to the Appropriations  Act, an air carrier may use the amount received as
     the air  carrier  determines.  Pursuant  to the  Appropriations  Act,  the  Company
     received  $15,573,000 in May 2003, of which $549,000 was paid to Mesa Air Group for
     the revenue passengers Mesa carried as Frontier JetExpress.

     The  Appropriations  Act provides for additional  reimbursements to be made to U.S.
     flag air carriers for costs incurred  related to the FAA  requirements for enhanced
     flight deck door security  measures that were mandated as a result of the September
     11 terrorist  attacks.  Pursuant to the  Appropriations  Act, the Company  received
     $889,000 in September  2003 for expenses  related to the  installation  of enhanced
     flight deck doors on its  aircraft,  $275,000 of which was  recorded as a reduction
     to property  and  equipment,  net,  and  $614,000  was  recorded as a reduction  to
     maintenance expense.

(4)  Stockholders' Equity

     Common Stock

     The Company  completed a secondary  public  offering of 5,050,000  shares of common
     stock  in  September  2003.  The  Company  received  $81,085,000,  net of  offering
     expenses,  from the  sale of  these  shares.  See  note 5 for a  discussion  of the
     required  prepayment of the  Company's  government  guaranteed  loan as a result of
     this sale of stock.  Additionally, the government guaranteed loan includes certain
     anti-dilution adjustments in the event of any sale of the Company's common stock.
     As a result, the exercise price of the warrants issued in connection with the loan
     was adjusted from $6.00 per share to $5.92 per share.  The total warrants outstanding
     at September 2003 in connection with the loan was 3,833,945.





FRONTIER AIRLINES, INC.
Notes to Financial Statements
September 30, 2003


(5)  Long-Term Debt

     Government Guaranteed Loan

     In  July  2003,  the  Company   received  a  federal  income  tax  refund  totaling
     $26,574,000 from the Internal Revenue Service.  The Company prepaid  $10,000,000 on
     its  government  guaranteed  loan upon  receipt of this  refund as  required by the
     terms of the loan agreement.

     The government  guaranteed loan also required a prepayment  equal to 60% of the net
     proceeds  from any sales of common  stock.  As a result of the sale of common stock
     (see note 4) in September  2003, the Company prepaid  approximately  $48,418,000 on
     the  loan.  As a  result  of the  prepayments  made  during  the six  months  ended
     September 30, 2003,  the remaining  loan balance is  approximately  $11,582,000  at
     September 30, 2003.  The remaining  principal  payments under the loan will consist
     of  $571,000   payable  in  September   2004,   four  quarterly   installments   of
     approximately  $2,643,000  beginning  in December  2004,  and one final  payment of
     $439,000 in December 2005.

     Other Long-Term Debt

     During the six months ended September 30, 2003, the Company  borrowed an additional
     $76,500,000  for the purchase of three Airbus A318  aircraft.  Each  aircraft  loan
     has a term of 12 years and is payable in monthly installments,  including interest,
     payable in arrears,  with a floating  interest  rate  adjusted  quarterly  based on
     LIBOR plus a margin of 2.25%.  At the end of the term,  there is a balloon  payment
     of $3,060,000 for each aircraft loan.  The loans are secured by the aircraft.










Item 2:  Management's Discussion and Analysis of Financial Condition and Results of
Operations

This report  contains  forward-looking  statements  within the meaning of Section 21E of
the  Securities  Exchange  Act of 1934 that  describe  the  business  and  prospects  of
Frontier  Airlines,  Inc.  and the  expectations  of our  company  and  management.  All
statements,  other than  statements  of historical  facts,  included in this report that
address  activities,   events  or  developments  that  we  expect,  believe,  intend  or
anticipate will or may occur in the future, are  forward-looking  statements.  When used
in  this  document,   the  words   "estimate,"   "anticipate,"   "project"  and  similar
expressions  are  intended  to  identify  forward-looking  statements.   Forward-looking
statements are inherently  subject to risks and  uncertainties,  many of which cannot be
predicted  with  accuracy and some of which might not even be  anticipated.  These risks
and  uncertainties  include,  but are  not  limited  to:  the  timing  of,  and  expense
associated  with,  expansion and  modification  of our operations in accordance with our
business  strategy  or in  response  to  competitive  pressures  or other  factors;  the
inability to obtain  sufficient  gates at Denver  International  Airport to  accommodate
the  expansion  of  our  operations;  general  economic  factors  and  behavior  of  the
fare-paying  public and its  potential  impact on our  liquidity;  terrorist  attacks or
other  incidents  that could cause the public to question the safety  and/or  efficiency
of air travel; operational disruptions,  including weather; industry consolidation;  the
impact of labor disputes;  enhanced security  requirements;  changes in the government's
policy   regarding  relief  or  assistance  to  the  airline   industry;   the  economic
environment of the airline industry  generally;  increased  federal scrutiny of low-fare
carriers  generally that may increase our operating costs or otherwise  adversely affect
us; actions of competing  airlines,  such as increasing  capacity and pricing actions of
United  Airlines  and other  competitors  and  other  actions  taken by United  Airlines
either in or out of  bankruptcy  protection;  the  availability  of  suitable  aircraft,
which may  inhibit  our  ability  to  achieve  operating  economies  and  implement  our
business  strategy;  the  unavailability  of, or  inability  to secure  upon  acceptable
terms,  financing  necessary  to  purchase  aircraft  which  we have  ordered  or  lease
aircraft we anticipate  adding to our fleet through lease financing;  issues relating to
our  transition  to an Airbus  aircraft  fleet;  uncertainties  regarding  aviation fuel
prices;  and  uncertainties as to when and how fully consumer  confidence in the airline
industry  will be  restored,  if ever.  Because our  business,  like that of the airline
industry  generally,  is characterized  by high fixed costs relative to revenues,  small
fluctuations  in our yield per available  seat mile ("RASM") or cost per available  seat
mile ("CASM") can  significantly  affect  operating  results.  See "Risk Factors" in our
Form 10-K for the year ended March 31, 2003 and our Form 8-K filed  September  19, 2003,
which updates our risk factors.

General

       We are a  scheduled  passenger  airline  based in  Denver,  Colorado.  We are the
second  largest jet  service  carrier at Denver  International  Airport  ("DIA").  As of
November 1, 2003,  we, in  conjunction  with  Frontier  JetExpress  operated by Mesa Air
Group  ("Mesa"),  operate  routes  linking  our  Denver  hub to 37  cities  in 22 states
spanning  the  nation  from coast to coast and to three  cities in Mexico.  We are a low
cost,  affordable fare airline  operating in a hub and spoke fashion  connecting  points
coast to coast.  We were  organized in February  1994 and we began flight  operations in
July 1994 with two leased  Boeing  737-200  jets.  We have since  expanded  our fleet in
service  to 39 jets  (26 of which we  lease  and 13 of which we own),  consisting  of 14
Boeing  737-300s,  21 Airbus  A319s,  and four  Airbus  A318s.  In May 2001,  we began a
fleet  replacement  plan to replace our Boeing  aircraft  with new  purchased and leased
Airbus jet aircraft,  a transition we expect to complete by  approximately of the end of
calendar  year  2005.  As of  November  1, 2003,  we no longer  operate  Boeing  737-200
aircraft.  During  the three and six months  ended  September  30,  2003,  we  increased
capacity  by 10.4% and 16.0% over the prior  comparable  periods,  respectively.  In the
three and six months ended September 30, 2003, we increased  passenger  traffic by 42.8%
and 37.1% over the prior  comparable  periods,  respectively,  outpacing our increase in
capacity during the periods.

       We currently  lease 10 gates at DIA.  Together  with our  regional jet  codeshare
partner,  Frontier  Jet  Express,  we use up to 14 gates at DIA and three  regional  jet
parking  positions,  where we operate  approximately  180 daily system flight departures
and arrivals and 22 Frontier  JetExpress daily system flight  departures and arrivals at
DIA.  We have  signed a letter  of  intent  to lease an  additional  gate at DIA and are
waiting  final  lease  documentation  to add that  gate to our lease  agreement.  In the
meantime,  we are using this  additional  gate with  preference  over all other domestic
flights.  DIA has also commenced  construction  of two additional  gates at the west end
of Concourse A where we now operate.  Upon  completion  of the  construction,  we intend
to  lease  the  two  additional  gates  on a  preferential  basis.  At  this  time it is
anticipated  these two  additional  gates will be available in late Spring 2004.  On
November 9, 2003, the City and County of Denver and United Airlines announced that they
reached agreement with respect to the restructuring of United's lease of gates and other
facilities at DIA.  The agreement will permit United to proceed with the assumption of
the restructured lease as part of its bankruptcy reorganization process.  As part of that
settlement, we are advised that United has agreed to relinquish one gate on Concourse A
that DIA would then lease to Frontier on a permanent basis.  In addition, United would
make available two additional gates for use by Frontier until the earlier of the
construction of additional gates for Frontier on the West end of Concourse A or October 31,
2005.  We are currently in discussions with DIA to develop detailed plans relating to an
expansion of Concourse A to add additional gates for Frontier's future use.

       We began service to Orange County, California and Milwaukee,  Wisconsin on August
31,  2003  with two and  three  daily  round-trips,  respectively,  and we added a third
round-trip to Orange County,  California on October 1, 2003.  Additionally,  On November
1, 2003 we began service to St. Louis,  Missouri with two daily round-trip flights,
resumed our seasonal  service to Mazatlan,  Mexico with one weekly round-trip frequency,
increasing to three weekly round-trip frequencies on November 22, 2003; and began service
to Cabo San Lucas with one weekly round-trip frequency, increasing  to three weekly round-
trip frequencies beginning on November  22,  2003.  We intend to begin  service  to Puerto
Vallarta,  Mexico on November 22, 2003 with three weekly  round-trip  frequencies and to
Ixtapa/Zihuatanejo,   Mexico,   on  January   31,   2004  with  two  weekly   round-trip
frequencies.  We have  applied  for  authority  to add a third  frequency  at New York's
LaGuardia  airport.  There can be no  assurances  that we will receive the  authority to
do so.

       In June 2003,  we entered into an agreement  with  Kinetics,  Inc., a provider of
enterprise and  self-service  technology to the U.S. airline  industry,  to deploy their
new  automated  check-in  system.  The launch of  "FlexCheck,"  our suite of airport and
web-based  automated  check-in  services,   utilizes  Kinetics'  TouchPort  self-service
terminals  and  associated   Kinetics  software   solutions  for  airport  and  Internet
check-in.  FlexCheck  became  available  via the  Internet  in early  August  2003  with
deployment of  self-service  kiosks at our hub at DIA in September 2003. The system will
allow our  customers  to check in for their  flights  using a standard  credit  card for
identification  purposes  only,  their  EarlyReturns  frequent  flyer  number,  E-ticket
number or confirmation number.

       On  September  18,  2003,  we  signed  a  12  year  agreement  with  Horizon  Air
Industries,  Inc.  ("Horizon")  under which  Horizon will operate up to nine 70-seat CRJ
700 aircraft  under our  Frontier  JetExpress  brand.  The service will begin on January
1,  2004  with  four  aircraft,  and the  remaining  aircraft  will be added to  service
periodically  through May 2004.  We will  control the  scheduling  of this  service.  We
will  reimburse  Horizon for its expenses  related to the operation  plus a margin.  The
agreement provides for financial  incentives,  penalties and changes to the margin based
on  performance  of Horizon and our  financial  performance.  This  service will replace
our current codeshare  arrangement with Mesa Airlines,  which terminates on December 31,
2003.

       In   March   2003,   we   entered   into   an   agreement   with   Juniper   Bank
(WWW.JUNIPERBANK.COM),  a full-service credit card issuer, to offer exclusively Frontier
MasterCard products to consumers,  customers and Frontier's  EarlyReturns frequent flyer
members.  We launched the  co-branded  credit card in May 2003.  As of November 1, 2003,
Juniper  Bank has issued  approximately  23,170 of these credit  cards.  We believe that
the  Frontier/Juniper  Bank co-branded  MasterCard will offer one of the most aggressive
affinity  card  programs  because  free  travel  can be  earned  for as little as 15,000
miles.

       In October  2002,  we signed a purchase and  long-term  services  agreement  with
LiveTV  to bring  DIRECTV  AIRBORNE(TM)satellite  programming  to every  seatback  in our
Airbus fleet.  In February 2003, we completed the  installation  of the LiveTV system on
all Airbus A319  aircraft.  The installed  systems  became  operational  upon receipt of
regulatory  approval in December  2002. We are moving forward with the  installation  of
the LiveTV  systems in our Airbus  A318  aircraft  and  anticipate  these  systems  will
become  operational  by January 2004. We have  implemented a $5 per segment usage charge
for access to the system to offset the costs for the system  equipment,  programming and
services.  We  believe  the  DIRECTV(TM)product  represents  a  significant  value to our
customers and offers a competitive advantage for our company.

       In September  2001, we entered into a codeshare  agreement  with Mesa.  Under the
terms  of the  agreement,  we  market  and sell  flights  operated  by Mesa as  Frontier
JetExpress using five 50-passenger  Bombardier  CRJ-200 regional jets.  Effective May 4,
2003,  Frontier Jet Express replaced our mainline service to Tucson,  Arizona,  Oklahoma
City,  Oklahoma  and  Boise,  Idaho  and  terminated  service  to  Oakland,  California.
Frontier  JetExpress also provides service to Ontario,  California and Wichita,  Kansas,
and supplements our mainline service to San Jose,  California,  Albuquerque,  New Mexico
and Austin,  Texas. Mesa terminated  service to Wichita,  Kansas on October 31, 2003 and
this  service was  replaced by Great  Lakes  Aviation,  Ltd.  ("Great  Lakes"),  another
codeshare  partner,  on November 1, 2003.  In February  2003,  we amended our  codeshare
agreement  with  Mesa  from  a  prorate-based  compensation  method  to  a  "cost  plus"
compensation  method  effective  March 1, 2003 through August 31, 2003. In June 2003, Mesa
and us agreed to extend the term  through  December  31,  2003.  Horizon replaces Mesa
as the Frontier  JetExpress  operation  on January 1, 2004 as  previously discussed.

       Effective  July 9, 2001,  we began a codeshare  agreement  with Great  Lakes.  We
recently  added two  additional  markets  under the  codeshare  agreement:  Rapid  City,
South  Dakota on July 30,  2003 and to Grand  Junction,  Colorado  on  August  1,  2003.
Including  these two new cities,  Great Lakes  provides  service to 36 regional  markets
located in  Arizona,  Colorado,  Kansas,  New  Mexico,  Nebraska,  North  Dakota,  South
Dakota, Texas, Utah, and Wyoming under this codeshare agreement.

       Our filings with the Securities and Exchange  Commission are available at no cost
on our website,  WWW.FRONTIERAIRLINES.COM,  in the Investor  Relations  folder contained
in the section  titled  "About  Frontier".  These  reports  include our annual report on
Form 10-K, our quarterly  reports on Form 10-Q,  current reports on Form 8-K, Section 16
reports on Forms 3, 4 and 5, and any  related  amendments  or other  documents,  and are
typically available within two days after we file the materials with the SEC.

       Our  corporate  headquarters  are  located at 7001 Tower Road,  Denver,  Colorado
80249.   Our   administrative   office   telephone   number  is  720-374-4200   and  our
reservations telephone number is 800-432-1359.


Results of Operations

       We had net income of $1,998,000 or 6¢ per diluted share for the three  months
ended September 30, 2003 as compared to a net loss of  $3,055,000, or 10¢ per share
for the three months ended September 30, 2002.  Included in our net income for the three
months  ended  September  30,  2003 were the  following  special  items on a pre-tax and
profit  sharing  basis;   write-off  of  deferred  loan  costs  of $8,742,000 associated
with the prepayment of all but $11,582,000 remaining principal of the government guaranteed
loan; a charge for Boeing  aircraft and facility lease exit costs of  $4,659,000; loss of
$1,721,000  on the sale of one Airbus aircraft in a sale-leaseback transaction  and from
the sale of a spare engine;  and an unrealized  derivative loss of $276,000. These items,
net of income taxes and profit sharing, totaled $0.27 per diluted share.

       We had net income of $12,931,000 or 40¢per diluted  share for the six months
ended  September  30, 2003 as compared to a net loss of  $3,516,000,  before  cumulative
effect of change in accounting for maintenance checks,  or 19¢per share for the six
months ended  September  30,  2002.  Included in our net income for the six months ended
September  30, 2003 were the  following  special  items on a pre-tax and profit  sharing
basis;  $15,024,000 of compensation received under the Appropriations Act; write-off  of
deferred  loan costs of $8,742,000 associated with the prepayment of all but $11,582,000
remaining principal of the government guaranteed loan; a charge for Boeing aircraft  and
facility  lease  exit  costs of $5,345,000; loss of $1,721,000 on the sale of one Airbus
aircraft in a sale-leaseback transaction and from the sale of a spare engine;  and an
unrealized derivative  gain of  $475,000.  These items, net of income  taxes and  profit
sharing, totaled $0.03 per diluted share.






       The following table provides  certain of our financial and operating data for the
three month and six month periods ended September 30, 2003 and 2002.


                                          Three Months Ended Sept. 30,      Six Months Ended Sept. 30,
                                              2003          2002                2003           2002     
Selected Operating Data:
Passenger revenue (000s) (1)              $  159,965    $  116,710          $  298,855     $  226,002
Revenue passengers carried (000s)              1,457           987               2,684          1,916
Revenue passenger miles (RPMs) (000s) (2)  1,318,020       922,817           2,443,253      1,782,421
Available seat miles (ASMs) (000s) (3)     1,721,397     1,559,879           3,396,447      2,929,278
Passenger load factor (4)                      76.6%         59.2%               71.9%          60.8%
Break-even load factor (1) (5)                 74.9%         61.7%               65.0%          63.2%
Block hours (6)                               33,908        30,875              67,035         58,554
Departures                                    15,078        13,583              29,688         25,767
Average aircraft stage length (miles)            858           870                 860            861
Average passenger length of haul (miles)         905           935                 910            930
Average daily fleet block hour utilization(7)   10.0           9.9                10.1            9.9
Passenger yield per RPM (cents) (8) (9)        12.09         12.57               12.18          12.64
Passenger yield per ASM (cents) (9) (10)        9.26          7.44                8.76           7.69
Total yield per ASM (cents) (10)                9.63          7.65                9.07           7.89
Cost per ASM (cents)                            8.34          7.86                8.21           8.11
Fuel cost per ASM (cents) (12)                  1.51          1.37                1.43           1.32
Cost per ASM excluding fuel (cents)             6.83          6.49                6.78           6.78
Average fare (13)                         $      103    $      109          $      104     $      108
Average aircraft in service                     37.0          33.8                36.3           32.2
Aircraft in fleet at end of period              38.0          35.0                38.0           35.0
Average age of aircraft at end of period         4.6           9.3                 4.6            9.3

(1)  "Passenger revenue" includes revenues for non-revenue passengers, administrative
     fees, and revenue recognized for unused tickets that are greater than one year
     from issuance date.
(2)  "Revenue passenger miles," or RPMs, are determined by multiplying the number of
     fare-paying passengers carried by the distance flown.
(3)  "Available seat miles," or ASMs, are determined by multiplying the number of seats
     available for passengers by the number of miles flown.
(4)  "Passenger load factor" is determined by dividing revenue passenger miles by
     available seat miles.
(5)  "Break-even load factor" is the passenger load factor that will result in
     operating revenues being equal to operating expenses, assuming constant revenue
     per passenger mile and expenses.  The break-even load factor for the three months
     ended September 30, 2003 includes special items net of profit-sharing; write-off
     of deferred loan costs of $8,624,000 associated with the prepayment of the
     guaranteed loan; a charge for Boeing aircraft and facility lease exit costs of
     $4,292,000; loss of $1,586,000 on the sale of one Airbus aircraft in a
     sale-leaseback transaction and from the sale of a spare engine; and an unrealized
     derivative loss of $254,000.  The break-even load factor for the six months ended
     September 30, 2003 includes special items net of profit-sharing; compensation
     received under the Appropriations Act of $13,842,000; write-off of deferred loan
     costs of $8,624,000 associated with the prepayment of the guaranteed loan; a
     charge for Boeing aircraft and facility lease exit costs of $4,924,000; loss of
     $1,586,000 on the sale of one Airbus aircraft in a sale-leaseback transaction and
     from the sale of a spare engine; and an unrealized derivative gain of $438,000.
(6)  "Block hours" represent the time between aircraft gate departure and aircraft gate
     arrival.
(7)  "Average daily block hour utilization" represents the total block hours divided
     by the number of aircraft days in service, divided by the weighted average of
     aircraft in our fleet during that period.  The number of aircraft includes all
     aircraft on our operating certificate, which includes scheduled aircraft, as well
     as aircraft out of service for maintenance and operation spare aircraft, and excludes
     aircraft removed permanently from revenue service or new aircraft not yet placed in
     revenue service.
(8)  "Yield per RPM" is determined by dividing passenger revenues (excluding charter revenue)
     by revenue passenger miles.



(9)  For purposes of these yield calculations, charter revenue is excluded from passenger
     revenue.  These figures may be deemed non-GAAP financial measures under regulations
     issued by the Securities and Exchange Commission.  We believe that presentation of
     yield excluding charter revenue is useful to investors because charter flights are not
     included in RPMs or ASMs.  Furthermore, in preparing operating plans and
     forecasts, we rely on an analysis of yield exclusive of charter revenue.  Our
     presentation of non-GAAP financial measures should not be viewed as a substitute
     for our financial or statistical results based on GAAP.  The calculation of
     passenger revenue excluding charter revenue is as follows:

                                             Three Months Ended Sept. 30,       Six Months Ended Sept. 30,
                                             2003                    2002       2003                  2002  
     Passenger revenues, as reported       $159,965                $116,710   $298,855              $226,002
     Charter revenue                            580                     721      1,194                   779
     Passenger revenues, excluding
     charter revenue                      $159,385                $115,989   $297,661              $225,223
                                          ================================== ================================

(10) "Yield per ASM" is determined by dividing passenger revenues (excluding charter revenue) by
     available seat miles.
(11) "Total yield per ASM" is determined by dividing passenger revenues by available seat miles.
(12) This may be deemed a non-GAAP financial measure under regulations issued by the Securities
     and Exchange Commission.  We believe the presentation of financial information excluding fuel
     expense is useful to investors because we believe that fuel expense tends to
     fluctuate more than other operating expenses, it facilitates comparison of results
     of operations between current and past periods and enables investors to better
     forecast future trends in our operations.  Furthermore, in preparing operating
     plans and forecasts, we rely, in part, on trends in our historical results of
     operations excluding fuel expense.  However, our presentation of non-GAAP
     financial measures should not be viewed as a substitute for our financial results
     determined in accordance with GAAP.
(13) "Average fare" excludes revenue included in passenger revenue for non-revenue passengers,
     administrative fees, and revenue recognized for unused tickets that are greater
     than one year from issuance date.


       The following  table  provides our operating  revenues and expenses  expressed as
cents per total ASMs and as a percentage of total operating  revenues,  as rounded,  for
the three and six month periods ended September 30, 2003 and 2002.

                                             Three Months Ended September 30,   Six Months Ended September 30,     
                                                  2003               2002             2003            2002         
                                              Per       %       Per       %      Per       %       Per       %
                                             total     of      total     of     total     of      total     of
                                              ASM    Revenue    ASM    Revenue   ASM    Revenue    ASM    Revenue  
Revenues:
     Passenger                                9.29    96.5%     7.48    97.8%    8.80    97.0%     7.71    97.8%
     Cargo                                    0.14     1.4%     0.09     1.1%    0.12     1.3%     0.10     1.3%
     Other                                    0.20     2.1%     0.08     1.1%    0.15     1.7%     0.08    0.09%   
Total revenues                                9.63   100.0%     7.65   100.0%    9.07   100.0%     7.89   100.0%
                                           ==========================================================================

Operating expenses:
    Flight operations                         2.46    25.5%     2.71    32.0%    2.48    27.4%     2.57    32.6%
    Aircaft fuel expense                      1.51    15.6%     1.12    17.9%    1.43    15.7%     1.32    1.67%
    Aircraft and traffic servicing            1.51    15.7%     1.36    17.8%    1.47    16.2%     1.39    17.6%
    Maintenance                               0.99    10.3%     1.12    14.7%    1.03    11.4%     1.16    14.7%
    Promotion and sales                       0.96    10.0%     0.87    11.3%    0.92    10.1%     0.97    12.2%
    General and administrative                0.57     5.9%     0.42     5.5%    0.55     6.1%     0.43     5.5%
    Depreciation and amortization             0.34     3.5%     0.26     3.5%    0.33     3.6%     0.27     3.4%   
Total operating expenses                      8.34    86.5%     7.86   102.7%    8.21    90.5%     8.11   102.7%
                                           ==========================================================================


     Our  passenger  yield per RPM was 12.09¢and 12.57¢for  the  three  months
ended September 30, 2003 and 2002, respectively, or a decrease of 3.8%. Our length of haul
was 905 and 935 for the three months ended  September  30, 2003 and 2002,  respectively,
or a decrease of 3.2%.  Our average fare was $103 for the three  months ended  September
30, 2003 as compared to $109 for the three months ended  September  30, 2002, a decrease
of 5.5%.  Our passenger yield per RPM was 12.18¢and 12.64¢for the six months
ended September 30, 2003 and 2002, respectively, or a decrease of 3.6%. Our length of haul
was 910 and 930 for the six months ended  September  30, 2003 and 2002,  respectively,
or a decrease of 2.2%.  Our  average  fare was $104 for the six months  ended  September
30, 2003 as compared to $108 for the six months  ended  September  30,  2002, a decrease
of 3.7%.  As part of our new fare  structure,  which we  implemented  in February  2003,
our  highest-level  business  fares  were  reduced by 25 to 45  percent,  and our lowest
available  walk-up  fares were  reduced  by 38 to 77  percent.  The new fare  structure,
which is  comprised  of six fare  categories,  caps all fares to and from Denver at $399
or $499 one-way,  excluding passenger facility,  security or segment fees,  depending on
length of haul.  Unlike  some  other  airlines,  these  fares  can be  booked  each way,
allowing  customers  to get the best price on both the inbound and  outbound  portion of
their itinerary with no round-trip  purchase  required.  Our new fare structure  removes
the  advance  purchase  requirements  of  past  pricing  structures,  and  there  are no
Saturday night stayovers  required.  Although this has created downward  pressure on our
passenger  yield per RPM and average  fare,  we believe the effect on our  revenues  was
offset  by an  increase  in  passenger  traffic.  Our RASM for the  three  months  ended
September 30, 2003 and 2002 was 9.26¢and 7.44¢, an increase of 24.5%. Our RASM
for the six months ended September 30, 2003 and 2002 was 8.76¢and 7.69¢, an
increase of 13.9%.  Additionally, we believe that our average fare during the three and
six months ended September 30, 2003 was a result of intense competition from United
Airlines, a carrier operating under Chapter 11 bankruptcy protection, which is our
principal competitor at DIA.

       Our CASM for the three months ended September 30, 2003 and 2002 was 8.34¢
and 7.86¢, respectively, an increase of .48¢or 6.1%. CASM excluding fuel for
the three months ended September 30, 2003 and 2002 was 6.83¢and 6.49¢,
respectively, an increase of .34¢or 5.2%. Our CASM increased during the three
months ended September 30, 2003 as a result of an increase in the average price of
fuel from .92¢to $1.01 or .39¢per ASM; an increase in aircraft and traffic
servicing expenses combined with sales and  promotions  expenses  of .24¢as a
result of the  increase  in the  number of passengers  we serve and  general  increases
in DIA  airport costs as well as related increases in sales and promotion expenses for
booking  fees  associated  with the increase in passengers,  the ongoing costs of LiveTV
service of .05¢;  and, an increase in  general  and  administrative  expenses  of
..15¢as a result of the bonus accrual associated with our return to profitability
and an increase in health  insurance costs associated  with general increase in health
insurance  costs.  These  increases  were partially offset by a decrease of .13¢ in
maintenance expense primarily as a result of the reduction in the number of aircraft
in our Boeing  fleet that were  replaced  with new  Airbus  A319  aircraft.  Our CASM
also  increased  as a result of a  reduction  in planned  block hours flown due to the
timing of Boeing 737-200 aircraft returns while the number of crew personnel and related
salaries  remained  relatively  static while we prepared for the  deliveries of new
Airbus  aircraft.  Our CASM for the six months ended September  30, 2003 and 2002 was
8.21¢and 8.11¢,  respectively,  an increase of .10¢or 1.2%.  CASM
excluding  fuel for the six months  ended  September  30, 2003 and 2002 was 6.78¢
for each of the periods.

       An  airline's  break-even  load  factor is the  passenger  load  factor that will
result in  operating  revenues  being equal to  operating  expenses,  assuming  constant
revenue  per  passenger  mile.  For the three  months  ended  September  30,  2003,  our
break-even  load factor was 74.9%  compared  to our  achieved  passenger  load factor of
76.6%.  The  break-even  load  factor for the three  months  ended  September  30,  2003
includes the following special items net of  profit-sharing;  write-off of deferred loan
costs of $8,624,000  associated  with the  prepayment of the  guaranteed  loan; a charge
for Boeing  aircraft and facility lease exit costs of $4,292,000;  loss of $1,586,000 on
the sale of one Airbus aircraft in a  sale-leaseback  transaction and from the sale of a
spare  engine;  and an  unrealized  derivative  loss of $254,000.  These  items,  net of
profit  sharing,  accounted  for 6.2 load  factor  points of the  breakeven  load factor
amount.  For the six months ended  September 30, 2003,  our  break-even  load factor was
65.0%  compared to our achieved  passenger  load factor of 71.9%.  The  break-even  load
factor for the six months  ended  September  30, 2003  includes  the  following  special
items net of  profit-sharing;  compensation  received  under the  Appropriations  Act of
$13,842,000;  write-off  of  deferred  loan  costs  of  $8,624,000  associated  with the
prepayment  of the  guaranteed  loan; a charge for Boeing  aircraft  and facility  lease
exit costs of  $4,924,000;  loss of $1,586,000  on the sale of one Airbus  aircraft in a
sale-leaseback  transaction  and  from  the sale of a spare  engine;  and an  unrealized
derivative gain of $438,000.  These items,  net of profit sharing,  had no impact on the
break-even load factor.

       Small fluctuations in our RASM or in our CASM can significantly  affect operating
results  because  we,  like  other  airlines,  have  high  fixed  costs in  relation  to
revenues.  Airline  operations are highly  sensitive to various  factors,  including the
actions of competing  airlines and general economic factors,  which can adversely affect
our liquidity, cash flows and results of operations.

       Our operations  during the three and six months ended September 30, 2003, are not
necessarily  indicative of future  operating  results or comparable to the prior periods
ended September 30, 2002.


Revenues

       Our revenues are highly  sensitive  to changes in fare levels.  Competitive  fare
pricing  policies have a significant  impact on our revenues.  Because of the elasticity
of passenger  demand,  we believe that  increases in fares may at certain  levels result
in a decrease  in  passenger  demand in many  markets.  We cannot  predict  future  fare
levels,  which  depend  to a  substantial  degree  on  actions  of  competitors  and the
economy.  When sale prices or other price  changes are initiated by  competitors  in our
markets,  we believe  that we must,  in most  cases,  match those  competitive  fares in
order to maintain our market  share.  Passenger  revenues are seasonal  depending on the
markets' locations.

       We believe that our new fare structure that was  implemented in February 2003 may
have had a downward  effect on the  average  fare  offset by an  increase  in  passenger
traffic.  Our load  factors  of 75.6%,  80.1%,  79.7%,  and 69.5% for the months of June
through September 2003,  respectively,  represent record load factors for us as compared
to  prior  comparable  months.  Our  July  2003  load  factor  was  the  highest  in our
history.  We cannot  predict  whether or for how long these  higher  load  factors  will
continue.

       Passenger  Revenues.  Passenger  revenues  totaled  $159,965,000  for  the  three
months ended  September  30, 2003  compared to  $116,710,000  for the three months ended
September  30,  2002,  or an increase of 37.1%,  on  increased  ASMs of  161,518,000  or
10.4%.  Passenger  revenues totaled  $298,855,000 for the six months ended September 30,
2003  compared to  $226,002,000  for the six months  ended  September  30,  2002,  or an
increase  of 32.2%,  on  increased  ASMs of  467,169,000  or 16.0%.  Passenger  revenues
include revenues for reduced rate standby passengers,  administrative  fees, and revenue
recognized  for tickets  that are not used within one year from their  issue  dates.  We
carried  1,457,000  revenue  passengers during the three months ended September 30, 2003
compared to 987,000  during the three months ended  September  30, 2002,  an increase of
47.6%.  We had an average of 37.0  aircraft in our fleet  during the three  months ended
September  30, 2003  compared  to an average of 33.8  aircraft  during the three  months
ended  September  30,  2002,  an  increase  of 9.5%.  RPMs for the  three  months  ended
September  30, 2003 were  1,318,020,000  compared to  922,817,000  for the three  months
ended  September  30,  2002,  an increase of 42.8%.  Our load factor  increased to 76.6%
for the three  months  ended  September  30,  2003 from  59.2% for the prior  comparable
period,  or and  increase  of 17.4  points,  or  29.4%.  We  carried  2,684,000  revenue
passengers  during the six months ended September 30, 2003 compared to 1,916,000  during
the six months  ended  September  30, 2002,  an increase of 40.1%.  We had an average of
36.3  aircraft in our fleet during the six months ended  September  30, 2003 compared to
an average  of 32.2  aircraft  during  the six  months  ended  September  30,  2002,  an
increase  of  12.7%.   RPMs  for  the  six  months   ended   September   30,  2003  were
2,443,253,000  compared to  1,782,421,000  for the six months ended  September 30, 2002,
an  increase  of 37.1%.  Our load  factor  increased  to 71.9% for the six months  ended
September 30, 2003 from 60.8% for the prior comparable  period,  or and increase of 11.1
points, or 18.3%.

       Cargo  revenues,  consisting of revenues  from freight and mail service,  totaled
$2,369,000  and  $1,366,000  for the three  months  ended  September  30, 2003 and 2002,
respectively,  representing 1.4% and 1.1%, respectively,  of total revenues, an increase
of 73.4%.  Cargo  revenues  totaled  $4,058,000  and $2,946,000 for the six months ended
September  30, 2003 and 2002,  respectively,  representing  1.3% of total  revenues  for
each of the  periods,  an increase of 37.7%.  Cargo  revenues  increased  over the prior
comparable  periods  as a result of our new  contract  to carry  mail  under the  United
States  Postal  Service  Commercial  Air 2003 Air System  Contract.  This adjunct to the
passenger  business is highly  competitive and depends  heavily on aircraft  scheduling,
alternate competitive means of same day delivery service and schedule reliability.

       Other revenues,  comprised  principally of interline handling fees, liquor sales,
LiveTV  sales,   co-branded  credit  card  revenue,  and  excess  baggage  fees  totaled
$3,487,000  and  $1,279,000,  or 2.1% and 1.1% of total  revenues  for the three  months
ended  September  30,  2003  and  2002,  respectively,  an  increase  of  172.6%.  Other
revenues  totaled  $5,274,000  and  $2,219,000,  or 1.7%  and  1.0% of  total  operating
revenues  for the six  months  ended  September  30,  2003 and  2002,  respectively,  an
increase  of  137.7%.   Other  revenues  increased  over  the  prior  comparable  period
primarily  due to the Mesa  codeshare  agreement,  LiveTV sales,  and revenue  generated
from our co-branded  credit card program.  For the three and six months ended  September
30, 2003, we recognized $182,000 and $301,000, respectively.







Operating Expenses

       Operating  expenses  include  those  related to flight  operations,  aircraft and
traffic  servicing,  maintenance,  promotion and sales,  general and  administrative and
depreciation  and  amortization.  Total  operating  expenses  for the three months ended
September 30, 2003 and 2002 were  $143,491,000 and  $122,557,000  and represented  86.5%
and 102.7% of revenue,  respectively.  Total operating  expenses were  $278,976,000  and
$237,467,000  for the six  months  ended  September  30,  2003 and 2002 and  represented
90.5%  and  102.7%  of  revenue,   respectively.   Operating  expenses  decreased  as  a
percentage  of revenue  during the three and six months  ended  September  30, 2003 as a
result of an increase in total  revenues as compared to the six months  ended  September
30, 2002.

       Salaries,  Wages and Benefits. We record salaries,  wages and benefits within the
specific expense  category  identified in our statement of operations for which they are
relevant.  Salaries,  wages and benefits  totaled  $39,429,000  and $31,199,000 and were
23.8% and 26.1% of total  revenues  for the three months  ended  September  30, 2003 and
2002,  respectively,  an  increase  of  26.4%.  Salaries,  wages  and  benefits  totaled
$76,431,000  and  $60,775,000  and were  24.8% and 26.3% of total  revenues  for the six
months  ended  September  30,  2003  and  2002,  respectively,  an  increase  of  25.8%.
Salaries,  wages and benefits  increased over the prior comparable  periods largely as a
result  of  our  bonus  accrual  due  to  our  return  to  profitability,  overall  wage
increases,  and an  increase  in the number of  employees  to support  our ASM growth of
16.0% during the six months ended  September  30, 2003.  Our  employees  increased  from
approximately  2,950 in September  2002 to  approximately  3,570 in September  2003,  an
increase of 21.0%.

       Flight  Operations.  Flight  operations  expenses of $42,268,000  and $38,237,000
were 25.5% and 32.0% of total  revenue for the three  months  ended  September  30, 2003
and  2002,   respectively,   an  increase  of  10.5%.   Flight  operations  expenses  of
$84,433,000  and  $75,320,000  were 27.4% and 32.6% of total  revenue for the six months
ended  September  30,  2003  and  2002,  respectively,  an  increase  of  12.1%.  Flight
operations  expenses  include all  expenses  related  directly to the  operation  of the
aircraft   including  lease  and  insurance   expenses,   pilot  and  flight   attendant
compensation,  in-flight catering,  crew overnight expenses,  flight dispatch and flight
operations administrative expenses.

       Aircraft  lease  expenses  totaled  $17,921,000  (10.8%  of  total  revenue)  and
$17,671,000  (14.8% of total revenue) for the three months ended  September 30, 2003 and
2002,  respectively,  an increase of 1.4%.  Aircraft lease expenses totaled  $35,113,000
(11.4% of total  revenue) and  $34,601,000  (15.0% of total  revenue) for the six months
ended  September  30, 2003 and 2002,  respectively,  an  increase  of 1.5%.  The average
number of leased  aircraft  decreased  6.8% from 28.2 to 26.4  during  the three  months
ended  September 30, 2003.  The average  number of leased  aircraft  decreased 4.5% from
27.7 to 26.5 during the six months ended  September 30, 2003.  The marginal  increase is
due to the  replacement of older and smaller  leased Boeing  737-200  aircraft that have
unfavorable  lease rates with newer and larger  Airbus A319  leased  aircraft  with more
favorable lease rates.

         Aircraft  insurance expenses totaled $2,258,000 (1.4% of total revenue) for the
three  months  ended  September  30,  2003.  Aircraft  insurance  expenses for the three
months  ended  September  30, 2002 were  $2,548,000  (2.1% of total  revenue).  Aircraft
insurance  expenses were .17¢ and .28¢ per RPM for the three months ended
September 30, 2003 and 2002, respectively. Aircraft insurance expenses totaled $5,004,000
(1.6% of total revenue) for the six months ended September 30, 2003.  Aircraft  insurance
expenses  for the six months ended  September  30, 2002 were  $5,166,000  (2.2% of total
revenue).  Aircraft insurance expenses were .20¢ and .29¢per RPM for the six
months ended September 30, 2003 and 2002, respectively. Aircraft insurance decreased per
RPM as a result of less expensive war risk coverage that is presently provided by the FAA
than  during the  periods  ended  September  30,  2002 that was  previously  provided by
commercial  underwriters  combined  with a 30% decrease in our basic hull and  liability
insurance  rates  effective  June 7, 2003.  The current FAA war risk policy is in effect
until  December  10,  2003.  We do not know  whether  the  government  will  extend  the
coverage,  and if it does,  how long the  extension  will  last.  We expect  that if the
government  stops  providing  excess war risk  coverage  to the  airline  industry,  the
premiums  charged by aviation  insurers for this coverage will be  substantially  higher
than the  premiums  currently  charged by the  government  or the  coverage  will not be
available from reputable underwriters.

       Pilot and flight  attendant  salaries  before payroll taxes and benefits  totaled
$12,510,000 and  $10,575,000 or 7.8% and 9.1% of passenger  revenue for the three months
ended  September  30, 2003 and 2002,  an increase of 18.3%.  Pilot and flight  attendant
salaries before payroll taxes and benefits  totaled  $24,995,000 and $20,434,000 or 8.4%
and 9.0% of passenger  revenue for the six months ended  September 30, 2003 and 2002, an
increase  of  22.3%.  Pilot  and  flight  attendant  compensation  for the three and six
months  ended  September  30,  2003  also  increased  as a result  of a 9.5%  and  12.7%
increase in the average  number of  aircraft  in service,  respectively,  an increase of
9.8% and  14.5% in  block  hours,  respectively,  a  general  wage  increase  in  flight
attendant  and pilot  salaries and  additional  crew  required to replace those who were
attending  training  on  the  Airbus  equipment.  We  pay  pilot  and  flight  attendant
salaries for training,  consisting of approximately  six and three weeks,  respectively,
prior to  scheduled  increases  in  service,  which can cause the  compensation  expense
during such  periods to appear high in  relationship  to the average  number of aircraft
in service.  We expect  these  costs to  continue  to  increase  as we place  additional
aircraft into service and continue to retire Boeing equipment.

       Aircraft Fuel Expenses.  Aircraft fuel expenses  include both the direct cost of
fuel,  including  taxes,  as well as the cost of  delivering  fuel  into  the  aircraft.
Aircraft fuel expenses of $25,901,000  for 25,543,000  gallons used and  $21,332,000 for
23,170,000  gallons used  resulted in an average fuel expense $1.01 and 92.1¢per gallon
for the three months ended  September  30, 2003 and 2002,  respectively.  Aircraft  fuel
expenses  represented  15.6%  and 17.9% of total  revenue  for the  three  months  ended
September 30, 2003 and 2002,  respectively.  Aircraft fuel expenses of  $48,501,000  for
49,955,000  gallons used and  $38,728,000  for  44,028,000  gallons used  resulted in an
average fuel cost of 97.1¢and 88.0¢per gallon, for the six months ended September
30, 2003 and 2002,  respectively.  Aircraft  fuel expenses  represented  15.7% and 16.7%
of total  revenue for the six months ended  September  30, 2003 and 2002,  respectively.
Fuel  prices  are  subject to change  weekly,  as we  purchase  a very small  portion in
advance for  inventory.  We  initiated a fuel  hedging  program in late  November  2002,
which  increased  fuel expense by $36,000 for the three months ended  September 30, 2003
and decreased fuel expense  $503,000 for the six months ended  September 30, 2003.  Fuel
consumption  for the three months  ended  September  30, 2003 and 2002  averaged 753 and
750 gallons  per block hour,  respectively,  or an  increase  of .4%.  Fuel  consumption
per block hour  increased  during the three  months  ended  September  30, 2003 from the
prior  comparable  period  because  of the  17.4  point  increase  in our  load  factor,
partially  offset by the  increase  in Airbus  aircraft.  Fuel  consumption  for the six
months ended  September  30, 2003 and 2002  averaged 745 and 752 gallons per block hour,
respectively,  or a decrease of .9%. Fuel  consumption  per block hour decreased  during
the six months ended  September  30, 2003 from the prior  comparable  period  because of
the more  fuel-efficient  Airbus  aircraft added to our fleet coupled with the reduction
in our Boeing fleet, which had higher fuel burn rates.

       Aircraft and Traffic  Servicing.  Aircraft and traffic  servicing  expenses  were
$26,077,000  and  $21,274,000  (an  increase  of  22.6%)  for  the  three  months  ended
September  30, 2003 and 2002,  respectively,  and  represented  15.7% and 17.8% of total
revenue.  Aircraft and traffic  servicing  expenses were $50,075,000 and $40,623,000 (an
increase of 23.3%) for the six months ended  September 30, 2003 and 2002,  respectively,
and  represented  16.2% and  17.6% of total  revenue.  Aircraft  and  traffic  servicing
expenses include all expenses incurred at airports  including  landing fees,  facilities
rental,   station  labor,   ground  handling  expenses  and  interrupted  trip  expenses
associated  with delayed or cancelled  flights.  Interrupted  trip  expenses are amounts
paid to other  airlines to  reaccommodate  passengers  as well as hotel,  meal and other
incidental  expenses.  Aircraft and traffic  servicing  expenses  will increase with the
addition of new cities to our route  system.  During the three  months  ended  September
30,  2003,  our  departures  increased  to 15,078 from  13,583 for the six months  ended
September 30, 2002, or 11.0%.  Aircraft and traffic  servicing  expenses were $1,729 per
departure  for the three  months  ended  September  30,  2003 as  compared to $1,566 per
departure  for the three months  ended  September  30, 2002,  or an increase of $163 per
departure.  During the six months ended September 30, 2003, we served  approximately  36
cities  compared to 31 during the six months ended  September  30, 2002,  or an increase
of 16.1%.  During the six months ended  September 30, 2003, our departures  increased to
29,688 from 25,767 for the six months  ended  September  30,  2002,  or 15.2%.  Aircraft
and traffic  servicing  expenses  were  $1,687 per  departure  for the six months  ended
September  30,  2003 as  compared  to $1,577  per  departure  for the six  months  ended
September  30,  2002,  or an  increase  of $110  per  departure.  Aircraft  and  traffic
servicing  expenses  increased per departure as a result of general increases in airport
rents and  landing  fees and a 47.6% and a 40.1%  increase in  passengers  for the three
and six  months  ended  September  30,  2003,  respectively,  as  compared  to the prior
periods.  Additionally,  cargo  (including  mail) revenue  increased 73.4% and 37.7% for
the three and six months ended  September 30, 2003,  respectively,  as compared to prior
periods.   Aircraft  and  traffic   servicing   expenses   increase  with  increases  in
passengers  and cargo  handling.  We also  experienced  higher  landing fees  associated
with the Airbus aircraft which have higher landing weights than the Boeing aircraft.

       Maintenance.  Maintenance  expenses of $17,120,000 and $17,501,000 were 10.3% and
14.7% of  total  revenue  for the  three  months  ended  September  30,  2003 and  2002,
respectively,  a decrease of 2.2%.  Maintenance  expenses of $34,998,000 and $33,943,000
were 11.4% and 14.7% of total  revenue for the six months ended  September  30, 2003 and
2002,  respectively,  an increase of 3.1%. These expenses  include all labor,  parts and
supplies  expenses  related to the maintenance of the aircraft.  Routine  maintenance is
charged to  maintenance  expense as incurred  while  major  engine  overhauls  and heavy
maintenance  check expense are accrued  monthly with variances from accruals  recognized
at the time of the check.  Maintenance  cost per block hour for the three  months  ended
September  30,  2003 and 2002  were $505 and $567,  respectively.  Maintenance  cost per
block  hour for the six months  ended  September  30,  2003 and 2002 were $522 and $580,
respectively.  Maintenance  cost per block hour  decreased  as a result of a decrease in
our Boeing fleet coupled with the  additional  new Airbus  aircraft that are less costly
to maintain  than our older Boeing  aircraft.  During the three  months ended  September
30, 2003, we recorded a credit to  maintenance  expenses  totaling  $614,000 as a result
of the  cockpit  door  reimbursement  under  the  Appropriations  Act,  or $18 per block
hour.

       Promotion  and  Sales.   Promotion and sales  expenses  totaled  $16,471,000  and
$13,505,000  and were  10.0%  and 11.3% of total  revenue  for the  three  months  ended
September  30, 2003 and 2002,  respectively,  an increase of 22.0%.  Promotion and sales
expenses  totaled  $31,191,000 and $28,224,000 and were 10.1% and 12.2% of total revenue
for the six months  ended  September  30,  2003 and 2002,  respectively,  an increase of
10.5%.  These  include  advertising  expenses,  telecommunications  expenses,  wages and
benefits for  reservationists  and as well as marketing  management and sales personnel,
credit card fees,  travel agency  commissions and computer  reservations  costs.  During
the three months ended  September 30, 2003,  promotion and sales  expenses per passenger
decreased to $11.30  compared to $13.68 for the three months ended  September  30, 2002.
During the six months  ended  September  30,  2003,  promotion  and sales  expenses  per
passenger  decreased  to $11.62  compared to $14.73 for the six months  ended  September
30,  2002.  Promotion  and  sales  expenses  per  passenger  decreased  as a  result  of
variable   expenses  that  are  based  on  lower  average  fares,   the  elimination  of
substantially  all travel  agency  commissions  effective  on tickets sold after May 31,
2002, and economies of scale associated with our growth.

       General and  Administrative.  General and  administrative  expenses for the three
months  ended  September  30,  2003 and  2002  totaled  $9,784,000  and  $6,575,000  (an
increase of 48.8%) and were 5.9% and 5.5% of total  revenue,  respectively.  General and
administrative  expenses  for the six months ended  September  30, 2003 and 2002 totaled
$18,720,000  and  $12,697,000  (an  increase  of 47.4%)  and were 6.1% and 5.5% of total
revenue for each of the six months  ended  September  30,  2003 and 2002,  respectively.
During the three months ended  September  30, 2003, we accrued  $1,298,000  for employee
performance  bonuses,  or .8% of total  revenue.  During the six months ended  September
30, 2003, we accrued for employee  performance  bonuses totaling  $2,423,000,  or .8% of
total  revenue.  Bonuses are based on  profitability.  As a result of our  pre-tax  loss
for the three and six months  ended  September  30,  2002,  we did not  accrue  bonuses.
General and  administrative  expenses  include the wages and benefits for several of our
executive  officers  and  various  other   administrative   personnel  including  legal,
accounting,  information  technology,  aircraft procurement,  corporate  communications,
training and human  resources  and other  expenses  associated  with these  departments.
Employee  health  benefits,  accrued  vacation  and bonus  expenses,  general  insurance
expenses  including  worker's  compensation  and write-offs  associated with credit card
and  check  fraud  are  also  included  in  general  and  administrative  expenses.  Our
employees  increased from approximately  2,950 in September 2002 to approximately  3,570
in  September  2003,  or  21.0%.  Accordingly,  we  experienced  increases  in our human
resources,  training,  information  technology,  and health insurance  benefit expenses.
General and  administrative  expenses  increased with a general  increase in the cost of
providing health insurance..

       Depreciation  and  Amortization.   Depreciation  and  amortization   expenses  of
$5,870,000  and  $4,133,000  were  approximately  3.5% of total  revenue for each of the
periods  ended the three  months ended  September  30, 2003 and 2002,  respectively,  an
increase  of  42.0%.   Depreciation  and   amortization   expenses  of  $11,057,000  and
$7,932,000  were  approximately  3.6% and 3.4% of total revenue for the six months ended
September  30,  2003 and  2002,  respectively,  an  increase  of 39.4%.  These  expenses
include  depreciation  of aircraft and aircraft  components,  office  equipment,  ground
station  equipment  and other fixed  assets.  Depreciation  expense  increased  over the
prior year  largely as a result of an increase in the average  number of Airbus A319 and
A318  aircraft  owned from an average of 4.7  during the  September  2002  quarter to an
average of 9.8 during the September 2003 quarter, an increase of 108.5%.

       Nonoperating  Income (Expense).  Net nonoperating  expense totaled $8,085,000 for
the six months ended September 30, 2003 compared to net  nonoperating  expense  totaling
$2,398,000 for the six months ended September 30, 2002.

       Interest  income  decreased  to $938,000  from  $1,195,000  during the six months
ended  September  30,  2003 from the prior  period due a  decrease  in  interest  rates.
Interest  expense  increased to $7,869,000  for the six months ended  September 30, 2003
from  $3,155,000  as a result of  interest  expense  associated  with the  financing  of
additional  aircraft  purchased since  September 30, 2002 and the government  guaranteed
loan we obtained in February 2003.

       During the six months  ended  September  30,  2003,  we ceased using three of our
Boeing  737-200 leased  aircraft,  two of which had lease  terminations  in October 2003
and one with a lease  termination  date in October  2005.  In August 2003, we closed our
maintenance  facility in El Paso  Texas,  which had a lease  termination  date in August
2007.  As a result of these  transactions  we recorded a pre-tax  charge of  $5,345,000.
This  amount  recognizes  the  remaining  fair  value  of the  lease  payments  and  the
unamortized leasehold improvements on the aircraft and facility.

       We completed a public  offering of 5,050,000  shares of common stock in September
2003.  Under the terms for our  government  guaranteed  loan by the ATSB, as a result of
this  offering,  we were  required to make a prepayment  of the loan equal to 60% of the
net proceeds from the offering.  As a result,  we prepaid  approximately  $48,418,000 on
the loan and wrote off  approximately  $8,742,000 of deferred loan costs associated with
the prepayment  amount.  Of the  $8,742,000,  approximately  $7,239,000  represented the
value  assigned  to the  warrants  issued  to the ATSB and to two  other  guarantors  in
connection  with the loan  transaction.  The  warrants  had an  estimated  fair value of
$9,282,000  when issued.  The fair value for these  options was estimated at the date of
grant using a Black-Scholes option pricing model.

       Other, net nonoperating  expense includes a loss totaling $1,238,000 on the sales
leaseback  of an Airbus A319  aircraft  and a loss  totaling  $483,000 on the sale of an
aircraft engine during the six months ended September 30, 2003.

       Offsetting these nonoperating  expenses during the six months ended September 30,
2003,  is  pre-tax  compensation  of  $15,024,000  as a result  of  payments  under  the
Appropriations  Act for expenses and revenue foregone related to aviation  security.  We
received a total of  $15,573,000  in May 2003, of which we paid $549,000 to Mesa for the
revenue passengers Mesa carried as Frontier JetExpress.

       Income Tax Expense.  Income tax expense totaled  $8,195,000 during the six months
ended  September  30,  2003 at a 38.8%  rate,  compared  to an  income  tax  benefit  of
$3,172,000 for the six months ended September 30, 2002, at a 36.5% rate.


Liquidity and Capital Resources

       Our liquidity  depends to a large extent on the number of passengers who fly with
us, the fares we charge,  our  operating  and capital  expenditures,  and our  financing
activities.  We depend on lease or mortgage  financing  to acquire all of our  aircraft,
including 40 firm  additional  owned and leased Airbus aircraft as of September 30, 2003
scheduled  for  delivery   through  2008.  In  August  2003,  we  amended  our  purchase
agreement with Airbus to provide for 15 additional  firm Airbus A319 aircraft  purchases
with deliveries scheduled beginning in calendar year 2004 and continuing through 2008.

       We had cash and cash  equivalents  and short-term  investments of $203,332,000 at
September 30, 2003 and  $104,880,000 at March 31, 2003,  respectively.  At September 30,
2003,  total  current  assets were  $271,959,000  as compared to  $153,770,000  of total
current  liabilities,  resulting in working capital of $118,189,000.  At March 31, 2003,
total current  assets were  $190,838,000  as compared to  $130,047,000  of total current
liabilities,  resulting  in working  capital of  $60,791,000.  The  increase in our cash
and  working  capital  from  March 31,  2003 is largely a result of cash  provided  by a
stock  offering in  September  2003 which netted  $81,085,000  after  offering  expenses
offset by a required  prepayment of principal and interest  totaling  $48,633,000 on our
government  guaranteed loan and by operating  activities.  Also favorably  impacting our
liquidity  during  the  six  months  ended  September  30,  2003,  was  the  receipt  of
$15,913,000  under the  Appropriations  Act. In September  2003 we completed an aircraft
sale  leaseback with net proceeds to us totaling  $4,374,000.  In July 2003, we received
our income  tax refund  from the  Internal  Revenue  Service  totaling  $26,574,000  and
prepaid  $10,000,000  on our government  guaranteed  loan upon receipt of this refund as
required by the loan agreement.

       Cash  provided by operating  activities  for the six months ended  September  30,
2003 was  $96,928,000.  This is  attributable  to our net  income  for the  period,  the
income  tax refund we  received,  an  increase  in air  traffic  liability  and  accrued
expenses,  offset by a decrease in restricted  investments  and accounts  payable.  Cash
used  by  operating  activities  for  the  six  months  ended  September  30,  2002  was
$6,650,000.  This  is  attributable  to the  net  loss  for  the  period,  increases  in
restricted  investments,   receivables,   security,   maintenance  and  other  deposits,
decreases in accounts  payable,  air traffic  liability,  other  accrued  expenses,  and
deferred  Stabilization Act  compensation,  offset by a decrease in prepaid expenses and
increases  in  accrued  maintenance  expense  and  deferred  lease and  other  expenses.
Included  in cash  used by  operating  activities  in the 2002  period  is a  $4,000,000
repayment of the excess amounts received under the Stabilization Act.

       Cash used in investing  activities  for the six months ended  September  30, 2003
was  $91,871,000.  Net aircraft  lease and  purchase  deposits  decreased by  $1,956,000
during this period.  We used  $94,445,000  for the purchase of three  additional  Airbus
aircraft,  aircraft  leasehold  improvements,  ground  equipment  to  support  increased
below-wing  operations,  and computer  equipment which included  scanning  equipment for
the new mail  transportation  requirements.  During the six months ended  September  30,
2003,  we took  delivery of three  purchased  Airbus  A318  aircraft  and applied  their
respective  pre-delivery  payments to the purchase of those aircraft.  Additionally,  we
completed a  sale-leaseback  transaction  on one of our purchased  aircraft that we took
delivery of in September  2003,  generating  cash proceeds of  approximately  $4,374,000
from the sale and the  return of the  pre-delivery  payments  relating  to the  purchase
commitment.  We  agreed  to  lease  the  aircraft  over a 12  year  term.  Cash  used by
investing  activities for the six months ended September 30, 2002 was  $108,580,000.  We
used  $98,755,000 for the purchase of three  additional  Airbus aircraft and to purchase
rotable  aircraft  components,   leasehold  improvements  and  other  general  equipment
purchases.  Net aircraft  lease and purchase  deposits  increased  by  $10,236,000  this
period.  During the six months  ended  September  30,  2002,  we took  delivery of three
purchased  Airbus  aircraft and applied their  respective  pre-delivery  payments to the
purchase of those aircraft.

       Cash  provided by financing  activities  for the six months ended  September  30,
2003 and 2002 was  $93,395,000  and  70,240,000,  respectively.  During  the six  months
ended  September  30,  2003,  we completed a stock  offering of 5,050,000  shares of our
common  stock.  We  received  $81,085,000,  net of offering  expenses,  from the sale of
these shares.  We used  $48,418,000 of the proceeds to prepay the government  guaranteed
loan.  During the six months ended  September  30, 2003 and 2002,  we received  $349,000
and $571,000,  respectively,  from the exercise of common stock options.  During the six
months ended  September  30, 2003 and 2002,  we borrowed  $76,500,000  and  $73,200,000,
respectively,  to finance  the  purchase of Airbus  aircraft,  of which  $5,599,000  and
$2,542,000 was repaid as principal  payments during the respective  periods.  During the
six  months  ended  September  30,  2003 we  prepaid an  additional  $10,000,000  on the
government guaranteed loan as required by the loan agreement.

       We have been working  closely with DIA,  our primary hub or  operations,  and the
offices  of the Mayor of the City and  County of  Denver,  in which DIA is  located,  to
develop  strategies  and plans for  expanding  Concourse A where our aircraft  gates are
located and also  improving  efficient use of existing  gates,  in order to  accommodate
our  anticipated  growth over the next several  years.  At  this time, DIA has  committed
to  adding  two  additional gates  to Concourse  A for our  preferential  use.  It
is  expected  that these  gates will become available in late spring of 2004. We are
examining  other  expansion  options that could add up to an  additional  eight gates
and five  regional  jet parking  positions  to the west side of Concourse A. As new gates
are  constructed,  we would enter into  long-term lease  arrangements  to use those gates
on a preferential  basis.  On November 9, 2003, the City and County of Denver and United
Airlines announced that they had reached agreement with respect to the restructuring
of United's lease of gates and other facilities at DIA.  The agreement will permit United
to proceed with the assumption of the restructured lease as part of its bankruptcy
reorganization process.  As a part of the negotiations, we are advised that United has
agreed to relinquish one gate on Concourse A for immediate lease to Frontier on a permanent
basis.  In addition, United would make available two additional gates for use by Frontier
until the earlier of the construction of additional gates for Frontier on the West end of
Concourse A or October 31, 2005.  Plans for our expansion of Concourse A are still in
development and the final scope of the project, if any, and a firm estimate of the
project costs, is yet to be determined.  We also have not been advised of the amount
of increased rents that will result from Frontier's lease of the gates being made
available by United.  It is impossible at this time to estimate the increased rates and
charges that we would incur as the result of the construction and leasing of newly
constructed gates on Concourse A or the lease by Frontier of the gates being made available
by United.

       As part of the lease restructure between the City and County of Denver and United
Airlines, we believe that United has been provided certain concessions and reductions in
the rents, rates and charges arising from their lease of facilities at DIA.  We have
been advised by the City and County of Denver that they will seek to prevent the reduced
rates and charges being paid by United from increasing the rates and charges being paid
by other airlines.  However, the City and County of Denver has also made it clear that
in certain circumstances it will have no choice but to increase rates and charges being
paid by other airlines in order to comply with their own cash flow, reserve account and
bond financing requirements.  Because we are the second largest airline operating out
of Denver, we may incur a larger impact of any increase in rates and charges imposed by
DIA.  At this time, it is impossible to quantify what the increase in our rates and
charges would be, if any, due to the concession being provided to United.

       We have been assessing our liquidity  position in light of; our aircraft purchase
commitments  and other  capital  needs,  the  economy,  our  competition,  the events of
September  11,  and other  uncertainties  surrounding  the  airline  industry.  Prior to
applying  for a  government  guaranteed  loan under the  Stabilization  Act,  we filed a
shelf  registration  with the  Securities  and  Exchange  Commission  in April 2002 that
allowed  us to sell  equity or debt  securities  from time to time as market  conditions
permit.  In September  2003,  we completed a stock  offering of 5,050,000  shares of our
common stock.  Although the stock  offering has improved our  liquidity,  we may need to
continue  to explore  avenues to enhance  our  liquidity  if our  current  economic  and
operating  environment  changes.  We intend to continue  to examine  domestic or foreign
bank aircraft  financing,  bank lines of credit and aircraft  sale-leasebacks,  the sale
of equity or debt  securities,  and other  transactions  as  necessary  to  support  our
capital  and  operating  needs.  For  further  information  on our  financing  plans and
activities, see "Contractual Obligations" below.


Contractual Obligations

       The following table  summarizes our  contractual  obligations as of September 30,
2003:

                                        Less than        1-3           4-5          After
                                          1 year        years         years        5 years        Total    
Long-term debt (1)                    $ 15,317,000  $ 42,938,000  $ 35,490,000  $200,950,000   $294,695,000
Operating leases (2) (4)                83,570,000   161,762,000   159,555,000   521,681,000    926,568,000
Unconditional purchase obligations(3)  125,210,000   207,082,000   249,879,469        -         582,171,000
Total contractual cash obligations    $224,097,000  $411,782,000  $444,924,469  $722,631,000 $1,803,434,000
                                     ======================================================================

 (1) In February 2003, we obtained a $70,000,000  guaranteed  loan of which  $69,300,000
     was  guaranteed  by the Air  Transportation  Stabilization  Board  ("ATSB") and two
     other  parties.  The loan has three  tranches,  Tranche A, Tranche B and Tranche C,
     in  amounts  that   initially   totaled   $63,000,000,   $6,300,000  and  $700,000,
     respectively.  At September 30, 2003,  the interest  rates were 1.80%,  2.15%,  and
     3.6%,  respectively.  The  interest  rates  on  each  tranche  of the  loan  adjust
     quarterly  based on  LIBOR  rates.  The loan  required  quarterly  installments  of
     approximately  $2,642,000  beginning in December 2003 with a final balloon  payment
     of $33,000,000 due in June 2007.  Upon receipt of our income tax refund,  which was
     pledged  under  this loan  agreement,  we were  required  to make a  prepayment  of
     $10,000,000,  which was to be  applied  against  the next  successive  installments
     due.  In July 2003,  we  received  our  income  tax  refund  and made the  required
     pre-payment.  Additionally,  the  loan  required  a  prepayment  of 60% of the  net
     proceeds  from any sale of equity.  As a result of the stock  offering we completed
     in September  2003, we prepaid an additional  $48,418,000 in principal on the loan.
     As a result of these  prepayments,  the loan balance was  $11,542,000  at September
     30, 2003. The prepayment of  $48,418,000,  as required by the loan  agreement,  was
     applied to the installments  including the balloon payment that were due at the end
     of the  loan.  As a  result,  the final  principal  payment  due on the loan is now
     December 2005.  Interest is payable quarterly,  in arrears.  Guarantee fees of 4.5%
     annually are payable  quarterly in advance to the  guarantors  of the Tranche A and
     Tranche  B loans.  The loan  facility  is  secured  by  certain  assets  of ours as
     described  in the loan  agreement,  consisting  primarily of Boeing  rotable  fixed
     assets,  all  expendable  inventory  and 50% of other  property and  equipment.  In
     connection  with this  transaction,  we issued  warrants to  purchase of  3,833,946
     shares  of our  common  stock at  $6.00  per  share  to the  ATSB and to two  other
     guarantors.  The warrants had an estimated fair value of $9,282,538 when issued and
     expire seven years after  issuance.  The fair value for these options was estimated
     at the date of grant using a  Black-Scholes  option pricing  model.  This amount is
     being  amortized  to  interest  expense  over the life of the loan.  The  effective
     interest rate on the notes is approximately  11.39% including the non-cash value of
     the warrants and other costs associated with obtaining the loan,  assuming that the
     variable  interest  rates  payable on the notes at September  30,  2003.  The notes
     contain certain  covenants that require us to maintain  certain ratios with respect
     to  indebtedness to earnings before income taxes,  depreciation  and  amortization,
     and rents  ("EBITDAR") and EBITDAR to fixed charges  beginning  January 1, 2004. We
     are not required to meet  certain  liquidity  tests until the quarter  ending March
     31, 2004.  Unrestricted  cash balances cannot be less than  $25,000,000 at any time
     through  September 30, 2004 or $75,000,000  thereafter.  We are in compliance  with
     these requirements at September 30, 2003.

     During the year ended March 31, 2002, we entered into two loan  agreements  for two
     Airbus A319  aircraft.  Each aircraft loan has a term of 10 years and is payable in
     equal monthly  installments,  including interest,  payable in arrears. The aircraft
     secure  the  loans.  Each of the  loans  require  monthly  principal  and  interest
     payments of $215,000 and  $218,110,  bears  interest with rates of 6.71% and 6.54%,
     with  maturities in May and August 2011, at which time a balloon  payment  totaling
     $10,200,000 is due with respect to each loan.

     During the year ended March 31, 2003, we entered into  additional  loans to finance
     seven  additional  Airbus  aircraft with interest rates based on LIBOR plus margins
     that adjust  quarterly or  semi-annually.  At September 30, 2003 interest rates for
     these loans  ranged from  2.375% to 2.888%.  Each loan has a term of 12 years,  and
     each loan has balloon  payments ranging from $4,800,000 to $7,770,000 at the end of
     the term.  The loans are secured by the aircraft.

     During  the six  months  ended  September  30,  2003,  we  borrowed  an  additional
     $75,600,000  for the purchase of three Airbus A318  aircraft.  Each  aircraft  loan
     has a term of 12 years and is payable in monthly installments,  including interest,
     payable in arrears,  with a floating  interest  rate  adjusted  quarterly  based on
     LIBOR plus a margin of 2.25%.  At the end of the term,  there is a balloon  payment
     of $3,060,000  for each aircraft  loan. At September 30, 2003,  interest  rates for
     these loans ranged from 3.36% to 3.39%.  The loans are secured by the aircraft.

     In October  2003,  we took  delivery  of an Airbus  A318  aircraft  and we borrowed
     $22,000,000  for the  purchase  of that  aircraft.  The loan has a term of 12 years
     and is payable in monthly  installments,  including  interest,  payable in arrears,
     with a floating  interest rate adjusted  quarterly  based on LIBOR plus a margin of
     1.95%.  At the end of the  term,  there is a  balloon  payment  of  $2,640,000.  At
     September  30,  2003,  the  interest  rate for this  loan  was  3.12%.  The loan is
     secured by the  aircraft.  We entered into this loan  agreement in October 2003 and
     the payment obligations are not included in the table.

(2)  As of September  30, 2003,  we lease 11 Airbus 319 type  aircraft and 19 Boeing 737
     type aircraft under  operating  leases with  expiration  dates ranging from 2003 to
     2014.  Five of the Boeing  737 type  aircraft  are no longer in service  and are in
     the process of being  brought into return  conditions  and returned to the aircraft
     lessors.  Under all of our leases,  we have made cash security deposits or arranged
     for letters of credit  representing  approximately two months of lease payments per
     aircraft.  At September 30, 2003, we had made cash security  deposits of $7,786,000
     and had arranged for letters of credit of $6,106,000  collateralized  by restricted
     cash balances.  Additionally,  we are required to make  supplemental  rent payments
     to cover  the cost of major  scheduled  maintenance  overhauls  of these  aircraft.
     These  supplemental  rent  payments  are based on the number of flight  hours flown
     and/or  flight  departures  and are not  included  as an  obligation  in the  table
     above.

     As a  complement  to our  Airbus  purchase  agreement,  in April  2000 we signed an
     agreement,  as subsequently  amended, to lease 15 new Airbus aircraft for a term of
     12 years.  As of  September  30,  2003,  we had arranged for issuance of letters of
     credit on the remaining  six aircraft we agreed to lease  totaling  $1,235,000,  to
     secure these leases, collateralized by restricted cash balances.

     During the six months ended  September 30, 2003,  we entered into three  additional
     aircraft lease agreements;  one for two additional Airbus A318 aircraft,  scheduled
     for delivery in May 2004 and March 2005, and one  additional  Airbus A319 aircraft,
     scheduled for delivery in February  2005;  another for eight A319s with  deliveries
     in January,  March, May, and June of 2005, March, April and May of 2006, and one in
     February 2007; and two additional  A319 aircraft,  one of which we took delivery of
     in September 2003 as a result of the sale leaseback  transaction,  and another that
     is scheduled  for delivery in March 2004.  As of September  30, 2003,  we have made
     $726,000 in security  deposits for these  aircraft.  The lease  commitment  amounts
     are included in these amounts.

     In July 2003,  we entered into a letter of intent to lease another five Airbus A319
     aircraft  and  executed a lease for one of these in  October  2003.  The  scheduled
     delivery  dates are in April,  May,  June,  and December  2004; and the last one is
     scheduled  for delivery in February  2006.  As of September  30, 2003, we have made
     $500,000 in security deposits for these aircraft.

     We also lease office and hangar space,  spare engines and office  equipment for our
     headquarters  and airport  facilities,  and certain other equipment with expiration
     dates  ranging  from 2003 to 2014.  In  addition,  we lease  certain  airport  gate
     facilities  on  a  month-to-month   basis.   Amounts  for  leases  that  are  on  a
     month-to-month basis are not included as an obligation in the table above.

(3)  We have adopted a fleet  replacement  plan to phase out our Boeing 737 aircraft and
     replace them with a combination  of Airbus A319 and A318  aircraft.  In March 2000,
     we entered into an agreement,  as  subsequently  amended,  to purchase up to 17 new
     Airbus  aircraft.  Included  in the  purchase  commitment  are  amounts  for  spare
     aircraft  components  to support  the  aircraft.  We are not under any  contractual
     obligations  with respect to spare parts.  As of September  30, 2003,  we had taken
     delivery of 15 of these  aircraft,  one of which we sold in December  2002.Prior to
     the delivery of the aircraft we assigned  two of the  purchase  commitments  to two
     lessors  in  February  2003 and  September  2003.  We  agreed to lease two of these
     aircraft  over a five year term and the third for a 12 year term.  As of  September
     30, 2003, we have remaining firm purchase  commitments for two additional  aircraft
     which,  one of  which  we took  delivery  of in  October  2003  and one of which is
     scheduled  to be  delivered  in  April  2004.  Under  the  terms  of  the  purchase
     agreement,  we are  required  to make  scheduled  pre-delivery  payments  for these
     aircraft.  These  payments  are  non-refundable  with  certain  exceptions.  As  of
     September  30,  2003,  we had  made  pre-delivery  payments  on  future  deliveries
     totaling $10,474,000 to secure the remaining aircraft.

     In August  2003,  we amended  the  purchase  agreement  with  Airbus to purchase 15
     additional  firm  Airbus A319  aircraft  purchases.  Our  purchase  agreement  with
     Airbus also includes purchase rights for up to 23 additional  aircraft,  and allows
     us to  purchase  Airbus A318 or A320  aircraft in lieu of the A319  aircraft at our
     option.  The firm Airbus A319 aircraft have scheduled  delivery dates  beginning in
     calendar year 2004 and continuing  through 2008.  Under the terms of the amendment,
     we have  rights  to  modify  some or all of these  additional  aircraft  into  A320
     aircraft by providing  Airbus  notice prior to December  31,  2004.  The  amendment
     also  requires  us to lease at least three new Airbus  A319 or A320  aircraft  from
     operating  lessors  for  delivery  in  calendar  year 2004.  Including  these three
     aircraft,  we intend to lease as many as 14  additional  A318 or A319 aircraft from
     third party  lessors  over the next five years.  As of September  30, 2003,  we had
     made  pre-delivery  payments on future  deliveries  totaling  $15,411,000 to secure
     these  aircraft.  In  August  2003,  we  entered  into a letter of intent to a sale
     leaseback  of  two  of  these  aircraft.  As  the  agreement  has  not  been  fully
     negotiated  and executed,  the purchase  amounts of these two aircraft are included
     in the purchase commitment amounts.

     In October  2002 we entered  into a purchase and 12 year  services  agreement  with
     LiveTV to bring DIRECTV  AIRBORNE(TM)satellite  programming to every seatback in our
     Airbus  fleet.  We  have  agreed  to the  purchase  of 46  units  of the  hardware;
     however,  we have the  option  to  cancel  up to a total  of 6 units  by  providing
     written notice of  cancellation at least 12 months in advance of  installation.  As
     of September  30, 2003, we have  purchased 22 units and have made  deposits  toward
     the  purchase  of  7  units.  The  table  above  includes  the  remaining  purchase
     commitment amounts not yet paid for on the remaining firm 18 units.

Commercial Commitments

       As we enter new  markets,  increase  the  amount of space  leased,  or add leased
aircraft,  we are often required to provide the airport  authorities  and lessors with a
letter of credit,  bond or cash security  deposits.  These  generally  approximate up to
three months of rent and fees.  As of September  30, 2003,  we had  outstanding  letters
of credit,  bonds, and cash security  deposits  totaling  $12,416,000,  $4,267,000,  and
$12,911,000,  respectively.  In  order  to meet  these  requirements,  we have a  credit
agreement with a financial  institution  for up to $1,500,000,  which expires August 31,
2004,  and  another  credit  agreement  with a second  financial  institution  for up to
$20,000,000,  which  expires  November 30,  2003.  These credit lines can be used solely
for the  issuance  of standby  letters of credit.  Any  amounts  drawn  under the credit
agreements are fully  collateralized  by certificates  of deposit,  which are carried as
restricted  investments  on our balance  sheet.  As of September 30, 2003, we have drawn
$12,416,000   under  these  credit   agreements  for  standby  letters  of  credit  that
collateralize  certain  leases.  In the  event  that  these  credit  agreements  are not
renewed beyond their present  expiration  dates,  the  certificates  of deposit would be
redeemed and paid to the various  lessors as cash  security  deposits in lieu of standby
letters  of  credit.  As a result  there  would be no impact on our  liquidity  if these
agreements  were not renewed.  In the event that the surety  companies  determined  that
issuing bonds on our behalf were a risk they were no longer  willing to  underwrite,  we
would be required to collateralize  certain of these lease  obligations with either cash
security deposits or standby letters of credit, which would decrease our liquidity.

       We use the  Airline  Reporting  Corporation  ("ARC")  to  provide  reporting  and
settlement  services for travel  agency sales and other related  transactions.  In order
to maintain the minimum  bond (or  irrevocable  letter of credit)  coverage of $100,000,
ARC requires  participating  carriers to meet, on a quarterly basis,  certain  financial
tests  such as,  but not  limited  to, net profit  margin  percentage,  working  capital
ratio,  and  percent of debt to debt plus  equity.  As of  September  30,  2003,  we met
these  financial  tests and presently are only  obligated to provide the minimum  amount
of $100,000 in  coverage  to ARC. If we were to fail the minimum  testing  requirements,
we would be required to increase  our bonding  coverage to four times the weekly  agency
net cash sales  (sales net of refunds and agency  commissions).  Based on net cash sales
remitted to us for the week ended October 31, 2003,  the coverage  would be increased to
5,505,000  if we failed the tests.  If we were unable to  increase  the bond amount as a
result  of our then  financial  condition,  we could be  required  to issue a letter  of
credit that would restrict cash in an amount equal to the letter of credit.

       In November  2002,  we  initiated a fuel  hedging  program  comprised of swap and
collar  agreements.  Under a swap agreement,  we receive the difference  between a fixed
swap price and a price based on an agreed  upon  published  spot price for jet fuel.  If
the index price is higher than the fixed price,  we receive the  difference  between the
fixed price and the spot  price.  If the index  price is lower,  we pay the  difference.
A collar  agreement  has a cap price,  a primary  floor  price,  and a  secondary  floor
price.  When the U.S.  Gulf Coast  Pipeline Jet index price is above the cap, we receive
the  difference  between  the  index  and the cap.  When the  index  price is below  the
primary floor but above the secondary  floor,  we pay the  difference  between the index
and the primary  floor.  However,  when the price is below the secondary  floor,  we are
only  obligated to pay the  difference  between the primary and secondary  floor prices.
When the price is  between  the cap price  and the  primary  floor the hedge has no cash
effect.

       We entered  into a three-way  collar in November  2002 with a notional  volume of
385,000  gallons per month for the period  December 1, 2002 to November  30,  2003.  The
cap prices for this  agreement  is 82¢ per gallon,  and the  primary and  secondary
floor  prices are at 72 and 64.5¢ per  gallon,  respectively.  This  agreement  is
estimated to  represent 5% of our fuel  purchases  for that  period.  In April 2003,  we
entered into a swap  agreement  with a notional  volume of  1,260,000  gallons per month
for the period from July 1, 2003 to December  31,  2003.  The fixed price of the swap is
71.53¢ per gallon and the  agreement  is  estimated  to  represent  15% of our fuel
purchases for that period.  In September  2003 we entered into a swap  agreement  with a
notional  volume of 630,000  gallons  per month for the period  from  January 1, 2004 to
June  30,  2004.  The  fixed  price  of the  swap is  74.50¢  per  gallon  and the
agreement  is  estimated to  represent  7% of our fuel  purchases  for that period.  Our
results  of  operations  for the three  months  ended  September  30,  2003  include  an
unrealized  derivative  loss  of  $276,000  which  is  included  in fuel  expense  and a
realized  gain  of  approximately  $240,000  in  cash  settlements  recovered  from  the
counter-party  recorded  as a  decrease  in fuel  expense.  We were  not a party  to any
derivative contracts during the three or six months ended September 30, 2002.

       In March 2003,  we entered into an interest rate swap  agreement  with a notional
amount of  $27,000,000  to hedge a  portion  of our LIBOR  based  borrowings.  Under the
interest  rate  swap  agreement,  we are  paying a fixed  rate of 2.45%  and  receive  a
variable  rate based on the three month  LIBOR.  At  September  30,  2003,  our interest
rate swap  agreement  had an estimated  unrealized  loss of $249,000,  $117,000 of which
was  recorded as  accumulated  other  comprehensive  loss and is included in the balance
sheet.  We did not have any interest  rate swap  agreements  outstanding  during the six
months ended September 30, 2002.

      Effective  January 1, 2003, we entered into an engine  maintenance  agreement with
GE Engine  Services,  Inc. ("GE")  covering the scheduled and unscheduled  repair of our
aircraft  engines used on most of our Airbus  aircraft.  The  agreement is for a 12 year
period from the effective  date for our owned  aircraft or December 31, 2014,  whichever
comes first,  and for each leased  aircraft,  the term  coincides with the initial lease
term of 12 years.  This  agreement  precludes us from using another third party for such
services  during the term.  This  agreement  requires  monthly  payments  at a specified
rate  multiplied  by the  number of  flight  hours  flown on the  aircraft  during  that
month.  The amounts due based on flight hours are not included in table above.


Critical Accounting Policies

       The preparation of financial statements in conformity with accounting  principles
generally  accepted  in the  United  States  of  America  requires  management  to  make
estimates and  assumptions  that affect the reported  amounts of assets and  liabilities
and  disclosure  of  contingent  assets  and  liabilities  at the date of the  financial
statements  and the  reported  amounts of revenues  and  expenses  during the  reporting
period.  Actual results could differ from those estimates.

       Critical  accounting policies are defined as those that are both important to the
portrayal of our  financial  condition and results,  and require  management to exercise
significant  judgments.  Our most critical  accounting  policies are  described  briefly
below.  For  additional  information  about these and our other  significant  accounting
policies, see Note 1 of the Notes to the Financial Statements.

Revenue Recognition

         Passenger,  cargo, and other revenues are recognized when the transportation is
provided or after the tickets  expire,  one year after date of issuance,  and are net of
excise taxes,  passenger  facility  charges and security  fees.  Revenues that have been
deferred are included in the accompanying balance sheet as air traffic liability.

Impairment of Long-Lived Assets

         We record  impairment  losses on  long-lived  assets  used in  operations  when
indicators of impairment are present and the  undiscounted  future cash flows  estimated
to be  generated by those  assets are less than the  carrying  amount of the assets.  If
an impairment  occurs,  the loss is measured by comparing the fair value of the asset to
its carrying amount.

 Aircraft Maintenance

       We operate under an FAA-approved  continuous  inspection and maintenance program.
We  account  for  maintenance  activities  on the  direct  expense  method.  Under  this
method,  major  overhaul  maintenance  costs are  recognized  as expense as  maintenance
services  are  performed,  as  flight  hours are  flown  for  nonrefundable  maintenance
payments  required by lease  agreements,  and as the obligation is incurred for payments
made  under  service  agreements.   Routine  maintenance  and  repairs  are  charged  to
operations as incurred.  Prior to fiscal 2003 we accrued for major  overhaul  costs on a
per-flight-hour basis in advance of performing the maintenance services.

       Effective  January  1,  2003,  GE and  we  executed  a  12-year  engine  services
agreement (the "Services  Agreement")  covering the scheduled and unscheduled  repair of
most of our Airbus  engines.  Under the terms of the  Services  Agreement,  we agreed to
pay  GE  a  fixed  rate   per-engine-hour,   payable   monthly,   and  GE  assumed   the
responsibility  to overhaul our engines on Airbus  aircraft as required  during the term
of the  Services  Agreement,  subject to certain  exclusions.  We believe the fixed rate
per-engine hour  approximates  the periodic cost we would have incurred to service those
engines.  Accordingly, these payments are expensed as the obligation is incurred.

Fuel Derivative Instruments

       We have  entered  into  derivative  instruments  which are intended to reduce our
exposure to changes in fuel prices.  We account for the derivative  instruments  entered
into as trading  instruments  under FASB Statement No. 133,  "Accounting  for Derivative
instruments  and Hedging  Activities" and record the fair value of the derivatives as an
asset or liability as of each balance  sheet date.  We record any  settlements  received
or paid as an adjustment to the cost of fuel or interest expense.

Interest Rate Hedging Program

       During the six months ending  September 30, 2003, we designated  certain interest
rate swaps as  qualifying  cash flow hedges.  Under these hedging  arrangements,  we are
hedging  the  interest   payments   associated   with  a  portion  of  our   LIBOR-based
borrowings.  Under  the  swap  agreements,  we  pay a  fixed  rate  of  interest  on the
notional  amount of the  contracts  of $27  million,  and we receive a variable  rate if
interest  based on the three  month  LIBOR rate,  which is reset  quarterly.  Changes in
the fair value of interest  rate swaps  designated as hedging  instruments  are reported
in   accumulated   other   comprehensive   income.   These   amounts  are   subsequently
reclassified  into  interest  expense as a yield  adjustment in the same period in which
the related interest payments on the LIBOR-based borrowings affects earnings.

Customer Loyalty Programs

       In February  2001,  we  established  EarlyReturns,  a frequent  flyer  program to
encourage  travel on our airline and customer  loyalty.  We account for the EarlyReturns
program  under the  incremental  cost  method  whereby  travel  awards are valued at the
incremental  cost of  carrying  one  passenger  based  on  expected  redemptions.  Those
incremental  costs  are  based on  expectations  of  expenses  to be  incurred  on a per
passenger  basis  and  include  food  and  beverages,  fuel,  liability  insurance,  and
ticketing  costs.  The  incremental  costs do not include a  contribution  to  overhead,
aircraft  cost  or  profit.  We  do  not  record  a  liability  for  mileage  earned  by
participants  who have not  reached  the  level to  become  eligible  for a free  travel
award.   We  believe  this  is   appropriate   because  the  large   majority  of  these
participants  are  not  expected  to  earn a free  flight  award.  We do  not  record  a
liability for the expected  redemption of miles for non-travel  awards since the cost of
these awards to us is negligible.

       As of September 30, 2003 and 2002,  we estimated  that  approximately  24,815 and
8,827  round-trip  flight  awards,   respectively,   were  eligible  for  redemption  by
EarlyReturns   members  who  have  mileage  credits   exceeding  the  15,000-mile   free
round-trip  domestic  ticket award  threshold.  Of these earned  awards,  we expect that
approximately  84% would be  redeemed.  The  difference  between the  round-trip  awards
outstanding  and the awards  expected  to be redeemed  is the  estimate of awards  which
will (1) never be redeemed, or (2) be redeemed for something other than a free trip.

       We account for point sales to third parties by allocating  the funds received for
each  mile (or  point)  between a  component  representing  the value of the  subsequent
travel  award  to  be  provided  and  the  remainder  being  recognized  in  revenue  at
collection to cover  marketing and other  related costs to administer  the program.  The
marketing  component is not  determined  directly,  but instead  represents the residual
after  determination  of the  value of the  travel  component  deferral.  The  component
representing  travel is determined  based on an  equivalent  restricted  fare,  which is
used as the value of travel on a frequent  flyer  mileage  award.  The travel  component
is recognized as revenue on a  straight-line  basis over the historical  usage period of
the frequent flyer mileage awards which we estimate to be 20 months.


Item 3:  Quantitative and Qualitative Disclosures About Market Risk

Aircraft Fuel

       Our earnings are  affected by changes in the price and  availability  of aircraft
fuel.  Market  risk is  estimated  as a  hypothetical  10 percent  change in the average
cost per gallon of fuel for the year ended  March 31,  2003.  Based on fiscal  year 2003
actual fuel usage,  such a change would have the effect of increasing or decreasing  our
aircraft fuel expense by  approximately  $8,590,000 in fiscal year 2003.  Comparatively,
based on projected  fiscal year 2004 fuel usage,  such a change would have the effect of
increasing  or  decreasing  our aircraft  fuel expense by  approximately  $9,890,000  in
fiscal year 2004, excluding the effects of our fuel hedging  arrangements.  The increase
in exposure  to fuel price  fluctuations  in fiscal year 2004 is due to the  increase of
our  average  aircraft  fleet  size  during  the year ended  March 31,  2004,  projected
increases  to our fleet  during  the year  ended  March  31,  2004 and  related  gallons
purchased.

       As of September  30, 2003,  we had hedged  approximately  12.8% of our  remaining
projected  fiscal  2004  fuel  requirements.  In  November  2002,  we  initiated  a fuel
hedging program  comprised of swap and collar  agreements.  Under a swap  agreement,  we
receive  the  difference  between a fixed swap price and a price based on an agreed upon
published  spot price for jet fuel.  If the index price is higher than the fixed  price,
we receive the  difference  between  the fixed  price and the spot  price.  If the index
price is lower,  we pay the  difference.  A collar  agreement has a cap price, a primary
floor price,  and a secondary  floor price.  When the U.S. Gulf Coast Pipeline Jet index
price is above the cap, we receive the  difference  between the index and the cap.  When
the index price is below the primary  floor but above the  secondary  floor,  we pay the
difference  between the index and the primary  floor.  However,  when the price is below
the secondary  floor,  we are only obligated to pay the  difference  between the primary
and  secondary  floor  prices.  When the price is between  the cap price and the primary
floor the hedge has no cash effect.

       We entered into a three-way  collar in November 2002,  with a notional  volume of
385,000  gallons per month for the period  December 1, 2002 to November  30,  2003.  The
cap prices for this  agreement  is 82¢ per gallon,  and the  primary and  secondary
floor  prices  are 72 and 64.5¢ per  gallon,  respectively.  The  volume  of fuel
covered by this  contract is estimated to  represent 5% of our fuel  purchases  for that
period.  In April 2003, we entered into a third swap  agreement  with a notional  volume
of  1,260,000  gallons per month for the period from July 1, 2003 to December  31, 2003.
The fixed price of the swap is 71.53¢ per gallon and the  agreement  is  estimated
to represent  15% of our fuel  purchases for that period.  In September  2003 we entered
into a swap  agreement  with a  notional  volume of  630,000  gallons  per month for the
period  from  January 1, 2003 to June 30,,  2004.  The fixed  price of the swap is 74.50¢
per gallon and the  agreement is  estimated to represent 7% of our fuel  purchases
for that period.  The results of  operations  for the quarter  ended  September 30, 2003
include an  unrealized  derivative  gain of $475,000  which is included in fuel  expense
and a  realized  gain of  approximately  $28,000  in cash  settlements  received  from a
counter-party  recorded  as a  decrease  in fuel  expense.  We were  not a party  to any
derivative contracts during the six months ended September 30, 2002.

Interest

       We are susceptible to market risk  associated  with changes in variable  interest
rates on long-term  debt  obligations we incurred to finance the purchases of our Airbus
aircraft and our  government  guaranteed  loan.  Interest  expense on seven of our owned
Airbus A319 aircraft is subject to interest rate  adjustments  every three to six months
based upon  changes in the  applicable  LIBOR  rate.  The  interest  rate on  borrowings
under our government  guaranteed loan is also subject to adjustment  based on changes in
the  applicable  LIBOR  rates.  A change in the base LIBOR rate of 100 basis points (1.0
percent) would have the effect of increasing or decreasing our annual  interest  expense
by  $2,513,000  assuming  the  loans  outstanding  that are  subject  to  interest  rate
adjustments at September 30, 2003 totaling  $251,376,000  are outstanding for the entire
period.  As of September  30, 2003,  we had hedged  approximately  10.7% of our variable
interest rate loans.

       In March 2003,  we entered into an interest rate swap  agreement  with a notional
amount of  $27,000,000  to hedge a  portion  of our LIBOR  based  borrowings.  Under the
interest  rate  swap  agreement,  we are  paying a fixed  rate of 2.45%  and  receive  a
variable  rate based on the three  month  LIBOR over the term of the swap which  expires
in March 2007.  As of  September  30,  2003,  the fair value of the swap  agreement is a
loss of $249,000.


Item 4.  Controls and Procedures

       As of the end of the period  covered by this report,  we conducted an evaluation,
under the  supervision  and with the  participation  of our  management,  including  our
Chief  Executive  Officer  and Chief  Financial  Officer,  of the  effectiveness  of the
design and  operation of our  disclosure  controls and  procedures  pursuant to Exchange
Act Rules 13a-15 and 15d-15.  Based upon that  evaluation,  our Chief Executive  Officer
and Chief Financial  Officer  concluded that our disclosure  controls and procedures are
effective.  Disclosure  controls and  procedures  are controls and  procedures  that are
designed to ensure that  information  required to be disclosed  in our reports  filed or
submitted under the Exchange Act is recorded,  processed,  summarized and completely and
accurately  reported  within the time periods  specified in the  Securities and Exchange
Commission's rules and forms.

       There have been no  significant  changes  in our  internal  controls  or in other
factors that could  significantly  affect  internal  controls  subsequent to the date we
carried out this evaluation.







                                   PART II. OTHER INFORMATION


Item 4:       Submission of Matters to a Vote of Security Holders

       Our annual meeting of shareholders was held on September 4, 2003, at which a
quorum for the transaction of business was present.  One matter was voted upon, as
described below.

       Members of the Board of  Directors  elected at the meeting were Samuel D. Addoms,
Hank Brown, D. Dale Browning,  Paul S. Dempsey,  William B. McNamara, B. Larae Orullian,
Jeff S.  Potter,  and James B.  Upchurch.  The votes cast with  respect to each  nominee
were as follows:

         18,193,479 "For" Mr. Addoms;                    8,349,763 "Withheld"
         23,867,207 "For" Mr. Brown;                     2,676,034 "Withheld"
         23,856,871 "For" Mr. Browning;                  2,686,371 "Withheld"
         23,860,264 "For" Mr. Dempsey;                   2,682,978 "Withheld"
         23,840,753 "For" Mr. McNamara;                  2,702,489 "Withheld"
         23.841.241 "For" Ms. Orullian;                  2.702.001 "Withheld"
         23,861,524 "For" Mr. Potter                     2,681,718 "Withheld"
         23,849,141 "For" Mr. Upchurch;                  2,694,101 "Withheld"

Shareholder Proposals

       Shareholders  are  entitled  to  submit  proposals  on  matters  appropriate  for
shareholder   action   consistent  with  regulations  of  the  Securities  and  Exchange
Commission  and our bylaws.  If a  shareholder  wishes to have a proposal  appear in our
proxy  statement  for  next  year's  annual  meeting,   under  the  regulations  of  the
Securities  and Exchange  Commission it must be received by our  Corporate  Secretary at
7001 Tower Road, Denver, Colorado 80249-7312 on or before March 19, 2004.


Item 6:       Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit
     Numbers

     Exhibit 10 - Material Contracts

            10.21    Credit Agreement dated as of July 30, 2003 between Frontier Airlines,
                   Inc. and a Lender in respect to an Airbus 318 aircraft. Frontier has
                   financed the purchase of 3 additional Airbus 318 aircraft with this
                   Lender under Credit Agreements that are substantially identical in all
                   material respects to this Exhibit.  Portions of this Exhibit have been
                   omitted and filed separately with the Securities and Exchange
                   Commission in a confidential treatment request under Rule 24b-2 of
                   the Securities Exchange Act of 1934, as amended. (1)

            10.22    Aircraft Mortgage and Security Agreement dated as of July 30, 2003
                   between Frontier Airlines, Inc. and a Lender in respect to an Airbus
                   318 aircraft. Frontier has financed the purchase of 3 additional Airbus
                   318 aircraft with this Lender under Aircraft Mortgage and Security
                   Agreements that are substantially identical in all material respects
                   to this Exhibit. Portions of this Exhibit have been omitted and filed
                   separately with the Securities and Exchange Commission in a confidential
                   treatment request under Rule 24b-2 of the Securities Exchange Act of 1934,
                   as amended. (1)

            10.23  Codeshare  Agreement  dated as of September 18, 2003 between  Horizon
                   Air Industries,  Inc. and Frontier  Airlines,  Inc.  Portions of this
                   Exhibit have been omitted and filed  separately  with the  Securities
                   and Exchange  Commission in a  confidential  treatment  request under
                   Rule 24b-2 of the Securities Exchange Act of 1934, as amended. (1)

     Exhibit 31 - Rule 13a-14(a)/15d-14(a) Certifications

            31.1   Section 302 certification of President and Chief Executive Officer,
                   Jeffery S. Potter. (1)

            31.2   Section 302 certification of Chief Financial Officer, Paul H. Tate. (1)

     Exhibit 32 - Section 1350 Certifications

            32     Section 906  certification of President and Chief Executive  Officer,
                   Jeffery S. Potter, and Chief Financial Officer, Paul H. Tate (1)

                  (1)      Filed herewith.


     (b)  Reports on Form 8-K

          During the quarter ended September 30, 2003, the Company filed the following
reports on Form 8-K.

  Date of                                             Financial Statements
  Report                     Item Numbers             Required to be Filed
  July 31, 2003                 7 and 12                      None
  September 4, 2003                5                          None
  September 18, 2003            7 and 9                       None
  September 19, 2003            5 and 7                       None









                                   SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                     FRONTIER AIRLINES, INC.


Date:  November 7, 2003                              By: /s/ Paul H. Tate        
                                                     Paul H. Tate, Vice President and
                                                     Chief Financial Officer

Date:  November 7, 2003                              By: /s/ Elissa A. Potucek   
                                                     Elissa A.Potucek, Vice President, Controller,
                                                     Treasurer and Principal Accounting Officer

EX-10

                                                   EXHIBIT 10.21

 PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN A
   CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL
   "[***]" IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED. IN SECTION 1.1 - DEFINED TERMS, CERTAIN
  DEFINED TERMS WERE MOVED TO THE END OF SECTION 1.1 TO PRESERVE THE CONFIDENTIALITY OF THE OMITTED INFORMATION.

                                                 CREDIT AGREEMENT

                                             Dated as of July 30, 2003

                                                       Among

                                             FRONTIER AIRLINES, INC.,

                                                   as Borrower,

                                             THE LENDERS PARTY HERETO

                                                        and

                                                       [***]

                                              as Administrative Agent






                                                 TABLE OF CONTENTS

                                                                                                PAGE

ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.........................................................1
         SECTION 1.1.   Certain Defined Terms......................................................1
         SECTION 1.2.   Terms Defined in Mortgage..................................................8
         SECTION 1.3.   Computation of Time Periods................................................8
         SECTION 1.4.   Accounting Terms...........................................................8

ARTICLE II AMOUNTS AND TERMS OF THE LOAN...........................................................8
         SECTION 2.1.   The Loan...................................................................8
         SECTION 2.2.   Making the Loan............................................................8
         SECTION 2.3.   Fees.......................................................................9
         SECTION 2.4.   Use of Proceeds............................................................9
         SECTION 2.5.   Repayment..................................................................9
         SECTION 2.6.   Interest...................................................................9
         SECTION 2.7.   Interest Rate and Period Determination.....................................9
         SECTION 2.8.   Prepayments...............................................................10
         SECTION 2.9.   Increased Costs...........................................................10
         SECTION 2.10.  Illegality................................................................12
         SECTION 2.11.  Payments and Computations.................................................12
         SECTION 2.12.  Taxes.....................................................................13
         SECTION 2.13.  Sharing of Payments, Etc..................................................15
         SECTION 2.14.  Lender Cooperation........................................................16
         SECTION 2.15.  [***] Lenders.............................................................16

ARTICLE III CONDITIONS TO MAKING THE LOAN.........................................................17
         SECTION 3.1.   Conditions Precedent to the Loan..........................................17

ARTICLE IV  REPRESENTATIONS AND WARRANTIES........................................................19
         SECTION 4.1.   Representations and Warranties of the Borrower............................19

ARTICLE V COVENANTS OF THE BORROWER...............................................................23
         SECTION 5.1.   Affirmative Covenants.....................................................23
         SECTION 5.2.   Compliance with Mortgage..................................................25
         SECTION 5.3.   Maintenance of Office.....................................................25
         SECTION 5.4.   Negative Covenants........................................................25
         SECTION 5.5.   Cape Town Convention......................................................25

ARTICLE VI EVENTS OF DEFAULT......................................................................25
         SECTION 6.1.   Events of Default.........................................................25

ARTICLE VII THE AGENTS............................................................................28
         SECTION 7.1.   Authorization and Action..................................................28
         SECTION 7.2.   Each Agent's Reliance, Etc................................................28
         SECTION 7.3.   The Agents and Their Affiliates...........................................29
         SECTION 7.4.   Lender Credit Decision....................................................29
         SECTION 7.5.   Indemnification...........................................................29
         SECTION 7.6.   Successor Agent...........................................................30

ARTICLE VIII MISCELLANEOUS........................................................................30
         SECTION 8.1.   Amendments, Etc...........................................................30
         SECTION 8.2.   Notices, Etc..............................................................31
         SECTION 8.3.   No Waiver; Remedies.......................................................32
         SECTION 8.4.   Costs and Expenses........................................................32
         SECTION 8.5.   Right of Setoff...........................................................32
         SECTION 8.6.   Binding Effect............................................................33
         SECTION 8.7.   Assignments and Participations............................................33
         SECTION 8.8.   Confidentiality...........................................................36
         SECTION 8.9.   Certain Agreements and Representations of Lenders.........................36
         SECTION 8.10.  GOVERNING LAW.............................................................36
         SECTION 8.11.  Execution in Counterparts; Prevalence of Loan Documents...................36
         SECTION 8.12.  Jurisdiction, Etc.........................................................37
         SECTION 8.13.  WAIVER OF JURY TRIAL......................................................37
         SECTION 8.14.  Severability..............................................................38
         SECTION 8.15.  Headings..................................................................38












Schedules

Schedule I        -   Lending Office of Initial Lender

Schedule II       -   Principal Payment Schedule

Exhibits

Exhibit A         -   Form of Promissory Note

Exhibit B         -   Form of Notice of Loan

Exhibit C         -   Form of Assignment and Acceptance

Exhibit D-1       -   Form of Opinion of David Sislowski, Esq., General Counsel of the Borrower

Exhibit D-2       -   Form of Opinion of [***], Special Counsel for the Borrower

Exhibit D-3       -   Form of Opinion of [***], Special Aviation Counsel







                                                 CREDIT AGREEMENT

                                             Dated as of July 30, 2003

                  FRONTIER AIRLINES, INC., a Colorado corporation (the "Borrower"), the lender or lenders party
to this Agreement from time to time (each, a "Lender") and [***], as Administrative Agent (as hereinafter
defined) for the Lenders hereunder agree as follows:

                  WHEREAS, the Borrower and [***], have entered into the Airbus Purchase Agreement, which covers,
among other matters, the sale by [***] and the purchase by the Borrower of certain Airbus A318 Aircraft.

                  WHEREAS, [***] has agreed to provide debt financing pursuant to the Term Sheet, to the Borrower
to finance the purchase of the first four (4) Airbus A318 Aircraft firmly ordered under the Airbus Purchase
Agreement on the terms and subject to the conditions set forth in the Term Sheet.

                  WHEREAS, on the basis of the foregoing and subject to the terms and conditions of this
Agreement, the Initial Lender is prepared to make the Loan in the amount of the Financed Purchase Price Amount
for the Aircraft.

                  NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto
in such capacity agree as follows:

                                                   ARTICLE I

                                         DEFINITIONS AND ACCOUNTING TERMS

SECTION 1.1.      Certain Defined Terms.  As used in this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):

                  "Administrative Agent" means [***] or such other agents as may from time to time become party
         hereto in such capacity pursuant to Section 7.6.

                  "Affiliate" means, as to any Person, any other Person that, directly or indirectly, controls,
         is controlled by or is under common control with such Person or is a director or officer of such Person.
         For purposes of this definition, (i) the term "control" (including the terms "controlling," "controlled
         by" and "under common control with") of a Person means the possession, direct or indirect, of the power
         to vote 5% or more of the Voting Stock of such Person or to direct or cause the direction of the
         management and policies of such Person, whether through the ownership of Voting Stock, by contract or
         otherwise and (ii) neither (x) the shareholders of [***] from time to time nor (y) [***] (or any of its
         Affiliates) shall be deemed to be an Affiliate of [***] for any purpose hereunder.

                  "Agent" or "Agents" means, individually or collectively, as the case may be, the Administrative
         Agent and the Collateral Agent under (and as defined in) the Mortgage.

                  "Airbus A318 Aircraft" means an Airbus model A318 aircraft delivered or to be delivered, as the
         context may require, pursuant to the Airbus Purchase Agreement.

                  "Airbus Purchase Agreement" means that certain Airbus A318/A319 Purchase Agreement dated as of
         March 10, 2000 between [***] and the Borrower as originally executed and as modified, amended or
         supplemented in accordance with the terms thereof.

                  "Aircraft" means the Airframe, together with two Engines delivered in connection therewith or
         any Replacement Engines substituted for any of said Engines, whether or not any of such initial or
         substitute Engines may from time to time be installed on such Airframe or may be installed on any other
         airframe or any other aircraft, as further specified in the Mortgage.

                  "Airframe" means (A) the Airbus A318-111 Aircraft (excluding the Engines or engines from time
         to time installed thereon) further identified in the Mortgage and (B) any and all Parts (other than
         Engines or engines) so long as the same shall be incorporated or installed in or attached to such
         Airframe.

                  "Alternate Rate" has the meaning specified in Section 2.7(b).

                  "Applicable Margin" means [***].

                  "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an
         Eligible Assignee, and accepted by the Administrative Agent, in substantially the form of Exhibit C
         hereto, entered into pursuant to and in accordance with the provisions of Section 8.7 hereof.

                  "Board" means the Board of Governors of the Federal Reserve System of the United States (or any
         successor).

                  "Business Day" means (i) for all purposes other than as covered by clauses (ii) and (iii)
         below, any day except Saturday, Sunday and any day which shall be in New York, New York, [***] or
         Denver, Colorado a legal holiday or a day on which banking institutions are authorized or required by
         law or other government action to close, (ii) where used in relation to payments, any day on which banks
         are open for business in New York, New York, and (iii) where used in relation to Eurodollar Rate
         determination, any day on which banks are open for business in London.

                  "Cancellation Date" means the date of termination in whole of the unused Commitment under and
         pursuant to the Term Sheet and as provided in Section 6.1.

                  "Certificated Air Carrier" means a Citizen of the United States holding a carrier operating
         certificate issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49, United States
         Code, for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo.

                  "Citizen of the United States" has the meaning specified in Section 40102(a)(15) of Title 49 of
         the United States Code.

                  "Commitment" means the commitment of [***] to provide financial accommodations to the Borrower
         as set forth in the Term Sheet.

                  "Confidential Information" means the Loan Documents and any information that the Borrower
         furnishes to the Agent or any Lender in writing designated as confidential, but does not include any
         such information (i) that is or becomes generally available to the public or (ii) that is or becomes
         available to the Agent or such Lender from a source other than the Borrower, unless the Agent or Lender
         has the actual knowledge (without being obligated to conduct any investigation) that such information
         has been made available by such source in breach of a confidentiality agreement which such source is
         bound by with respect to such information.

                  "Consolidated" refers to the consolidation of accounts in accordance with GAAP.

                  "Convention" means the Convention on International Interests in Mobile Equipment and the
         Protocol to the Convention on Matters Specific to Aircraft Equipment signed in Cape Town on 16 November
         2001.

                  "Default" means, with respect to the Loan, any event which, with the giving of notice, lapse of
         time, or both, would become an Event of Default with respect to the Loan.

                  "Eligible Assignee" has the meaning specified in Section 8.7.

                  "Engine" means (A) each of the two CFM International model CFM56 engines installed on the
          Aircraft at the time of delivery to the Borrower of the Aircraft, as further specified in the Mortgage,
         whether or not from time to time installed on the Aircraft or installed on any other aircraft and (B)
         any Replacement Engine that may from time to time be substituted for such engine; together, in each
         case, with any and all Parts incorporated or installed in or attached thereto.

                  "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to
         time, and the regulations promulgated and rulings issued thereunder.

                  "Eurodollar Rate" means, with respect to the Loan, the rate per annum (rounded to the nearest
         1/100 of 1%) equal to the quotation that appears on Page 3750 of the Telerate screen (or otherwise on
         such screen or on such other screen, page or service as may replace the Telerate screen) as of 11:00
         A.M., London time, two Business Days prior to the beginning of the applicable Interest Period as the
         rate for dollar deposits to be delivered on the first day of such Interest Period and maintained for
         such Interest Period.  In the event that such rate does not so appear on the Telerate Screen (or
         otherwise as aforesaid), the "Eurodollar Rate" for purposes of this definition shall be the arithmetic
         average (rounded to the nearest 1/100 of 1%) of the offered quotation to first-class banks in the
         interbank Eurodollar market by each Reference Bank in London for dollar deposits with maturities
         comparable to the applicable Interest Period determined as of 11:00 A.M. (London time) on the date which
         is two Business Days prior to the commencement of such Interest Period.  If any one or more of the
         Reference Banks shall not furnish such timely information to the Administrative Agent for the purpose of
         determining any such interest rate, the Administrative Agent shall determine such interest rate on the
         basis of timely information furnished by the remaining Reference Bank or Reference Banks.

                  "Events of Default" has the meaning specified in Section 6.1.

                  "FAA" means the United States Federal Aviation Administration, and any agency or
         instrumentality of the United States government succeeding to its functions.

                  "Federal Aviation Act" means Title 49 of the United States Code, as amended, or any successor
         or substitute provisions.

                  "Federal Bankruptcy Code" means the Bankruptcy Act of Title 11 of the United States Code, as
         amended from time to time, and any successor provisions thereof.

                  "Financed Purchase Price Amount" means [***]

                  "GAAP" means generally accepted accounting principles in the United States, as in effect from
         time to time and consistently applied.

                  "Governmental Authority" means any nation or government, any state or other political
         subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or
         administrative functions of or pertaining to government.

                  "Inflight Equipment" has the meaning specified in the Mortgage.

                  "Initial Lender" means [***], as the initial lender under this Agreement.

                  "Interest Payment Date" has the meaning specified in Section 2.6.

                  "Interest Period" means the period commencing on (and including) the date of the Loan and
         ending on (but excluding) the date three months after such date and, thereafter, each subsequent period
         commencing on (and including) the last day of the immediately preceding Interest Period and ending on
         (but excluding) the date three months after such date; provided, however, that:

                       (i)      whenever the last day of any Interest Period would otherwise occur on a day other
                  than a Business Day, the last day of such Interest Period shall be extended to occur on the next
                  succeeding Business Day, provided, however, that, if such extension would cause the
                  last day of such Interest Period to occur in the next following calendar month, the last day of
                  such Interest Period shall occur on the next preceding Business Day; and

                      (ii)     whenever the first day of any Interest Period occurs on a day of a calendar month
                  for which there is no numerically corresponding day in the calendar month that succeeds such
                  calendar month by the number of months equal to the number of months in such Interest Period,
                  such Interest Period shall end on the last Business Day of such succeeding calendar month.

                  "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time.

                  "Lease Assignment" has the meaning specified in the Mortgage.

                  "Lending Offices" means, with respect to the Initial Lender, the office of such Lender
         specified on Schedule I hereto, and with respect to any other Lender, means the office of such Lender
         specified in the Assignment and Acceptance pursuant to which it became a Lender, or such other office of
         such Lender as such Lender may from time to time specify to the Borrower and the Administrative Agent.

                  "Lien" means any lien (statutory or otherwise), security interest or other charge or
         encumbrance of any kind, or any other type of preferential arrangement, including, without limitation,
         the lien or retained security title of a conditional vendor.

                  "Loan" means the loan made pursuant to this Agreement.

                  "Loan Documents" means this Agreement, the Notes, the Mortgage, each Lease Assignment and any
          other agreement, document or instrument entered into or delivered pursuant to any of the foregoing.

                  "Manufacturer" means Airbus.

                  "Mortgage" means the Mortgage and Security Agreement, dated as of July 30, 2003, between the
          Borrower and the Collateral Agent named therein, as originally executed and as supplemented by the
         Mortgage and Security Agreement Supplement No. 1, as the same may be further amended, modified or
         supplemented from time to time.

                  "Note" means a promissory note of the Borrower issued in connection with and payable to the
         order of a Lender, in substantially the form of Exhibit A hereto, evidencing the indebtedness of the
         Borrower to such Lender resulting from the Loan.

                  "Notice of Loan" has the meaning specified in Section 2.2.

                  "Obligations" means the Borrower's obligation to make the due and punctual payment of (i) the
         principal and interest from time to time due on the Loan and the Notes (including interest at the rate
         specified herein after the occurrence of an Event of Default, including interest accruing after the
         maturity of the Loan and interest accruing after the filing of any petition in bankruptcy, or the
         commencement of any insolvency, reorganization or like proceeding, relating to the Borrower, whether or
         not a claim for post-filing or post-petition interest is allowed in such proceeding), (ii) all sums
         payable by the Borrower under the Mortgage and (iii) all other sums payable by the Borrower to the
         Lenders or the Agent under Sections 2.9, 2.12 and 8.4 of, or elsewhere under, this Agreement.

                  "Officer's Certificate" means, as to any company, a certificate signed by the Chairman, the
         Vice Chairman, the President, any Executive Vice President, any Director, any Senior Vice President, any
         Vice President, any Assistant Vice President, the Treasurer or any Assistant Treasurer, the Secretary,
         or any Assistant Secretary of such company.

                  "Other Taxes" means any and all present or future stamp or documentary taxes or any other
          excise or property taxes, charges or similar levies arising from any payment made hereunder or from the
         execution, delivery or enforcement of, or otherwise with respect to, this Agreement.

                  "Parts" means any and all appliances, parts, instruments, appurtenances, accessories,
         furnishings, seats, buyer furnished equipment, and other equipment of whatever nature (other than (a)
         complete Engines or engines and (b) any items leased by the Borrower from a third party (including
         without limitation leased Inflight Equipment)) which may from time to time be incorporated or installed
         in or attached to any Airframe or any Engine.

                  "Payment Date" shall have the meaning specified in Section 2.5.

                  "Person" means an individual, partnership, corporation, a business trust, joint stock company,
         trust, unincorporated association, joint venture, governmental authority or other entity of whatever
         nature.

                  "Principal Payment Date" has the meaning specified in Section 2.5.

                  "Reference Banks" means the principal London offices of Credit Lyonnais and Citibank, NA or
         such other bank or banks as may be appointed by the Administrative Agent in consultation with the
         Lenders.

                  "Register" has the meaning specified in Section 8.7(c).

                  "Related Loan Documents" means the "Loan Documents" as defined in the definitive credit
         agreement(s) and mortgage and security agreement(s) for the Related Obligations.

                  "Related Obligations" means "Obligations" as defined in the mortgage and security agreement
          entered into by the Borrower pursuant to the Term Sheet with respect to the financing of any other
         Airbus A318 Aircraft thereunder.

                  "Required Lenders" means Lenders holding not less than 66?% of the aggregate outstanding
         principal amount of the Loan.

                  "Requirement of Law" means, as to any Person, any law, treaty, rule or regulation or
         determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or
         binding upon such Person or any of its property or to which such Person or any of its property is
         subject.

                  "Secured Obligations" has the meaning specified in the Mortgage.

                  "Subsidiary" of any Person means any corporation, partnership, joint venture, limited liability
         company, trust or estate of which (or in which) more than 50% of (a) the issued and outstanding capital
         stock having ordinary voting power to elect a majority of the Board of Directors of such corporation
         (irrespective of whether at the time capital stock of any other class or classes of such corporation
         shall or might have voting power upon the occurrence of any contingency), (b) the interest in the
         capital or profits of such limited liability company, partnership or joint venture or (c) the beneficial
         interest in such trust or estate is at the time directly or indirectly owned or controlled by such
         Person, by such Person and one or more of its other Subsidiaries or by one or more of such Person's
         other Subsidiaries.

                  "Taxes" has the meaning specified in Section 2.12.

                  "10-Year Loan" means a Loan with a final maturity date of the tenth anniversary of the date the
           Loan is made.

                  "12-Year Loan" means a Loan with a final maturity date of the twelfth anniversary of the date
         the Loan is made.

                  "Term Sheet" means the Term Sheet for the Financing Support of A318 Aircraft dated May 21,
         2003, between [***] and the Borrower.

                  "U.C.C." has the meaning set forth in Section 3.1(d).

                  "Voting Stock" means capital stock issued by a corporation, or equivalent interests in any
         other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for
         the election of directors (or persons performing similar functions) of such Person, even if the right so
         to vote has been suspended by the happening of such a contingency.

                  [***]

SECTION 1.2.      Terms Defined in Mortgage.  Terms for which meanings are provided in any Mortgage are, unless
otherwise defined herein, used in this Agreement with such meanings.

SECTION 1.3.      Computation of Time Periods.  In this Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding."

SECTION 1.4.      Accounting Terms.  All accounting terms not specifically defined herein shall be construed in
accordance with GAAP.

                                                   ARTICLE II

                                           AMOUNTS AND TERMS OF THE LOAN

SECTION 2.1.      The Loan.  The Initial Lender agrees, subject to the terms and conditions hereinafter set
forth, to make the Loan to the Borrower on a Business Day during the period from the date hereof until the
Cancellation Date in an amount equal to the Financed Purchase Price Amount of the Aircraft.

SECTION 2.2.      Making the Loan.  (a)  The Loan shall be made on notice, given not later than 5:00 P.M. (New
York time) on the fourth Business Day prior to the date of the proposed Loan, by the Borrower to the
Administrative Agent, which shall give to the Initial Lender prompt notice thereof.  Such notice of the Loan (the
"Notice of Loan") shall be by telephone, confirmed immediately in writing, or telecopier or telex, in
substantially the form of Exhibit B-1 hereto, specifying therein (i) the requested date of the Loan (the actual
date of the Loan being the date on which the Loan is made), (ii) the aggregate amount of the Loan, (iii) the date
of delivery to the Borrower of the Aircraft to secure the Loan, (iv) whether the Loan is to be a 10-Year Loan or
a 12-Year Loan, and (v) identifying information for the Aircraft to be financed.  The Administrative Agent shall,
after receipt of such notice and prior to two (2) Business Days before the requested date of the Loan, provide to
the Borrower and the Initial Lender a schedule containing the Principal Payment Dates for the Loan and the amount
of principal of the Loan to be paid on each such date, which shall be attached hereto as Schedule II.  The
Initial Lender shall, before 11:00 A.M. (New York time) on the date of the Loan, make available for the account
of its Lending Office to the Administrative Agent at the account of the Administrative Agent at [***], New York,
New York Branch (account number [***], in same day funds, the amount of the Loan.  After the Administrative
Agent's receipt of such funds and upon fulfillment of the applicable conditions set forth in Article III, the
Administrative Agent will make such funds available to the Borrower by direct transfer to [***] at such account
as [***] may direct.

SECTION 2.3.      Fees.  The Borrower agrees to pay to the Administrative Agent an administrative fee in the
amount of [***] per annum for the Loan, payable on the date of the borrowing of the Loan and annually on the
anniversary of such date until the Obligations shall have been satisfied in full.

SECTION 2.4.      Use of Proceeds.  The proceeds of the Loan shall be available (and the Borrower agrees that it
shall use such proceeds) solely to finance the purchase of the Aircraft.

SECTION 2.5.      Repayment.  The Borrower shall repay to the Administrative Agent for the ratable account of
each Lender the principal amount of the Loan in the monthly installments on the monthly anniversary dates of the
date of borrowing of the Loan (each such monthly anniversary date (or quarterly anniversary date to the extent
specified by the Administrative Agent as described below) being referred to as a "Payment Date") in accordance
with Schedule II; provided that the Payment Dates for the Loan may be changed from monthly to quarterly at the
option of the Administrative Agent, in which case the Administrative Agent shall provide to the Borrower and the
Lender a revised Schedule II reflecting such change, the terms of which revised Schedule shall be conclusive and
binding on the parties hereto, absent manifest error.

SECTION 2.6.      Interest.  (a)  Scheduled Interest.  The Borrower shall pay interest on the unpaid principal
amount of the Loan from the date of the Loan until the Loan shall be paid in full, payable in arrears, on each
Payment Date, at an interest rate per annum equal to the sum of (x) the Eurodollar Rate for the then applicable
Interest Period plus (y) the Applicable Margin, except as otherwise provided in Section 2.6(b), 2.7(b) or 2.10.

(b)      Default Interest.  Upon the occurrence and during the continuance of an Event of Default or a Default in
the payment of any principal of the Loan, the Borrower shall pay interest on the unpaid principal amount of the
Loan, payable upon demand at a rate per annum equal at all times to [***] per annum above the rate per annum that
would otherwise be required to be paid on the Loan pursuant to paragraph (a) above.  In addition, if any
interest, fee or other amount payable hereunder is not paid when due, then, to the fullest extent permitted by
law, the Borrower shall pay interest on such amount from the date such amount shall be due until such amount
shall be paid in full, payable on demand, at a rate per annum equal at all times to [***] per annum above the
rate of interest then applicable on the Loan pursuant to paragraph(a) above.

SECTION 2.7.      Interest Rate and Period Determination.  (a)  The interest rate for each Interest Period shall
be established by the Administrative Agent.  The Administrative Agent shall give prompt notice to the Borrower
and the Lenders of the applicable interest rate determined by the Administrative Agent from time to time and the
rate, if any, furnished by each Reference Bank and used by the Administrative Agent for the purpose of
determining the Eurodollar Rate.

(b)      In the event that, prior to the first day of any Interest Period, the Administrative Agent shall have
determined, acting reasonably (which determination shall be conclusive and binding upon the Borrower), that, by
reason of circumstances affecting the market generally, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the Lenders as soon as practicable thereafter.  In such case,
during the next thirty days, the Borrower and the Administrative Agent, in consultation with the Lenders, shall
negotiate a mutually satisfactory interest rate to be substituted for the Eurodollar Rate.  If a substituted
interest rate is agreed upon, it shall be effective from the first day of the applicable Interest Period.  If the
Borrower and the Administrative Agent fail to agree upon a substituted interest rate, the applicable interest
rate for the Loan shall be equal to the sum of (x) the rate determined in good faith by the Administrative Agent,
in consultation with the Lenders, to be the Lenders' cost to maintain the Loan plus (y) the Applicable Margin.
The replacement interest rate determined pursuant to this paragraph (b) (not including the Applicable Margin)
shall hereinafter be referred to as the "Alternate Rate".

SECTION 2.8.      Prepayments.  (a)  The Borrower may, upon at least ten (10) Business Days notice to the
Administrative Agent stating the proposed date and aggregate principal amount of the prepayment (unless the
giving of ten Business Days notice as aforesaid is not practicable, in which event the Borrower agrees to give
such shorter notice as is practicable but in any event not to be less than five Business Days), and if such
notice is given the Borrower shall prepay the outstanding principal amount of the Loan in whole but not in part
(except as otherwise expressly permitted pursuant to Section 2.14 hereof), together with accrued interest to the
date of such prepayment on the principal amount prepaid, and without premium or penalty except to the extent of
any costs required to be reimbursed by Borrower pursuant to the applicable provisions of Section 8.4(b) hereof.
The Loan, if prepaid pursuant to this Section 2.8, may not be reborrowed.

(b)      If an Event of Loss occurs with respect to the Aircraft, the Borrower shall prepay the outstanding
principal amount of the Loan in whole, together with accrued interest to the date of such prepayment and all
other Obligations then due and payable; provided that (x) the date of prepayment shall not be later than the
earlier of the third Business Day following receipt of insurance proceeds in respect of the Aircraft or the first
Business Day following the 90th day after the occurrence of such Event of Loss, (y) the date of such prepayment
shall be notified by the Borrower to the Administrative Agent at least five Business Days prior thereto and
(z) such prepayment shall be without premium or penalty except to the extent of such costs are required to be
reimbursed by Borrower pursuant to the applicable provisions of Section 8.4(b) hereof.

SECTION 2.9.      Increased Costs.  (a)  If the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender with any applicable request or directive
(whether or not having the force of law but, if not having the force of law, is generally applied by the Lender
to similarly situated borrowers) from any central bank or other Governmental Authority made subsequent to the
date hereof:

    (i)  shall subject any Lender to any Tax of any kind whatsoever with respect to this Agreement or the Loan
         made or held by it, or change the basis of taxation of payments to such Lender in respect thereof
         (except for Taxes covered by Section 2.12 and changes in the rate of tax on the overall net income of
         such Lender);

    (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar
         requirement against assets held by, deposits or other liabilities in or for the account of, advances,
         loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender;
         or

    (iii)shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender, by an amount that such Lender,
acting reasonably, deems to be material, of making, funding or maintaining the Loan based upon the Eurodollar
Rate, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to compensate such Lender for such
increased cost or reduced amount receivable.  If any Lender becomes entitled to claim any additional amounts
pursuant to this paragraph, it shall promptly notify the Borrower (with a copy to the Administrative Agent) of
the event by reason of which it has become so entitled.

(b)      Without duplication of any amount payable by Borrower underss. 2.9(a), if any Lender, acting reasonably,
shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or
in the interpretation or application thereof or compliance by such Lender or any corporation controlling such
Lender with any request or directive regarding capital adequacy (whether or not having the force of law but, if
not having the force of law, is generally applied by the Lender to similarly situated borrowers) from any
Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that
which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking
into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender, acting reasonably, to be material, then from time to time, after submission by such Lender
to the Borrower (with a copy to the Administrative Agent) of a written request therefor, the Borrower shall pay
to such Lender such additional amount or amounts as will compensate such Lender or such corporation for such
reduction.

(c)      A certificate as to any additional amounts payable pursuant to this Section submitted by any Lender to
the Borrower (with a copy to the Administrative Agent) shall be conclusive in the absence of manifest error.
Notwithstanding anything to the contrary in this Section, the Borrower shall not be required to compensate a
Lender pursuant to this Section for any amounts incurred more than 180 days prior to the date that such Lender
notifies the Borrower of such Lender's intention to claim compensation therefor; provided that, if the
circumstances giving rise to such claim have a retroactive effect, then such 180 day period shall be extended to
include the period of such retroactive effect.

SECTION 2.10.     Illegality.  Notwithstanding any other provision of this Agreement, if any Lender, acting
reasonably, shall determine that the introduction after the date of this Agreement of or any change after the
date of this Agreement in or in the interpretation of any law or regulation makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for any Lender or its Lending Office to make,
fund, continue or maintain its portion of the Loan bearing interest based upon the Eurodollar Rate as
contemplated herein, then:  (i) such Lender shall notify the Administrative Agent and the Borrower of the same,
(ii) such portion of the Loan will convert into a Loan based upon the Alternate Rate (as determined pursuant to
Section 2.7(c) except that only the affected Lender shall be involved) such that the interest due and payable
thereon shall be the sum of (x) the Applicable Margin and (y) the Alternate Rate in effect from time to time, and
(iii) the obligation of such Lender to make, fund, continue or maintain its portion of the Loan based upon the
Eurodollar Rate shall be suspended until the Administrative Agent shall notify the Borrower and the Lenders that
the circumstances causing such suspension no longer exist.

SECTION 2.11.     Payments and Computations.  (a)  The Borrower shall make each payment hereunder and under the
Notes not later than 11:00 A.M. (New York time) on the day when due in U.S. dollars to the Administrative Agent
at [***], New York, New York, [***] (or to such other account as shall be designated by the Administrative Agent
from time to time) in same day funds. The Administrative Agent will promptly thereafter but in no event later
than 3:00 P.M. (New York time) on the date such funds are received by the Administrative Agent from the Borrower
cause to be distributed like funds relating to the payment of principal or interest ratably (other than amounts
payable pursuant to Section 2.9, 2.12 or 8.4(c) and amounts reflecting different prevailing interest rates on
the outstanding Loan) to the Lenders for the account of their respective Lending Offices, and like funds
relating to the payment of any other amount payable to any Lender to such Lender for the account of its Lending
Office, in each case to be applied in accordance with the terms of this Agreement. Upon its acceptance of an
Assignment and Acceptance and recording of the information contained therein in the Register pursuant to Section
8.7(d), from and after the effective date specified in such Assignment and Acceptance, the Administrative Agent
shall make all payments hereunder and under the Notes in respect of the interest assigned thereby to the Lender
assignee thereunder, and the parties to such Assignment and Acceptance shall make all appropriate adjustments in
such payments for periods prior to such effective date directly between themselves.

(b)      The Borrower hereby authorizes each Lender, if and to the extent any payment owed to such Lender is not
made by the Borrower when due hereunder or under any Note held by such Lender, to charge from time to time
against any or all of the Borrower's accounts with such Lender any amount so due.

(c)      All computations of interest based on the Eurodollar Rate or the Alternate Rate shall be made by the
Administrative Agent on the basis of a year of 360 days, in each case for the actual number of days (including
the first day but excluding the last day) occurring in the Interest Period for which such interest is payable.
Each determination by the Administrative Agent of an interest rate hereunder shall be conclusive and binding for
all purposes, absent manifest error.

(d)      Whenever any payment hereunder or under the Notes shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest; provided, however, that, if such extension would
cause payment of interest on or principal of the Loan if accruing interest at the Eurodollar Rate to be made in
the next following calendar month, such payment shall be made on the immediately preceding Business Day.

SECTION 2.12.     Taxes.  (a)  All payments made by the Borrower under this Agreement and the Notes shall be made
free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp
or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority or any political subdivision or taxing
authority thereof or therein (all such taxes, levies, imposts, duties, charges, fees, deductions and withholdings
being hereinafter called "Taxes").  If any Taxes are required to be withheld from any amounts payable to any
Agent or any Lender hereunder or under the Notes, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after payment of all Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the
Notes.  In addition, the Borrower shall pay any Other Taxes to the appropriate taxing authority in accordance
with applicable law.  Whenever any Taxes or Other Taxes are payable by the Borrower, as promptly as possible
thereafter the Borrower shall send to the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing
payment thereof.  If the Borrower fails to pay any Taxes or Other Taxes which are subject to indemnification
hereunder when due to the appropriate taxing authority or fails to remit to the Administrative Agent the required
receipts or other required documentary evidence, the Borrower shall indemnify the Agents and the Lenders for any
incremental taxes, interest or penalties that may become payable by each Agent or any Lender as a result of any
such failure.  The agreements of the Borrower in this subsection shall survive the termination of this Agreement
and the Commitments and the payment of the Notes and all other amounts payable hereunder and under the other Loan
Documents.

(b)      Notwithstanding any provision to the contrary herein, the Borrower shall have no liability to pay or
indemnify any Lender, any Agent or any of their respective Affiliates with respect to any of the following Taxes
or Other Taxes:

(1)      Any Taxes or Other Taxes to the extent such Taxes or Other Taxes are imposed as a result of a present,
former, or future connection between any Lender or each Agent or Affiliate thereof and the jurisdiction imposing
such Taxes or Other Taxes (other than a connection arising solely from such Agent, Lender or Affiliate having
executed, delivered, performed its obligations, received a payment under or enforced this Agreement or any
related document or the Notes) or any political subdivision or taxing authority thereof or therein; or

(2)      Any Taxes or Other Taxes to the extent imposed as a result of a Lender's failure (i) to comply with the
requirements of subsection (c) hereunder or (ii) to provide any other necessary exemption certificates or other
required documentation that is required by law, treaty, or regulation as a condition to the allowance of any
reduction in the rate of such Taxes or Other Taxes; provided, however, that in the case of both (i) and (ii) that
the Lender is legally entitled to comply with such requirements.

(3)      Any Taxes or Other Taxes imposed upon such Lender, Agent or Affiliate based upon its net income, net
profits or net gains;

(4)      Any incremental Taxes or Other Taxes imposed upon such Lender as of the date of such transfer (or
imposed based on a Requirement of Law enacted prior to the date of such transfer but effective as of a later
date) solely as a result of (i) a transfer by any Lender of its lending office in respect of the Loan other than
as a result of a circumstance contemplated by Sections 2.9, 2.10 or 2.14 or otherwise at the request of Borrower
or (ii) the gross negligence, willful misconduct or breach of any obligation undertaken by any Lender or Agent
hereunder; or

(5)      Any Taxes or Other Taxes the imposition or amount of which is being contested by Borrower on reasonable
grounds by appropriate proceedings or, at Borrower's request, by any Agent or Lender pursuant to the provision of
Section 2.12(f) during the period such contest is pending provided, however, that if the Agent or the Lender is
required to pay such Taxes or Other Taxes regardless of such contest, the Borrower shall pay such Taxes or Other
Taxes to the appropriate Government Authority and shall be entitled to the refund, if any, received upon a
successful resolution of such claim.

(c)      Each Lender that is not incorporated under the laws of the United States of America or a state thereof
agrees that, on or before the first Interest Payment Date after the date on which such Lender becomes a Lender
hereunder, it will deliver to the Borrower and the Agent two duly completed copies of United States Internal
Revenue Service ("IRS") Form W-8BEN or W-8ECI or other applicable form, as the case may be, certifying that it is
entitled to receive payments under this Agreement without deduction or withholding of any United States Federal
income taxes or at a reduced rate.  Each such Lender also agrees to deliver to the Borrower and the
Administrative Agent two further copies of the said IRS Form W-8BEN or W-8ECI or other or successor applicable
forms or other manner of certification, as the case may be, on or before the date that any such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the most recent form previously
delivered by it to the Borrower, and such extensions or renewals thereof as may reasonably be requested by the
Borrower or the Administrative Agent.  Notwithstanding any other provision of this paragraph, a Lender shall not
be required to deliver any form pursuant to this paragraph that such Lender is not legally able to deliver.

(d)      The Borrower shall duly file IRS Forms 1042 and 1042S or appropriate successor forms annually with
respect to all interest payments hereunder as required by the Code and applicable IRS regulations and procedures
and shall provide the Administrative Agent with copies of the forms so filed.

(e)      If the Administrative Agent or any Lender receives a refund in respect of Taxes or Other Taxes paid by
the Borrower, which in the good faith judgment of such Lender is allocable to such payment, it shall promptly pay
such refund, together with any other amounts paid by the Borrower in connection with such refunded Taxes or Other
Taxes, to the Borrower, net of all out-of-pocket expenses of such Lender incurred in obtaining such refund,
provided, however, that the Borrower agrees to promptly return such refund to the Administrative Agent or the
applicable Lender as the case may be, if it receives notice from the Administrative Agent or applicable Lender
that such Administrative Agent or Lender is required to repay such refund unless such repayment is due to events
described in (b)(6) hereof.

(f)      If a written claim is made against any Lender or either Agent for any Taxes or Other Taxes, such Lender
or Agent, as the case may be, shall promptly notify the Borrower in writing of such claim, and upon written
request of Borrower shall, at the Borrower's sole cost and expense, contest the validity or amount of such claim
or permit the Borrower, to contest the validity or amount of such claim, provided, however, that the Lender or
Agent shall not be required and Borrower shall not be permitted to contest such claim unless (i) the Borrower
shall provide to the Lender an opinion of the Chief Financial Officer of the Borrower reasonably satisfactory to
such Lender stating that a reasonable basis exists to contest such claim, (ii) the Borrower agrees to indemnify
the Lender for any additional taxes, interest, penalties or other expenses incurred as a result of such contest
and (iii) the contest of such claim would not, in the sole judgment, exercised in good faith, of such Lender, be
materially disadvantageous to such Lender.  The failure of a Lender or Agent to promptly notify the Borrower of
any such claim as required above in this clause (f) shall not diminish the obligations of the Borrower under this
Section 2.12 with respect to such claim, except to the extent that a contest that would otherwise be available in
accordance with this clause (f) is precluded as a result of such failure or to the extent of any penalty that
would have been avoided absent such failure.

SECTION 2.13.     Sharing of Payments, Etc.  If any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) on account of the Loan (other than
amounts due to such Lender pursuant to Section 2.9, 2.12 or 8.4(c) or on account of differing rates of interest
on portions of the Loan) in excess of its ratable share of payments on account of the Loan obtained by all the
Lenders (such Lender, the "Overpaid Lender"), such Overpaid Lender shall forthwith (x) notify the Administrative
Agent of such overpayment (and the Administrative Agent shall notify the other Lenders thereof) and (y) pay to
the other Lenders such amounts in cash as shall be necessary (as calculated by the Administrative Agent) to cause
such Overpaid Lender to share the excess payment ratably with each of them, and the Overpaid Lender, upon such
payment to each other Lender, shall be deemed to have purchased a participation in such other Lender's Loans in
an amount equal to such payment; provided, however, that if all or any portion of such excess payment is
thereafter recovered from such Overpaid Lender, such payment to and purchase from each Lender shall be rescinded
and such Lender shall repay to the Overpaid Lender such payment to the extent of such recovery together with an
amount equal to such Lender's ratable share (according to the proportion of (i) the amount of such Lender's
required repayment to (ii) the total amount so recovered from the Overpaid Lender) of any interest or other
amount paid or payable by the Overpaid Lender in respect of the total amount so recovered. The Borrower agrees
that any Lender so deemed to have purchased a participation from another Lender pursuant to this Section 2.13
may, to the fullest extent permitted by law, exercise all its rights to obtain payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the direct creditor of the Borrower
in the amount of such participation.

SECTION 2.14.     Lender Cooperation.  (a)  Each Lender agrees that, upon the occurrence of any event giving rise
to the operation of Section 2.9, 2.10, 2.12(a) or 2.15 with respect to such Lender, it will, if requested by the
Borrower and at the Borrower's cost for all of such Lender's out-of-pocket costs and expenses, use reasonable
efforts (subject to overall policy considerations of such Lender) to designate another lending office for the
Loan with the objective of avoiding or, if avoidance is not possible, reducing the consequences of such event;
provided, that such designation is made on terms that, in the reasonable judgment of such Lender, cause such
Lender and its lending office(s) to suffer no economic, legal or regulatory disadvantage.

(b)      If any Lender is unable to avoid or reduce, to Borrower's reasonable satisfaction, the amount payable by
Borrower as compensation or indemnification under Sections 2.9, 2.10, 2.12(a) or 2.15, the Borrower shall be
entitled (but shall not be obligated) to prepay such Obligations as shall then be due and owing to such Lender in
respect of the portion of the Loan owing to it, with accrued interest to the date of prepayment but without
premium or penalty.

(c)      Nothing in this Section shall affect or postpone any of the obligations of the Borrower or the rights of
any Lender pursuant to Section 2.9, 2.10, 2.12(a), 2.15 or elsewhere in the Loan Documents.

SECTION 2.15.     [***] Lenders.  The Borrower acknowledges and agrees that [***] or another [***] Lender or if
the Loan is transferred to [***], [***] may obtain the funds necessary for it to make or maintain the Loan (in
whole or in part) from commercial banks or other institutional lenders who, as a condition to providing such
funds, may require an [***] Lender or [***] to enter into covenants substantially similar to those described in
Section 2.9. The Borrower agrees to pay on demand, and without duplication of any other amount it is required to
pay under Section 2.9, to [***] or any other [***] Lender or [***] an amount equal to any amount [***] or any
other  [***] Lender or [***] is required to pay under any such covenant as a result of costs so imposed on [***]
or another [***] Lender or [***] which are of general application, subject, in each case to the provisions of
Section 2.14 requiring mitigation on the part of the relevant commercial bank or other institutional lender (it
being agreed that the Borrower shall be entitled to prepay the Loan in connection with a claim under this
Section 2.15 to the extent provided in Section 2.14(b)).  Any such [***] Lender shall provide the Borrower with a
statement in reasonable detail of such costs.

                                                   ARTICLE III

                                           CONDITIONS TO MAKING THE LOAN

SECTION 3.1.      Conditions Precedent to the Loan.  The obligation of the Initial Lender to make the Loan shall
be subject to the following conditions precedent.

(a)      The Administrative Agent shall have received from the Borrower a duly executed Notice of Loan in
accordance with Section 2.2 hereof.

(b)      The Administrative Agent shall have received, each dated the date of the Loan, in form and substance
satisfactory to the Administrative Agent:

    (i)  one Note to the order of the Initial Lender evidencing the Loan;

    (ii) an Officer's Certificate of the Borrower stating (and such statements shall be true) that:

                                    (x)  the representations and warranties made by the Borrower and contained in
                           the Loan Documents are correct on and as of the date of the Loan before and after
                           giving effect to the Loan and to the application of the proceeds therefrom, as though
                           made on and as of such date, and

                                    (y)  no Default or Event of Default has occurred and is continuing;

    (iii)certified copies of the resolutions of the Board of Directors of the Borrower approving the Airbus
         Purchase Agreement and the financing of the Aircraft purchased thereunder and of all documents
         evidencing other necessary corporate action and governmental approvals, if any, to authorize the
         execution of such Loan Documents and the performance of the Borrower's obligations thereunder;

    (iv) a certificate of the Secretary or an Assistant Secretary of the Borrower certifying the names and true
         signatures of the officers of the Borrower authorized to sign the Loan Documents and the other documents
         to be delivered hereunder and thereunder;

    (v)  a favorable opinion of David Sislowski, Esq., General Counsel of the Borrower, substantially in the form
         of Exhibit D-1 hereto;

    (vi) a favorable opinion of [***] special counsel for the Borrower, substantially in the form of Exhibit D-2
         hereto; and

    (vii)a favorable opinion of [***], special aviation counsel for the Administrative Agent, substantially in
         the form of Exhibit D-3 hereto and addressed to the Administrative Agent and the Lender.

(c)      The following documents shall have been duly authorized, executed and delivered by the respective
parties thereto, shall each be reasonably satisfactory in form and substance to the Administrative Agent and
shall be in full force and effect and copies (or an excerpt in the case of the purchase agreement described in
clause (i) below) shall have been delivered to the Administrative Agent and its counsel:

    (i)  subject to the prior written consent of [***] and the manufacturer, a copy of Clauses 12 and 13 of the
         Airbus Purchase Agreement, certified by an authorized representative of the Borrower to be true and
         correct and not to be terminated, amended or waived by the Borrower in respect of the Aircraft;

    (ii) a bill of sale covering the Aircraft executed by [***] in favor of the Borrower, dated the date of
         delivery of the Aircraft;

    (iii)a bill of sale for the Aircraft on AC Form 8050-2 or such other form as may be approved by the FAA on
         the date of delivery of the Aircraft executed by [***] in favor of the Borrower and dated such date; and

    (iv) a consent and agreement, relating to the Collateral Agent's Lien on the Purchase Agreement Rights
         pursuant to the Mortgage, executed by [***] in favor of the Borrower, dated the date of delivery of the
         Aircraft.

(d)      The Administrative Agent shall have received a copy of the Mortgage, duly executed by the Borrower,
together with:

    (i)  acknowledgment copies or stamped receipt copies of proper financing statements, duly filed under the
         Uniform Commercial Code (the "U.C.C.") of all jurisdictions that the Administrative Agent may deem
         necessary or desirable in order to perfect the security interests created by the Mortgage,

    (ii) evidence of the completion of all recordings and filings of or with respect to the Mortgage that the
         Administrative Agent may deem necessary or desirable in order to perfect the security interest created
         by the Mortgage,

    (iii)at the Borrower's cost, an independent insurance broker's report (including confirmation of coverage)
         and certificate(s) of insurance, in form and substance satisfactory to the Administrative Agent, acting
         reasonably, as to due compliance with the terms of such Mortgage relating to insurance with respect to
         the Aircraft, and

    (iv) evidence that all other actions necessary or, in the reasonable opinion of the Administrative Agent,
         desirable to perfect and protect the security interests created by the Mortgage have been taken
         (including all FAA filings).

(e)      The Borrower has (subject to the filing of an appropriate bill of sale with the FAA) good title to the
Aircraft, free and clear of Liens other than the Permitted Liens.

(f)      The Aircraft shall have been duly certified by the FAA as to type and airworthiness and the
Administrative Agent has received a copy of such certification (or delivery of such copy will occur as soon after
the closing as is practicable).

(g)      No applicable law or regulation or interpretation thereof by appropriate regulatory authorities shall be
in effect which, in the opinion of the Administrative Agent or its counsel, acting reasonably, would materially
restrict, prohibit or make it illegal for the Initial Lender to make the Loan or to realize the benefits of the
security afforded by the Mortgage in respect thereof; and no action or proceeding shall have been instituted nor
shall government action be threatened before any court or governmental agency, nor shall any order, judgment or
decree have been issued or proposed to be issued by any court or governmental agency at the time of the Loan to
set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transactions
contemplated hereby.

(h)      The Administrative Agent shall have received payment of the arrangement fee in the amount of 1% of the
principal amount of the Loan and of the initial administrative fee pursuant to Section 2.3, and payment of or
arrangements satisfactory to the Administrative Agent for the payment of all costs and expenses then required to
be paid by the Borrower under Section 8.4.

                  Promptly upon the filing of the Mortgage and the Mortgage Supplement (as defined in such
Mortgage) and the due registration of the Aircraft, in each case pursuant to the Federal Aviation Act, the
Borrower shall cause [***], special aviation counsel for the Administrative Agent, to deliver an opinion as to
the due and valid registration of the Aircraft in the name of the Borrower, the due recording of the Borrower's
FAA bill of sale, the Mortgage and the Mortgage Supplement and the lack of filing of any intervening documents
with respect to the Aircraft.

                                                   ARTICLE IV

                                          REPRESENTATIONS AND WARRANTIES

SECTION 4.1.      Representations and Warranties of the Borrower.  (a)  The Borrower represents and warrants, on
the date of this Agreement, as follows:

    (i)  The Borrower is a corporation duly organized, validly existing and in good standing under the laws of
         the State of Colorado; is duly qualified to do business as a foreign corporation in each jurisdiction in
         which its operations or the nature of its business requires, other than failures to qualify which would
         not have a material adverse effect on the ability of the Borrower to perform its obligations under this
         Agreement; is a Certificated Air Carrier; maintains its location (as such term is defined in Article 9
         of the Uniform Commercial Code) in Colorado; holds all licenses, certificates, permits and franchises
         from the appropriate agencies of the United States and/or all other governmental authorities having
         jurisdiction necessary to authorize the Borrower to engage in air transport and to carry on scheduled
         passenger service as presently conducted; and has the corporate power and authority to conduct its
         business as it is presently being conducted.

    (ii) The execution, delivery and performance by the Borrower of this Agreement and the consummation of the
         transactions contemplated hereby, are within the Borrower's corporate powers, have been duly authorized
         by all necessary corporate action, and do not contravene (1) the Borrower's articles of incorporation or
         by-laws or (2) any Requirement of Law or any contractual restriction binding on or affecting the
         Borrower and do not result in or require the creation of any lien, security interest or other charge or
         encumbrance (other than pursuant to the Mortgage) upon or with respect to any of its properties.

    (iii)No authorization or approval or other action by, and no notice to or filing with, any Governmental
         Authority or any other third party is required for the due execution, delivery and performance by the
         Borrower of this Agreement, except for (1) the orders, permits, waivers, exemptions, authorizations and
         approvals of the Governmental Authorities having jurisdiction over the Borrower, which orders, permits,
         waivers, exemptions, authorizations and approvals have been duly obtained and are in full force and
         effect and (2) any normal periodic and other reporting requirements under the Federal Aviation Act and
         the regulations promulgated thereunder and the applicable rules and regulations of the FAA, in each case
         to the extent required to be given or obtained only after the date of this Agreement.

    (iv) This Agreement has been duly executed and delivered by the Borrower.  This Agreement is the legal, valid
         and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms,
         except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or
         similar laws relating to or limiting creditors' rights generally or by equitable principles relating to
         enforceability.

    (v)  The Consolidated balance sheet of the Borrower and its Subsidiaries as at the end of the most recent
         fiscal year of the Borrower for which such balance sheet is available, and the related Consolidated
         statements of operations and cash flows of the Borrower and its Subsidiaries for such fiscal year,
         accompanied by an opinion of KPMG LLP, independent public accountants, and the Consolidated balance
         sheet of the Borrower and its Subsidiaries as at the end of the most recent fiscal quarter of the
         Borrower (excluding the final fiscal quarter of each fiscal year) for which such balance sheet is
         available, and the related Consolidated statements of operations and cash flows of the Borrower and its
         Subsidiaries for the fiscal period then ended, duly certified by the Chief Financial Officer of the
         Borrower, copies of which have been furnished to the Administrative Agent, fairly present, subject, in
         the case of said balance sheet as at the end of such fiscal quarter, and said statements of operations
         and cash flows for such fiscal period then ended, to year-end audit adjustments, the Consolidated
         financial condition of the Borrower and its Subsidiaries as at such dates and the Consolidated results
         of the operations of the Borrower and its Subsidiaries for the period ended on such dates, all in
         accordance with GAAP.

    (vi) There is no pending or threatened action, suit, investigation, litigation or proceeding affecting the
         Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (1) is
         reasonably likely to have a material adverse effect on (A) the business, condition (financial or
         otherwise), operations or properties of the Borrower and its Subsidiaries taken as a whole, (B) the
         rights and remedies of the Administrative Agent or any Lender under this Agreement or (C) the ability of
         the Borrower to perform its obligations under this Agreement, or (2) purports to affect the legality,
         validity or enforceability of this Agreement or the consummation of the transactions contemplated hereby.

    (vii)The Borrower is not engaged in the business of extending credit for the purpose of purchasing or
         carrying margin stock (within the meaning of Regulation U issued by the Board of Governors of the
         Federal Reserve System).

(b)      On the date of the Loan, the Borrower represents and warrants as set forth in Section 4.1(a) as of such
date and as follows:

    (i)  The Borrower has the corporate power and authority to own the Aircraft securing the Loan.

    (ii) The execution, delivery and performance by the Borrower of each Loan Document to which it is or will be
         a party, and the consummation of the transactions contemplated thereby, are within the Borrower's
         corporate powers, have been duly authorized by all necessary corporate action, and do not contravene (1)
         the Borrower's articles of incorporation or by-laws or (2) any Requirement of Law or any contractual
         restriction binding on or affecting the Borrower and do not result in or require the creation of any
         Lien, security interest or other charge or encumbrance (other than pursuant to the Mortgage relating to
         the Loan) upon or with respect to any of its properties.

    (iii)No authorization or approval or other action by, and no notice to or filing with, any Governmental
         Authority or any other third party is required for the due execution, delivery and performance by the
         Borrower of any Loan Document to which it is or will be a party, except for (1) the orders, permits,
         waivers, exemptions, authorizations and approvals of the Governmental Authorities having jurisdiction
         over the operation of the Aircraft by the Borrower, which orders, permits, waivers, exemptions,
         authorizations and approvals have been duly obtained or will prior to the date of the Loan be duly
         obtained, and will on the date of the Loan be in full force and effect and (2) any normal periodic and
         other reporting requirements under the Federal Aviation Act and the regulations promulgated thereunder
         and the applicable rules and regulations of the FAA, in each case to the extent required to be given or
         obtained only after the date of the Loan.

    (iv) Except for (1) the filing for recording pursuant to the Federal Aviation Act of the Mortgage and the
         Mortgage Supplement attached thereto and made a part thereof, (2) the filing of financing statements
         (and continuation statements at periodic intervals) with respect to the security and other interests
         created by such documents under the Uniform Commercial Code of Colorado (which financing statement the
         Borrower has caused or is in the process of causing to be presented in due form for filing to the
         appropriate filing office in Colorado) and (3) the taking of possession by the Collateral Agent of the
         original counterparts of such Mortgage and the Mortgage Supplement, no further action, including any
         filing or recording of any document (including any financing statement in respect thereof under Article
         9 of the Uniform Commercial Code of any applicable jurisdiction), is necessary or advisable in order to
         establish or perfect the Collateral Agent's security interest in the Aircraft (granted pursuant to the
         Mortgage and the Mortgage Supplement) as against the Borrower and any third parties in any applicable
         jurisdictions in the United States.

    (v)  There has not occurred any event which constitutes a Default or an Event of Default which is continuing
         and there has not occurred any event which constitutes or would, with the passage of time or the giving
         of notice, or both, constitute an Event of Loss.

    (vi) This Agreement has been, and each of the other Loan Documents to which the Borrower will be a party when
         delivered hereunder will have been, duly executed and delivered by the Borrower. This Agreement is, and
         each of the Loan Documents to which the Borrower will be a party when delivered hereunder will be, the
         legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with
         their respective terms except as such enforceability may be limited by bankruptcy, insolvency,
         reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by
         equitable principles relating to enforceability.

    (vii)There is no pending or threatened action, suit, investigation, litigation or proceeding affecting the
         Borrower or any of its Subsidiaries before any court, governmental agency or arbitrator that (1) is
         reasonably likely to have a material adverse effect on (A) the business, condition (financial or
         otherwise), operations or properties of the Borrower and its Subsidiaries taken as a whole, (B) the
         rights and remedies of the Agents or any Lender under the Loan Documents or (C) the ability of the
         Borrower to perform its obligations under the Loan Documents or (2) purports to affect the legality,
         validity or enforceability of this Agreement or any Loan Document or the consummation of the
         transactions contemplated hereby or thereby.

    (viii)The Borrower has good title to the Aircraft, free and clear of Liens other than the Permitted Liens.
         The Aircraft has been duly certified by the FAA as to type and airworthiness, has been insured by the
         Borrower in accordance with the terms of such Mortgage and is in the condition and state of repair
         required under the terms of such Mortgage.

    (ix) The Collateral Agent, as secured party under the Mortgage, is entitled to all of the benefits and
         protections of Section 1110 of the Federal Bankruptcy Code with respect to the Aircraft and the
         Mortgage, including with respect to its right to take possession of the Airframe and Engines in the
         event of a case under Chapter 11 of the Federal Bankruptcy Code in which the Borrower is a debtor.

    (x)  Since March 31, 2003, there has been no material adverse change in the condition (financial or other),
         business, assets, properties or prospects of the Borrower.

                                                   ARTICLE V

                                             COVENANTS OF THE BORROWER

SECTION 5.1.      Affirmative Covenants.  So long as the Loan shall remain unpaid or any Lender shall have any
Commitment, the Borrower will:

(a)      Compliance with Laws, Etc.  Comply, and cause each of its Subsidiaries to comply, in all respects, with
         all applicable laws, rules, regulations and orders other than those the noncompliance with which would
         not have a material adverse effect on the Consolidated business, assets, properties or condition
         (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole or on the ability of the
         Borrower to perform its obligations under any Loan Document to which it is a party.

(b)      Payment of Taxes, Etc.  Pay and discharge, and cause each of its Subsidiaries to pay and discharge,
         before the same shall become delinquent, (i) all taxes, assessments and governmental charges or levies
         imposed upon it or upon its property (other than such taxes, assessments and governmental charges or
         levies as are being contested by Borrower on reasonable grounds by appropriate proceedings during the
         period such proceedings remain pending and for which adequate reserves have been established in
         accordance with GAAP) and (ii) all lawful claims that, if unpaid, might become a Lien upon its property,
         other than any such tax, assessment and governmental charge or levy or any such lawful claim which, if
         unpaid, in the aggregate, would not have a material adverse effect on the Consolidated business, assets,
         properties or condition (financial or otherwise) of the Borrower and its Subsidiaries taken as a whole
         or on the ability of the Borrower to perform its obligations under any Loan Document to which it is a
         party.

(c)      Preservation of Corporate Existence Etc.  Except as otherwise expressly provided herein, preserve and
         maintain and cause each of its Subsidiaries to preserve and maintain, its corporate existence, rights
         (charter and statutory) and franchises; provided, however, that neither the Borrower nor any of its
         Subsidiaries shall be required to preserve any right or franchise if the Board of Directors of the
         Borrower or such Subsidiary shall determine that the preservation thereof is no longer desirable in the
         conduct of the business of the Borrower or such Subsidiary.  Notwithstanding the foregoing, the Borrower
         shall at all times be a Certificated Air Carrier and the Mortgage shall at all times be entitled to all
         of the benefits and protections of Section 1110 of the Federal Bankruptcy Code.

(d)      Visitation Rights.  At any reasonable time and from time to time, permit the Administrative Agent or any
         of the Lenders or any agents or representatives thereof, to examine and make copies of and abstracts
         from the records and books of account of, and visit the properties of, the Borrower and any of its
         Subsidiaries, and to discuss the affairs, finances and accounts of the Borrower and any of its
         Subsidiaries with any of their officers or directors and with their independent certified public
         accountants.

(e)      Keeping of Books.  Keep, and cause each of its Subsidiaries to keep, proper books of record and account,
         in accordance with GAAP.

(f)      Reporting Requirements.  Furnish to the Lenders:

    (i)      as soon as available, but not later than 90 days after the close of each fiscal year of the Borrower, an
                  audited balance sheet and related statements of the Borrower at and as of the end of such
                  fiscal year, together with an audited statement of income and cash flows of the Borrower for
                  such fiscal year, each of which shall be prepared in accordance with GAAP and shall be
                  accompanied by an unqualified opinion of a firm of independent public accounts of nationally
                  recognized standing that said financial statements fairly present in all material respects the
                  financial condition and results of operation of the Borrower as at the end of, and for, such
                  period in accordance with GAAP;

    (ii)     as soon as available, but not later than 60 days after the close of each of the first three quarters of
                  each fiscal year of the Borrower, an unaudited balance sheet of the Borrower at and as of the
                  end of such quarter, together with an unaudited statement of income and cash flows of the
                  Borrower for such quarter, each of which shall be prepared in accordance with GAAP, certified
                  by the Chief Financial Officer of the Borrower that said financial statements fairly present in
                  all material respects the financial condition and results of operation of the Borrower as at
                  the end of, and for, such period in accordance with GAAP (subject to normal year-end audit
                  adjustments);

    (iii)    on an annual basis, together with the financial statements delivered pursuant to the preceding
                  paragraph (i), a certificate of the chief financial officer, Treasurer, any Vice President, or
                  other officer of the Borrower elected by the Borrower's Board of Directors stating that such
                  authorized officer has reviewed the activities of the Borrower and that, to the best knowledge
                  of such authorized officer, there exists as at the relevant date no Default or Event of Default
                  hereunder or should a Default or Event of Default exist, setting forth a description of such
                  Default or Event of Default and the relevant measures being taken to cure the same;

    (iv)     simultaneously with the filing thereof or the mailing thereof to its shareholders, copies of all such
                  financial statements, SEC Forms 10-K and 10-Q reports, notices of proxy statements and any
                  other documents as the Borrower shall file with the Securities and Exchange Commission or mail
                  to its shareholders or to creditors generally;

    (v)      from time to time, such other information as the Administrative Agent or any Lender may reasonably
                  request; and

    (vi)     promptly after the occurrence thereof and actual knowledge thereof by a responsible officer of the
                  Borrower, notice to the Administrative Agent and the Lenders of any Default or Event of Default.

SECTION 5.2.      Compliance with Mortgage.  Comply with the terms and provisions of the Mortgage.

SECTION 5.3.      Maintenance of Office.  Maintain an office in the State of Colorado where notices,
presentations and demands in respect of this Agreement and the other Loan Documents may be made upon it (which
office shall be maintained at the address specified in Section 8.2 until such time as the Borrower shall have
notified the Administrative Agent of a change of location).

SECTION 5.4.      Negative Covenants.  So long as the Loan shall remain unpaid or any Lender shall have any
Commitment, the Borrower will not make or permit, or permit any of its Subsidiaries to make or permit, any change
in accounting policies or reporting practices, except as required or permitted by GAAP.

SECTION 5.5.      Cape Town Convention.  The parties undertake to enter into new transaction documents, effective
from the date the Convention takes effect in the United States that constitute (an) "international interest(s)"
under the Convention.  The new transaction documents shall retain the commercial agreements set forth herein
modified only to ensure that an international interest is constituted and to reflect and enhance the
enforceability of the commercial agreements of the parties in the context of the Convention.  The parties intend
that the Lender's current priority position is not prejudiced thereby, and, should there be a risk thereof that
the creditor finds unacceptable, the current documents shall remain in force.  In that case, an additional
international interest shall be created in favor of the Lender and appropriate subordination arrangements shall
be made.  All such international interest(s) shall be registered in the international registry, on that effective
date, by one party and the other shall consent thereto.  Reasonable costs arising under this clause shall be for
the account of Borrower.

                                                   ARTICLE VI

                                                 EVENTS OF DEFAULT

SECTION 6.1.      Events of Default.  Each of the following events shall constitute an event of default with
respect to the Loan ("Events of Default") (whether any such event shall be voluntary or involuntary or come about
or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any
court or any order, rule or regulation of any administrative or government body) and each such Event of Default
shall continue so long as, but only as long as, it shall not have been remedied:

(a)      (i) the Borrower shall fail to make any payment within two (2) Business Days after the same shall have
         become due of principal of, or interest on, the Loan or any Note evidencing the Loan; or (ii) the
         Borrower shall fail to make any payment when the same shall become due of any other Obligations, and
         such failure shall continue unremedied for five (5) Business Days after the receipt by the Borrower of
         written notice of such failure from the Administrative Agent;

(b)      the Borrower shall have failed to perform or observe (or cause to be performed and observed) any other
         covenant or agreement to be performed or observed by it under this Agreement, the Mortgage or any other
         Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after
         knowledge thereof by a senior officer of the Borrower or, if earlier, receipt by the Borrower of written
         notice thereof from the Administrative Agent; or

(c)      any representation or warranty made by the Borrower herein or in such Mortgage or any document or
         certificate furnished by the Borrower in connection herewith or therewith or pursuant hereto or thereto
         shall prove to have been incorrect in any material respect at the time made, and, if capable of cure is
         not cured within ten (10) Business Days of the actual knowledge thereof by a senior officer of the
         Borrower or, if earlier, receipt by the Borrower of written notice thereof from the Administrative
         Agent; or

(d)      the commencement of an involuntary case or other proceeding in respect of the Borrower in an involuntary
         case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal
         or state bankruptcy, insolvency or other similar law in the United States or seeking the appointment of
         a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Borrower
         or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs
         and the continuation of any such case or other proceeding undismissed and unstayed for a period of sixty
         (60) consecutive days or an order, judgment or decree shall be entered in any proceeding by any court of
         competent jurisdiction appointing, without the consent of the Borrower, a receiver, trustee or
         liquidator of the Borrower, or of any substantial part of its property, or sequestering any substantial
         part of the property of the Borrower and any such order, judgment or decree or appointment or
         sequestration shall be final or shall remain in force undismissed, unstayed or unvacated for a period of
         sixty (60) days after the date of entry thereof; or

(e)      the commencement by the Borrower of a voluntary case under the Federal bankruptcy laws, as now
         constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or
         other similar law in the United States, or the consent by the Borrower to the appointment of or taking
         possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar
         official) of the Borrower or for all or substantially all of its property, or the making by the Borrower
         of any assignment for the benefit of creditors or the Borrower shall take any corporate action to
         authorize any of the foregoing; or

(f)      the Borrower shall fail to carry and maintain on or with respect to the Aircraft (or cause to be carried
         and maintained) insurance required to be maintained in accordance with the provisions of Section 3.6 of
         the Mortgage; or

(g)      the Lien of the Mortgage ceases to be a valid and enforceable, first and prior perfected Lien on the
         Collateral; or

(h)      the Borrower fails or ceases to be a Certificated Air Carrier or shall have been suspended as a
         Certificated Air Carrier and such suspension shall not be lifted or vacated within thirty (30) days, or
         if reinstatement of the same cannot reasonably be accomplished within such thirty (30) day period, such
         further period, not to exceed ninety (90) days, during which the Borrower is diligently pursuing such
         reinstatement, provided that during any such period, but for such suspension, no other Event of Default
         shall have occurred; or

(i)      the Borrower shall default in the payment when due of any principal of or interest on, or fail to make a
         scheduled rental payment on, any of its other indebtedness or any lease obligation; or (ii) any event
         specified in any note, agreement, indenture, lease or other document evidencing or relating to any
         indebtedness or any lease obligation shall occur, and, after giving effect to any applicable notice
         and/or grace periods, the effect of such default (in the case of clause (i)) or event (in the case of
         clause (ii)) is to cause, or to permit the holder or holders of such indebtedness or lease obligation
         (or a trustee or agent on behalf of such holder or holders) to cause, such indebtedness or lease
         obligation to become due or to be terminated, or to be prepaid in full (whether by redemption, purchase,
         offer to purchase or otherwise), prior to its stated maturity; provided that, (x) the outstanding amount
         of such indebtedness, (y) the capitalized amount of such lease obligation shall, singly or in the
         aggregate, be in excess of $10,000,000, and (z) in respect of any lease obligations, the event giving
         rise to any such default is not frivolous or vexatious; or

(j)      for so long as the Loan is held in whole or in part by a Lender, the maturity of any Related Obligations
         then held in whole or in part by such Lender or its Affiliates shall have been accelerated; or

(k)      for so long as the Loan is held in whole or in part by an  [***] Lender, Borrower shall default under
         the Airbus Purchase Agreement or any other contractual or financial obligation between the Borrower or
         its Affiliates, on the one hand, and an [***] Lender or its Affiliates, on the other hand

provided, however, that, notwithstanding anything to the contrary contained in Section 6.1(b) or (c), any failure
of the Borrower to perform or observe any covenant, condition, agreement or any error in a representation or
warranty shall not constitute an Event of Default if such failure or error is caused solely by reason of an event
that constitutes an Event of Loss affecting the Aircraft so long as the Borrower is continuing to comply with all
of the terms of Section 3.5 of the Mortgage.

                  Upon the occurrence of any Event of Default, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower, declare the Commitment to be
terminated, whereupon the same shall forthwith terminate, and/or (ii) shall at the request, or may with the
consent, of the Required Lenders, by notice to the Borrower, declare the Loan and all the Notes, all interest
thereon and all other amounts payable under this Agreement in connection with the Loan to be forthwith due and
payable and/or the Commitment terminated, whereupon the Loan and Notes, all such interest and all such amounts
shall become and be forthwith due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower and the Commitment shall be terminated; provided,
however, that in the event of an actual or deemed entry of an order for relief with respect to the Borrower under
the Federal Bankruptcy Code, (A) the Commitment shall automatically be terminated and (B) all Notes, all such
interest and all such amounts shall automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by the Borrower.  In addition, upon
the occurrence of an Event of Default, the Agents shall be entitled to exercise all rights, residing in powers
provided in the Mortgage or by applicable law.

                                                   ARTICLE VII

                                                    THE AGENTS

SECTION 7.1.      Authorization and Action.  Each Lender hereby appoints and authorizes each Agent to take such
action as agent on its behalf and to exercise such powers and discretion under the Loan Documents as are
expressly delegated to such Agent by the terms thereof, together with such powers and discretion as are
reasonably incidental thereto.  Each Agent shall have no duties or responsibilities except those expressly set
forth in this Agreement and any other Loan Document.  As to any matters not expressly provided for by the Loan
Documents (including, without limitation, enforcement or collection of the Notes), each Agent shall not be
required to exercise any discretion or take any action, but shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon the instructions of the Required
Lenders, and such instructions shall be binding upon all Lenders and all holders of Notes; provided, however,
that no Agent shall be required to take any action that exposes such Agent to personal liability or that is
contrary to this Agreement or applicable law or is not within the powers and discretion expressly delegated to
such Agent pursuant to the Loan Documents.  Each Agent agrees to give to each Lender prompt notice of each notice
received by it from the Borrower pursuant to the terms of this Agreement.

SECTION 7.2.      Each Agent's Reliance, Etc.  Neither Agent nor such Agent's directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with
the Loan Documents, except for its or their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, each Agent:  (i) may treat the payee of any Note as the holder thereof until the
Administrative Agent receives and accepts an Assignment and Acceptance entered into by the Lender that is the
payee of such Note, as assignor, and an Eligible Assignee, as assignee, as provided in Section 8.7; (ii) may
consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes no warranty or representation to
any Lender and shall not be responsible to any Lender for any statements, warranties or representations (whether
written or oral) made in or in connection with the Loan Documents; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or conditions of the Loan Documents
on the part of the Borrower or to inspect the property (including the books and records and the Airbus A318
Aircraft) of the Borrower; (v) shall not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of, or the perfection or priority of any Lien or security
interest created or purported to be created under or in connection with, the Loan Documents or any other
instrument or document furnished pursuant thereto; and (vi) shall incur no liability under or in respect of the
Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by
telecopier, telegram or telex) believed by it to be genuine and signed or sent by the proper party or parties.

SECTION 7.3.      The Agents and Their Affiliates.  Each Agent (or an Affiliate of such Agent) shall have the
same rights and powers under the Loan Documents as any other Lender and may exercise the same as though it were
not an Agent, and the term "Lender" or "Lenders" shall, as the context requires, include each Agent in its
individual capacity.  Each Agent and its Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, accept investment banking engagements from and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own securities of the Borrower or
any such Subsidiary, all as if such Agent were not an Agent and without any duty to account therefor to the
Lenders.

SECTION 7.4.      Lender Credit Decision.  Each Lender acknowledges that it has, independently and without
reliance upon the Agent or any other Lender and based on the financial statements referred to in Section
4.1(a)(v) and such other documents and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without
reliance upon any Agent or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action under this
Agreement.

SECTION 7.5.      Indemnification.  The Lenders agree to indemnify each Agent and such Agent's directors,
officers, agents or employees (to the extent not reimbursed by the Borrower), ratably according to the respective
principal amounts of the Notes then held by each such Lender, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind
or nature whatsoever that may be imposed on, incurred by, or asserted against such Agent in any way relating to
or arising out of the Loan Documents or any action taken or omitted by such Agent under the Loan Documents,
provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements resulting from an Agent's gross negligence
or willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse each Agent promptly
upon demand for its ratable share of any out-of-pocket expenses (including counsel fees) incurred by such Agent
in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, the Loan Documents, to the extent that such Agent is not reimbursed for such expenses by
the Borrower.

SECTION 7.6.      Successor Agent.  Subject to the appointment and acceptance of a successor agent as provided
below, either Agent may resign at any time by giving written notice thereof to the Lenders and the Borrower and
may be removed at any time with or without cause by the Required Lenders.  Upon any such resignation or removal,
or the earlier written request of such Agent to resign addressed as aforesaid, the Required Lenders shall have
the right to appoint a successor Agent.  If no successor Agent shall have been so appointed by the Required
Lenders, and shall have accepted such appointment, within 30 days after the retiring Agent's giving of notice of
resignation or the Required Lenders' removal of the retiring Agent, then the retiring Agent may, on behalf of the
Lenders, appoint a successor Agent, which may be [***].  Upon the acceptance of any appointment as an Agent by a
successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations under the Loan Documents.  After any retiring Agent's resignation or removal hereunder as
an Agent, the provisions of this Article VII (including, without limitation, Section 7.5) shall inure to the
retiring Agent's benefit as to any actions taken or omitted to be taken by it while it was an Agent under the
Loan Documents.

                                                   ARTICLE VIII

                                                   MISCELLANEOUS

SECTION 8.1.      Amendments, Etc.  No amendment or waiver of any provision of this Agreement or the Notes or the
other Loan Documents, nor consent to any departure by the Borrower therefrom, shall in any event be effective
unless the same shall be in writing and signed by the Required Lenders, and then such waiver or consent shall
(except as otherwise expressly agreed, in writing, by such Required Lenders) be effective only in the specific
instance and for the specific purpose for which given; provided, however, that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders (or, in the case of clauses (b) and (c) below, by the
holder of each Note affected thereby), do any of the following: (a) reduce the principal of, or interest on, the
Loan or the Notes or any other amounts hereunder, (b) postpone any date fixed for any payment of principal of, or
interest on, the Loan or the Notes or any other amounts payable hereunder, (c) change the aggregate unpaid
principal amount of the Loan or the Notes, or the number of Lenders, that shall be required for the Lenders or
any of them to take any action hereunder, (d) release any material portion of any Collateral; or (e) amend this
Section 8.1; and provided further that no amendment, waiver or consent shall, unless in writing and signed by the
Lenders required above to take such action and by the Agent, affect the rights or duties of the Agent under this
Agreement or any Note.

SECTION 8.2.      Notices, Etc.  All notices, requests and demands to or upon the respective parties hereto to be
effective shall be in writing (including by telecopy), and, unless otherwise expressly provided herein, shall be
deemed to have been duly given or made when delivered, or three Business Days after being deposited in the mail,
postage prepaid, or, in the case of telecopy notice, when confirmation of receipt is received by the sender,
addressed (a) in the case of the Borrower and the Agents, as follows and (b) in the case of any Lender other than
the Initial Lender, the Assignment and Acceptance pursuant to which such Lender becomes a party hereto or (c) in
the case of any party, to such other address as such party may hereafter notify to the other parties hereto:

                  The Borrower:                               Frontier Airlines, Inc.
                                                              Frontier Center One
                                                              7001 Tower Road
                                                              Denver, Colorado  80249-7312
                                                              Attention:  General Counsel
                                                              Telecopy:  (720) 374-4379
                                                              Telephone:  (720) 374-4542

                                                              Each Agent and Initial Lender:
                                                              [***]

 provided that any notice, request or demand to or upon the any Agent or any Lender pursuant to Article II, III
  or VII shall not be effective until received.  Delivery by telecopier of an executed counterpart of any
 amendment or waiver of any provision of this Agreement or the Notes or of any Exhibit hereto to be executed and
 delivered hereunder shall be effective as delivery of a manually executed counterpart thereof.

SECTION 8.3.      No Waiver; Remedies.  No failure on the part of any Lender or any Agent to exercise, and no
delay in exercising, any right under any Loan Document 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. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

SECTION 8.4.      Costs and Expenses.  (a)  The Borrower agrees (i) to pay or reimburse the Initial Lender and
each Agent for all its reasonable out-of-pocket costs and expenses incurred in connection with the preparation,
negotiation and execution of, and any amendment, supplement or modification to, this Agreement and the other Loan
Documents and any other documents prepared in connection herewith or therewith, and the consummation and
administration of the transactions contemplated hereby and thereby, including the reasonable fees and
disbursements of counsel to such Agent and filing and recording fees and expenses and (ii) to pay or reimburse
each Lender and each Agent for all its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including
the fees and disbursements of counsel (including the allocated fees and expenses of in-house counsel) to each
Lender and of counsel to such Agent.

(b)      The Borrower agrees to indemnify each Lender for, and to hold each Lender harmless from, any loss or
expense that such Lender may sustain or incur as a consequence of (a) default by the Borrower in making a
borrowing of the Loan after the Borrower has given a notice requesting the same in accordance with the provisions
of this Agreement, (b) default by the Borrower in making any prepayment of the Loan if based upon the Eurodollar
Rate after the Borrower has given a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of the Loan if based upon the Eurodollar Rate on a day that is not the last day of an
Interest Period with respect thereto.  A certificate as to any amounts payable pursuant to this Section 8.4(b)
submitted to the Borrower by any Lender shall be conclusive in the absence of manifest error.  This covenant
shall survive the termination of this Agreement and the payment of the Loan and all other amounts payable
hereunder.

(c)      Without prejudice to the survival of any other agreement of the Borrower hereunder, the agreements and
obligations of the Borrower contained in Sections 2.9, 2.10, 2.12, 2.13 and 8.4 shall survive the payment in full
of principal, interest and all other amounts payable hereunder and under the Notes.

SECTION 8.5.      Right of Setoff.  Upon the occurrence and during the continuance of any Event of Default, each
Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by such Lender to or for the credit or the account of the Borrower against
any and all of the obligations of the Borrower now or hereafter existing under any Loan Document, whether or not
such Lender shall have made any demand under such Loan Document and although such obligations may be unmatured.
Each such Lender agrees promptly to notify the Borrower after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and application. The rights of each such
Lender under this Section 8.5 are in addition to other rights and remedies (including, without limitation, other
rights of setoff) that such Lender may have.

SECTION 8.6.      Binding Effect.  This Agreement shall become effective when it shall have been executed by the
Borrower, the Agent and [***], as the initial Lender and thereafter shall be binding upon and inure to the
benefit of the Borrower, the Agent and each Lender and their respective successors and permitted assigns, except
that the Borrower shall not have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.

SECTION 8.7.      Assignments and Participations.  (a)  Each Lender may, at any time after the Loan is made,
assign to one or more Persons all or a portion of its rights and obligations under the Loan Documents; provided,
however, that (i) each such assignment may be of a constant, or of a varying, percentage of all rights and
obligations under this Agreement and the other Loan Documents, and (ii) each such assignment shall be (x) to any
[***] Lender or any Affiliate thereof or to [***], or an Affiliate thereof, or (y) to a bank or other financial
institution or financial company (each such person, an "Eligible Assignee").  The parties to each such assignment
shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance together with any Note subject to such assignment.  Upon such execution, delivery,
acceptance and recording from and after the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (y) the Lender assignor thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease
to be a party hereto).

(b)      By executing and delivering an Assignment and Acceptance, the Lender assignor thereunder and the
assignee thereunder confirm to and agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or representations made in or in connection
with this Agreement or the other Loan Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of, or the perfection or priority of any lien or security interest created or
purported to be created under or in connection with, this Agreement or the other Loan Documents or any other
instrument or document finished. pursuant hereto; (ii) such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this Agreement or the other Loan Documents or any
other instrument or document furnished pursuant hereto; (iii) such assignee confirms that it has received a copy
of this Agreement, together with copies of the financial statements referred to in Section 4.1(a)(v) and such
other documents and information as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such assignee will, independently and without reliance upon the
Agent, such assigning Lender or any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee; (vi) such assignee represents and warrants
that either (x) no part of the funds to be used by it for the purchase of a portion of the Loan (or any part
thereof) constitutes assets of any "employee benefit plan" as defined in Section 3(3) of ERISA or (y) the
proposed assignment will not result in a nonexempt prohibited transaction (as defined in Section 4975 of the
Internal Revenue Code and ERISA); (vii) such assignee appoints and authorizes each Agent to take such action as
agent on its behalf and to exercise such powers and discretion under the Loan Documents as are delegated to the
Agent by the terms thereof, together with such powers and discretion as are reasonably incidental thereto; and
(ix) such assignee agrees, for the benefit of the assigning Lender and Borrower, that it will perform in
accordance with their terms all of the obligations that by the terms of this Agreement are required to be
performed by it as a Lender.

(c)      The Administrative Agent shall maintain at its address referred to in Section 8.2 a copy of each
Assignment and Acceptance delivered to and accepted by it and a register for the recordation of the names and
addresses of the Lenders and the principal amount of the Loan owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and binding for all purposes, absent manifest error,
and the Borrower, the Agent and the Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time to time upon reasonable prior notice.

(d)      Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with any Note or Notes subject to such assignment, the
Administrative Agent shall, if such Assignment and Acceptance has been completed and is in substantially the form
of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii) record the information contained therein in
the Register and (iii) give prompt notice thereof to the Borrower. Within five Business Days after its receipt of
such notice, the Borrower, at its own expense, shall execute and deliver to the Administrative Agent in exchange
for any surrendered Notes new Notes to the order of such Eligible Assignee each in an amount equal to the portion
of such surrendered Note assumed by such Eligible Assignee pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a portion of such surrendered Note, a new Note to the order of the assigning Lender
in an amount equal to such retained portion and such old Note shall be returned to the Borrower marked
"cancelled". Such new Note or Notes shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A hereto.

(e)      Each Lender may sell participations to one or more Eligible Assignees in or to all or a portion of the
Loan owing to it and the Note or Notes held by it; provided, however, that (i) such Lender's obligations under
this Agreement (including, without limitation, its Commitment to the Borrower hereunder) shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such
obligations, (iii) such Lender shall remain the holder of any such Note for all purposes of this Agreement and
the other Loan Documents, (iv) the Borrower, each Agent and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the
other Loan Documents, (v) no participant under any such participation shall have any right to approve any
amendment or waiver of any provision of this Agreement or any Note or any other Loan Documents, or any consent to
any departure by the Borrower therefrom, except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Notes or any other amounts payable hereunder, in each case to the extent
subject to such participation, or postpone any date fixed for any payment of principal of, or interest on, the
Notes or any fees or other amounts payable hereunder, in each case to the extent subject to such participation.

(f)      Any Lender may, in connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 8.7, disclose to the assignee or participant or proposed assignee or
participant, any information relating to the Borrower furnished to such Lender by or on behalf of the Borrower;
provided that, prior to any such disclosure, the assignee or participant or proposed assignee or participant
shall agree to preserve the confidentiality of any Confidential Information relating to the Borrower received by
it from such Lender pursuant to a confidentiality agreement containing an undertaking as provided in Section 8.8.

(g)      Notwithstanding any other provision set forth in this Agreement, any Lender may at any time create a
security interest in all or any portion of its rights under this Agreement (including, without limitation, the
Loan owing to it and the Notes held by it) in favor of any Federal Reserve Bank in accordance with Regulation A
of the Board of Governors of the Federal Reserve System.

(h)      The Borrower agrees to cooperate with any Lender to accommodate the efforts of such Lender to transfer,
sell or assign all or any part of its rights and obligations under this Agreement pursuant to this Section 8.7.
Without limiting the generality of the foregoing, the Borrower also agrees to cooperate with the Initial Lender
to refinance or sell down its exposure under the Loan, through a securitization or tax enhanced structure or
otherwise.  Such cooperation may involve dividing the Loan into senior and junior tranches, allocating voting and
other rights as between the senior and junior tranches of the Loan (which allocation of voting rights may include
changes to the percentage of Lenders required to approve or to take specified actions) and/or
cross-collateralizing the senior and/or junior tranches of the Loan with any other Secured Obligations, and,
generally, restructuring the Loan in such manner as the Initial Lender shall determine in good faith to be
necessary or desirable to accomplish such refinancing or sell down; provided that none of the obligations of the
Borrower under the Loan Documents shall be increased as a result of any such transaction as of the closing date
of such transaction (or based on a Requirement of Law enacted prior to the closing date of such transaction but
effective as of a later date) and the Initial Lender agrees to reimburse the Borrower's reasonable and adequately
documented external legal fees and expenses in respect of any such transaction.

(i)      Notwithstanding any other provision hereof, no payment obligation of the Borrower shall be incurred or
increased as a result of an assignment or participation by the Lender on the closing date of such transaction.

SECTION 8.8.      Confidentiality.  Neither Agent nor any Lender nor the Borrower shall disclose any Confidential
Information to any other Person without the consent of each other, except (a) to the Agent's or such Lender's
Affiliates and their officers, directors, employees, agents and advisors and, as contemplated by Section 8.7(f),
to actual or prospective assignees and participants, and then only on a confidential basis, (b) as required by
any law, rule or regulation or judicial process and (c) as requested or required by any state, federal or foreign
authority or examiner regulating banks or banking.  Notwithstanding anything herein to the contrary, any party
subject to confidentiality obligations hereunder or under any other related document (and any employee,
representative or other agent of such party) may disclose to any and all persons, without limitation of any kind,
such party's U.S. federal income tax treatment and the U.S. federal income tax structure of the transactions
contemplated by this Agreement relating to such party and all materials of any kind (including opinions or other
tax analyses) that are provided to it relating to such tax treatment and tax structure. However, no such party
shall disclose any information relating to such tax treatment or tax structure to the extent nondisclosure is
reasonably necessary in order to comply with applicable securities laws.

SECTION 8.9.      Certain Agreements and Representations of Lenders.  Each Lender represents and warrants that:
(i) such Lender qualifies as an Eligible Assignee; (ii) such Lender will not make the Loan or acquire any
interest in the Loan with the assets of any "employee benefit plan" as defined in Section 3(3) of ERISA or of any
"plan" within the meaning of Section 4975(e)(I) of the Internal Revenue Code; and (iii) such Lender will acquire
the Loan and each Note for investment and not with a view to resale or distribution (it being understood that
such Lender may pledge or assign as security its interest in the Loan and each Note issued to it), provided that
the disposition of its property shall at all times be and remain within its control, except that such Lender may
sell, transfer or otherwise dispose of any Note or any portion thereof or grant participations therein, in a
manner which in itself will not require registration under the Securities Act of 1933, as amended.

SECTION 8.10.     GOVERNING LAW.  THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

SECTION 8.11.     Execution in Counterparts; Prevalence of Loan Documents.  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 a manually executed counterpart of this Agreement.  The provisions of the Loan Documents shall
prevail over the Term Sheet in case any provision thereof shall be in conflict.

SECTION 8.12.     Jurisdiction, Etc.  (a)  Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of any New York State court or federal
court of the United States of America, in each case sitting in New York City, in any action or proceeding arising
out of or relating to the Loan Documents, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment may be heard
and determined in such state court or, to the extent permitted by law, in such federal court. Each of the parties
hereto agrees that a final judgment in such action or proceeding or in any other manner provided by law. Nothing
in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding
relating to this Agreement or the Notes in the courts of any jurisdiction.

(b)      The Borrower hereby irrevocably designates, appoints and empowers Corporation Service Company, with
offices on the date hereof at 1177 Avenue of the Americas, 17th Floor, New York, New York 10036-2721 as its
designee, appointee and agent to receive, accept and acknowledge for and on its behalf, and in respect of its
property, service of any and all legal process, summons, notices and documents which may be served in any such
action or proceeding. If for any reason such designee, appointee and agent shall cease to be available to act as
such, the Borrower agrees to designate a new designee, appointee and agent in New York City on the terms and for
the purposes of this provision satisfactory to the Administrative Agent under this Agreement. The Borrower
further irrevocably consents to the service of process out of any of the aforementioned courts specified in
paragraph (a) above in any such action or proceeding by the mailing of copies there by registered or certified
mail, postage prepaid, to the Borrower, such service to become effective 30 days after such mailing.  Nothing
herein shall affect the right of the Agent under this Agreement, any Lender or the holder of any Note to serve
process in any other manner permitted by law or to commence legal proceedings or otherwise proceed against the
Borrower in any other jurisdiction.

(c)      Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally
and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action
or proceeding arising out of or relating to the Loan Documents in any New York State or federal court referred to
in Section 8.12(a).  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by
law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

SECTION 8.13.     WAIVER OF JURY TRIAL.  EACH OF THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THE LOAN DOCUMENTS OR THE ACTIONS OF THE AGENT OR ANY LENDER IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

SECTION 8.14.     Severability.  Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

SECTION 8.15.     Headings.  All headings in this Agreement are for convenience of reference only and do not
constitute a part of this Agreement.









                  IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and to be
delivered in New York, New York by their proper and duly authorized officers as of the day and year first above
written.

                                                     FRONTIER AIRLINES, INC.


                                                     By:                                                         
                                                          Name:
                                                          Title:


                                                     [***],
                                                     as Administrative Agent and Initial Lender


                                                     By:                                                         
                                                          Name:
                                                          Title:






                                                                                                    SCHEDULE I
                                                                                                            TO
                                                                                              CREDIT AGREEMENT

                                                  Lending Office
                                                 (Initial Lender)

[***]







                                                                                                   SCHEDULE II
                                                                                                            TO
                                                                                              CREDIT AGREEMENT

                                          Original Amortization Schedule

              Monthly Payments

 Payment    Outstanding Principal    Principal Payments
   Date                                 (in Dollars)








                                                                                           EXHIBIT A - FORM OF
                                                                                               PROMISSORY NOTE


                                              FRONTIER AIRLINES, INC.
                                                  PROMISSORY NOTE



U.S [***]                                                                                Dated: ________, ____

                  FOR VALUE RECEIVED, the undersigned, FRONTIER AIRLINES, INC., a Colorado corporation (the
"Borrower"), HEREBY PROMISES TO PAY to the order of  [***] (the "Lender") for the account of its Lending Office
(as defined in the Credit Agreement referred to below) the principal sum of TWENTY-FIVE MILLION FIVE HUNDRED
THOUSAND DOLLARS (U.S. $25,500,000) (the "Original Amount") representing the Loan made to the Borrower pursuant
to the Credit Agreement dated as of July 30, 2003 between the Borrower, the lenders party thereto and [***], as
Administrative Agent (as amended or modified from time to time, the "Credit Agreement"; the terms defined therein
being used herein as therein defined).  The Original Amount shall be payable in installments in the amounts and
on the dates specified in Section 2.5 of the Credit Agreement.  Notwithstanding the foregoing, the final payment
made on this Promissory Note shall be in an amount sufficient to discharge in full the unpaid Original Amount and
all accrued and unpaid interest on any amounts due under this Promissory Note.

                  The Borrower promises to pay interest on the unpaid principal amount hereof from the date
hereof until such principal amount is paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.

                  Both principal and interest are payable in lawful money of the United States of America to the
Administrative Agent, to the account specified in Section 2.11 of the Credit Agreement, in same day funds.

                  This Promissory Note is one of the Notes referred to in, and is entitled to the benefits of,
the Credit Agreement. The Credit Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events and also for prepayments on account of principal
hereof prior to the maturity hereof upon the terms and conditions therein specified. The obligations of the
Borrower under this Promissory Note and the Credit Agreement are secured by collateral as provided in the Credit
Agreement, in the Mortgage and Security Agreement, dated as of July 21, 2003, executed by the Borrower and
pertaining to the Aircraft bearing FAA Registration No. N802FR, and in the other Collateral Documents referred to
therein.

                                                     FRONTIER AIRLINES, INC.


                                                     By:                                                   
                                                  Title:                                                   





                                                                                           EXHIBIT B - FORM OF
                                                                                                NOTICE OF LOAN

  [***], as Administrative Agent
  for the Lenders under to the Credit
  Agreement referred to below

                                                              July __, 2003

Attention: Managing Director

Ladies and Gentlemen:

                  The undersigned, Frontier Airlines, Inc., refers to the Credit Agreement, dated as of July 30,
2003 (as amended or modified from time to time, the "Credit Agreement", the terms defined therein being used
herein as therein defined), between the undersigned, the Lenders party thereto and [***], as Administrative Agent
for the Lenders, and hereby gives you notice, irrevocably, pursuant to Section 2.2 of the Credit Agreement that
the undersigned hereby requests the Loan under the Credit Agreement, and in that connection sets forth below the
information relating to the Loan (the "Proposed Loan") as required by Section 2.2(a) of the Credit Agreement:

(i)      The Business Day of the Proposed Loan is __________.

(ii)     The aggregate amount of the Proposed Loan is $________.

(iii)    The Proposed Loan is to be a [10-Year Loan] [12-Year Loan].

(iv)     The Aircraft related to the Proposed Loan is the Airbus model A318 aircraft bearing manufacturer's
                  serial number 1991 and will be delivered to the Borrower on _________.

                  The undersigned hereby certifies that the following statements are true on the date hereof, and
will be true on the date of and after giving effect to the Proposed Loan:

                           (x)  the representations and warranties made by the Borrower and contained in the Loan
                  Documents are correct in all material respects on and as of the date of the Proposed Loan
                  before and after giving effect to the Loan and to the application of the proceeds therefrom, as
                  though made on and as of such date, and

                           (y)  no Default or Event of Default has occurred and is continuing.

                                                     Very truly yours,

                                                     FRONTIER AIRLINES, INC.

                                                     By:                                                   
                                                  Title:                                                   
                                                   Date:                                                   

                                                                                           EXHIBIT C - FORM OF
                                                                                     ASSIGNMENT AND ACCEPTANCE


                  Reference is made to the Credit Agreement dated as of July 30, 2003 (as amended or modified
from time to time, the "Credit Agreement") between Frontier Airlines, Inc., a Colorado corporation (the
"Borrower") and [***], as initial Lender and as Administrative Agent for the Lenders (the "Administrative
Agent").  Terms defined in the Credit Agreement are used herein with the same meaning.

                  The "Assignor" and the "Assignee" referred to on Schedule I hereto agree as follows:

1.       The Assignor hereby sells and assigns to the Assignee, and the Assignee hereby purchases and assumes
         from the Assignor, an interest in and to the Assignor's rights and obligations under the Credit
         Agreement as of the date hereof equal to the percentage interest specified on Schedule 1 hereto of all
         outstanding rights and obligations under the Credit Agreement. After giving effect to such sale and
         assignment, the amount of the Loan owing to the Assignee will be as set forth on Schedule 1 hereto.

2.       The Assignor (i) represents and warrants that it is the legal and beneficial owner of the interest being
         assigned by it hereunder and that such interest is free and clear of any adverse claim; (ii) makes no
         representation or warranty and assumes no responsibility with respect to any statements, warranties or
         representations made in or in connection with the Credit Agreement or the other Loan Documents or the
         execution, legality, validity, enforceability, genuineness, sufficiency or value of, or the perfection
         or priority of any lien or security interest created or purported to be created under or in connection
         with, the Credit Agreement or the other Loan Documents or any other instrument or document furnished
         pursuant thereto; (iii) makes no representation or warranty and assumes no responsibility with respect
         to the financial condition of the Borrower or the performance or observance by the Borrower of any of
         its obligations under the Credit Agreement or the other Loan Documents or any other instrument or
         document furnished pursuant thereto; and (iv) attaches the Note held by the Assignor and requests that
         the Administrative Agent exchange such Note for a new Note payable to the order of the Assignee in an
         amount equal to the portion of such Note assumed by the Assignee pursuant hereto or a new Note payable
         to the order of the Assignee in an amount equal to the portion of such Note assumed by the Assignee
         pursuant hereto and a new Note payable to the order of the Assignor in an amount equal to the portion of
         such Note retained by the Assignor under the Credit Agreement, respectively, as specified on Schedule 1
         hereto.

3.       The Assignee (i) confirms that it has received a copy of the Credit Agreement, together with copies of
         the financial statements referred to in Section 4.1(a)(v) thereof and such other documents and
         information as it has deemed appropriate to make its own credit analysis and decision to enter into this
         Assignment and Acceptance; (ii) agrees that it will, independently and without reliance upon the Agent,
         the Assignor or any other Lender and based on such documents and information as it shall deem
         appropriate at the time, continue to make its own credit decisions in taking or not taking action under
         the Credit Agreement; (iii) confirms that it is an Eligible Assignee; (iv) represents and warrants that
         either (x) no part of the funds to be used by it for the purchase of the Loan (or any part thereof)
         constitutes assets of any "employee benefit plan" as defined in Section 3(3) of ERISA or (y) the
         proposed assignment will not result in a non-exempt prohibited transaction (as defined in Section 4975
         of the Internal Revenue Code and ERISA); (v) represents and warrants that it will acquire its Note for
         investment and not with a view to sale or distribution (it being understood that the Assignee may pledge
         or assign as security its interest in the Note issued to it), provided that the disposition of its
         property shall at all times be and remain within its control, except that the Assignee may sell,
         transfer or otherwise dispose of its Note or any portion thereof or grant participations therein, in a
         manner which in itself will not require registration under the Securities Act of 1933, as amended; (vi)
         appoints and authorizes each Agent to take such action as agent on its behalf and to exercise such
         powers and discretion under the Loan Documents as are delegated to such Agent by the terms thereof,
         together with such powers and discretion as are reasonably incidental thereto; (vii) agrees that it will
         perform in accordance with their terms all of the obligations that by the terms of the Credit Agreement
         are required to be performed by it as a Lender; and (viii) attaches any U.S. Internal Revenue Service
         forms required under Section 2.12 of the Credit Agreement.

4.       Following the execution of this Assignment and Acceptance, it will be delivered to the Administrative
         Agent for acceptance and recording by the Administrative Agent.  The effective date for this Assignment
         and Acceptance (the "Effective Date") shall be the date of acceptance hereof by the Administrative
         Agent, unless otherwise specified on Schedule 1 hereto.

5.       Upon such acceptance and recording by the Administrative Agent, as of the Effective Date, (i) the
         Assignee shall be a party to the Credit Agreement and, to the extent provided in this Assignment and
         Acceptance, have the rights and obligations of a Lender thereunder and (ii) the Assignor shall, to the
         extent provided in this Assignment and Acceptance, relinquish its rights and be released from its
         obligations under the Credit Agreement.

6.       Upon such acceptance and recording by the Administrative Agent, from and after the Effective Date, the
         Administrative Agent shall make all payments under the Credit Agreement and the Notes in respect of the
         interest assigned hereby (including, without limitation, all payments of principal, interest and other
         amounts with respect thereto) to the Assignee.  The Assignor and Assignee shall make all appropriate
         adjustments in payments under the Credit Agreement and the Notes for periods prior to the Effective Date
         directly between themselves.

7.       This Assignment and Acceptance shall be governed by, and construed in accordance with, the laws of the
         State of New York.

8.       This Assignment and Acceptance 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 Schedule 1 to this Assignment and Acceptance by telecopier shall be effective as delivery
         of a manually executed counterpart of this Assignment and Acceptance.

                  IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule 1 to this Assignment and
Acceptance to be executed by their officers thereunto duly authorized as of the date specified thereon.







                                                    Schedule 1
                                                        to
                                             Assignment and Acceptance

Percentage interest assigned:

Aggregate outstanding principal amount of Loan assigned:

Effective Date:

                                                 Principal Amount of                   Principal Amount of
          _______Note_______                   Note payable to Assignee              Note payable to Assignor


                                                     [NAME OF ASSIGNOR], as Assignor


                                                     By:                                                   
                                                  Title:                                                   
                                                  Dated:  ________, ____


                                                     [NAME OF ASSIGNEE], as Assignee


                                                     By:                                                   
                                                  Title:                                                   

                                                     Lending Office:
                                                     [Address]








Accepted this
____ day of _________, ____

[***], as
Administrative Agent

By:                                         
Title:





                                                    EXHIBIT D-1

                                FORM OF OPINION OF GENERAL COUNSEL OF THE BORROWER

                                        [in the form delivered at closing]






                                                        D-2-1
                                                    EXHIBIT D-2

                                             FORM OF OPINION OF [***],
                                         SPECIAL COUNSEL FOR THE BORROWER

                                        [in the form delivered at closing]







                                                        D-3-1
                                                    EXHIBIT D-3

                                             FORM OF OPINION OF [***],
                                      SPECIAL AVIATION COUNSEL FOR THE AGENT

                                        [in the form delivered at closing]

EX-10

                                                   EXHIBIT 10.22

 PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION IN A
   CONFIDENTAL TREATMENT REQUEST UNDER RULE 24b-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE SYMBOL
   "[***]" IN THIS EXHIBIT INDICATES THAT INFORMATION HAS BEEN OMITTED. IN SECTION 1.1 - DEFINED TERMS, CERTAIN
  DEFINED TERMS WERE MOVED TO THE END OF SECTION 1.1 TO PRESERVE THE CONFIDENTIALITY OF THE OMITTED INFORMATION.






- -------------------------------------------------------------------------------------------------------------------


                                          MORTGAGE AND SECURITY AGREEMENT




                                             Dated as of July 30, 2003





                                                      between




                                              FRONTIER AIRLINES, INC.




                                                        and




                                                      [***],
                                                as Collateral Agent




                                           One Airbus A318-111 Aircraft
                                            FAA Registration No. N802FR


- -------------------------------------------------------------------------------------------------------------------






                                                 TABLE OF CONTENTS

                                                                                                      Page


ARTICLE I DEFINITIONS...................................................................................1

         Section 1.1.      Certain Definitions..........................................................1

ARTICLE II SECURITY  1

         Section 2.1.      Grant of Security Interest...................................................1
         Section 2.2.      Exclusion for Certain Inflight Equipment.....................................4

ARTICLE III COVENANTS OF THE COMPANY....................................................................4

         Section 3.1.      Liens........................................................................4
         Section 3.2.      Possession, Operation and Use, Maintenance and Registration..................5
         Section 3.3.      Inspection...................................................................9
         Section 3.4.      Replacement and Pooling of Parts; Alterations, Modifications and Additions;
                               Substitution of Engines.................................................10
         Section 3.5.      Loss, Destruction or Requisition............................................14
         Section 3.6.      Insurance...................................................................15
         Section 3.7.      Filings.....................................................................20
         Section 3.8.      Corporate Existence.........................................................20
         Section 3.9.      Merger, Consolidation.......................................................20
         Section 3.10.     Notice of Change of the Company's Location..................................21
         Section 3.11.     Interests in the Purchase Agreement.........................................22
         Section 3.12.     General Indemnity...........................................................24
         Section 3.13.     General Covenant............................................................26

ARTICLE IV REMEDIES OF THE COLLATERAL AGENT UPON AN EVENT OF DEFAULT...................................26

         Section 4.1.      Event of Default............................................................26
         Section 4.2.      Remedies with Respect to Collateral.........................................28
         Section 4.3.      Waiver of Appraisement, etc., Laws..........................................31
         Section 4.4.      Remedies Cumulative.........................................................31
         Section 4.5.      Discontinuance of Proceedings...............................................32

ARTICLE V DUTIES OF THE COLLATERAL AGENT...............................................................32

         Section 5.1.      Action Upon Event of Default................................................32
         Section 5.2.      Action Upon Instructions....................................................32
         Section 5.3.      Indemnification.............................................................32
         Section 5.4.      No Duties Except as Specified in Collateral Documents or Instructions.......32
         Section 5.5.      No Action Except Under Collateral Documents or Instructions.................33

ARTICLE VI SUPPLEMENTS AND AMENDMENTS TO THIS MORTGAGE AND OTHER DOCUMENTS.............................34

         Section 6.1.      Supplemental Mortgages......................................................34
         Section 6.2.      Collateral Agent Protected..................................................34

ARTICLE VII INVESTMENT OF SECURITY FUNDS...............................................................35

         Section 7.1.      Investment of Security Funds................................................35

ARTICLE VIII MISCELLANEOUS.............................................................................35

         Section 8.1.      Termination of Mortgage.....................................................35
         Section 8.2.      Alterations to Mortgage.....................................................36
         Section 8.3.      No Legal Title to Collateral in Noteholder..................................36
         Section 8.4.      Sale of the Aircraft by Collateral Agent Is Binding.........................36
         Section 8.5.      Benefit of Mortgage.........................................................36
         Section 8.6.      Section 1110 of the Bankruptcy Code.........................................36
         Section 8.7.      Notices.....................................................................37
         Section 8.8.      Severability................................................................37
         Section 8.9.      No Waiver; Cumulative Remedies..............................................38
         Section 8.10.     Separate Counterparts.......................................................38
         Section 8.11.     Successors and Assigns......................................................38
         Section 8.12.     Headings....................................................................38
         Section 8.13.     Governing Law...............................................................38
         Section 8.14.     Normal Commercial Relations.................................................39
         Section 8.15.     Language....................................................................39
         Section 8.16.     Interpretation..............................................................39
         Section 8.17.     Execution of Financing Statements...........................................39








Appendix A        -       Definitions

Exhibit A         -       Form of Mortgage and Security Agreement Supplement

Exhibit B         -       Form of Lease Assignment











                                          MORTGAGE AND SECURITY AGREEMENT

                  This MORTGAGE AND SECURITY AGREEMENT, dated as of July 30, 2003 between FRONTIER AIRLINES,
                                                                           =
INC., a Colorado corporation (together with its successors and permitted assigns, the "Company"), and [***], as
Collateral Agent for the benefit of the Administrative Agent and the Noteholders (together with its permitted
successors and assigns, the "Collateral Agent");

                                               W I T N E S S E T H :

                  WHEREAS, the Lenders have agreed, pursuant and subject to the terms and conditions of the
Credit Agreement, to make a Loan to the Company in connection with the acquisition of the Aircraft to be
evidenced by the Notes; and

                  WHEREAS, the Company desires by this Mortgage, among other things, to grant to the Collateral
Agent a Lien on the Collateral in accordance with the terms hereof, as security for the Obligations.

                  NOW, THEREFORE, to secure the due and punctual payment of the Obligations, it is hereby
covenanted and agreed by and between the parties hereto as follows:

                                                   Article I

                                                  DEFINITIONS

Section 1.1.      Certain Definitions.

                  Unless otherwise defined herein or the context requires otherwise, capitalized terms used
herein shall have the meanings set forth in Appendix A hereto.

                                                   Article II

                                                   SECURITY

Section 2.1.      Grant of Security Interest.

                  The Company, in order to secure (i) the prompt payment when due of the Obligations and of the
other Secured Obligations and (ii) the performance and observance by the Company of all agreements, covenants and
provisions contained herein and in the Loan Documents and in the Related Loan Documents, and in consideration of
the premises and of the covenants herein contained, and of other good and valuable consideration, the receipt of
which is hereby acknowledged, has granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged
and confirmed and does hereby (subject to the terms and conditions hereof) grant, bargain, sell, assign,
transfer, convey, mortgage, pledge and confirm unto the Collateral Agent, its permitted successors and assigns,
for the security and benefit of the Administrative Agent and the Noteholders, forever, a continuing security
interest in, and mortgage lien on, all estate, right, title and interest of the Company in, to and under the
following described properties, rights, interests and privileges (which, collectively, including all property
hereafter specifically subjected to the lien of this Mortgage by any instrument supplemental hereto, are referred
to herein as the "Collateral"):

(a)      the Airframe and the Engines, each of which Engines is of 750 or more rated takeoff horsepower or the
         equivalent of such horsepower, and in the case of such Engines, whether or not any such Engine shall be
         installed in or attached to the Airframe or any other airframe, together with all accessories,
         equipment, parts and appurtenances appertaining or attached to the Airframe (other than jet aircraft
         engines not constituting Engines) or Engines, whether now owned or hereafter acquired, and all
         substitutions, renewals and replacements of and additions, improvements, accessions and accumulations to
         the Airframe and Engines and all records, logs and other documents at any time maintained with respect
         to the foregoing;

(b)      the Purchase Agreement Rights, but subject always to the provisions of Section 3.11 hereof;

(c)      all proceeds with respect to the requisition of title to or use of the Aircraft or any part thereof, and
         all insurance proceeds with respect to the Aircraft or any part thereof, but excluding any insurance
         maintained by the Company and not required under Section 3.6 hereof;

(d)      all moneys and securities now or hereafter paid or deposited or required to be paid or deposited to or
         with the Collateral Agent in pledge hereunder and held or required to be held by the Collateral Agent
         hereunder;

(e)      any and all property that may, from time to time hereafter, in accordance with the provisions of this
         Mortgage, by delivery or by Mortgage Supplement or by other writing of any kind, for the purposes hereof
         be in any way subjected to the lien and security interest hereof or be expressly conveyed, mortgaged,
         assigned, transferred, deposited, in which a security interest may be granted by the Company and/or
         pledged by the Company, or by any Person authorized to so do on its behalf or with its consent, to and
         with the Collateral Agent, who is hereby authorized to receive the same at any and all times as and for
         additional security hereunder;

(f)      all proceeds of the foregoing;

                  PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions of this Section 2.1, so
long as no Event of Default shall have occurred and be continuing, (i) the Company shall have the right, to the
exclusion of the Collateral Agent, to quiet enjoyment of the Airframe and Engines, and to possess, use, retain
and control the Airframe and Engines and all revenues, income and profits derived therefrom and (ii) the
Collateral Agent, shall not, through its own actions or inactions, nor shall it permit any person lawfully
claiming by or through it, including, without limitation, any Lender to interfere with, or suffer to exist with
respect to the Aircraft any Lien attributable to the Collateral Agent or any such person which might interfere
with, the Company's (or any Lessee's) continued possession, use and operation of, and quiet enjoyment (including,
without limitation, administrative quiet enjoyment) of, the Aircraft during the term of this Mortgage in
accordance with the terms of the Loan Documents so long as no Event of Default shall have occurred and be
continuing.

                  TO HAVE AND TO HOLD the Collateral unto the Collateral Agent, its permitted successors and
assigns, forever, upon the terms herein set forth, in trust for the benefit, security and protection of the
Administrative Agent and the Noteholders, without any priority of any one Note over any other, and for the uses
and purposes and subject to the terms and provisions set forth in this Mortgage.

                  It is expressly agreed that anything herein contained to the contrary notwithstanding, the
Company shall remain liable under each of the Loan Documents to which it is a party to perform all of the
obligations assumed by it thereunder, all in accordance with and pursuant to the terms and provisions thereof,
and neither the Administrative Agent, the Collateral Agent nor the Noteholders shall have any obligation or
liability under any of the Loan Documents to which the Company is a party by reason of or arising out of the
assignment hereunder, nor shall the Administrative Agent, the Collateral Agent or the Noteholders be required or
obligated in any manner to perform or fulfill any obligations of the Company under any of the Loan Documents to
which the Company is a party, or, except as herein expressly provided, to make any payment, or to make any
inquiry as to the nature or sufficiency of any payment received by it, or present or file any claim, or take any
action to collect or enforce the payment of any amounts which may have been assigned to it or to which it may
entitled at any time or times.

                  The Company does hereby irrevocably constitute and appoint the Collateral Agent the true and
lawful attorney of the Company (which appointment is coupled with an interest) with full power (in the name of
the Company or otherwise) to ask, require, demand, receive, compound and give acquittance for any and all moneys
and claims for moneys (in each case including insurance and requisition proceeds) and all other property which
now or hereafter constitutes part of the Collateral, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or to institute any proceeding which the
Collateral Agent may deem to be necessary or advisable in the premises; provided that the Collateral Agent shall
not exercise any such rights except upon the occurrence and during the continuance of an Event of Default.

                  The Company agrees that at any time and from time to time, upon the written request of the
Collateral Agent, the Company will promptly and duly execute and deliver or cause to be duly executed and
delivered any and all such further instruments and documents as the Collateral Agent may reasonably deem
desirable in obtaining the full benefits of the assignment hereunder and of the rights and powers herein granted.

                  The Company does hereby warrant and represent that it has not assigned or pledged, and hereby
covenants that it will not assign or pledge, so long as the assignment hereunder shall remain in effect, any of
its right, title or interest hereby assigned, to anyone other than the Collateral Agent.

Section 2.2.      Exclusion for Certain Inflight Equipment.

                  The Mortgagee acknowledges and agrees that notwithstanding anything to the contrary herein set
forth, the Mortgagor may at any time during the term of this Mortgage install a telephone system and/or an
inflight entertainment system for passenger use on any Aircraft (collectively, the "Inflight Equipment") provided
that:

(a)      the owner or financier of the Inflight Equipment will have no Lien on or against such Aircraft and no
         rights with respect to such Aircraft except the right to remove the Inflight Equipment from such
         Aircraft if such owner, financier or the Company repairs and restores such Aircraft as provided below;

(b)      such right of installation and removal is subject to and conditional upon any such owner or financier
         repairing any damage to the Aircraft in connection therewith and paying (and holding the Agents and the
         Lenders harmless with respect to) all costs, expenses and liabilities in connection therewith; and

(c)      prior to the installation of any Inflight Equipment, the Company shall provide the Collateral Agent with
         the identity and notice particulars of the owner or financier of such Inflight Equipment. The Collateral
         Agent acknowledges that, if the requirements of this Section 2.2 are satisfied in full, at all times
         (i)  the Inflight Equipment will not constitute a Part or a part of such Aircraft, and (ii) the Inflight
         Equipment will not become subject to the Lien of this Mortgagee.

                                                   Article III

                                             COVENANTS OF THE COMPANY

Section 3.1.      Liens.

                  The Company will not directly or indirectly create, incur, assume or permit to exist any Lien
on or with respect to any of the Collateral or title thereto or any interest therein except:

(a)      the Lien of this Mortgage;

(b)      the rights of others under agreements or arrangements to the extent permitted by Sections 3.2 and 3.4
         hereof;

(c)      Liens for taxes of the Company (or any Lessee) either not yet due or payable or being contested in good
         faith by appropriate proceedings so long as such proceedings do not involve any material risk of the
         sale, forfeiture or loss of the Airframe or any Engine or any interest therein or adversely affect the
         Lien of this Mortgage;

(d)      materialmen's, mechanics', workmen's, repairmen's, employees' or other like Liens arising in the
         ordinary course of the Company's (or, if a Lease is then in effect, Lessee's) business (including those
         arising under maintenance agreements entered into in the ordinary course of business) securing
         obligations that are not overdue for a period of more than sixty (60) days or are being contested in
         good faith by appropriate proceedings so long as such proceedings do not involve any material risk of
         the sale, forfeiture or loss of the Airframe or any Engine or any interest therein or adversely affect
         the Lien of this Mortgage;

(e)      Liens arising out of any judgment or award against the Company (or any Lessee), unless the judgment
         secured shall not, within sixty (60) days after the entry thereof, have been discharged, vacated,
         reversed or the execution thereof stayed pending appeal or shall not have been discharged, vacated or
         stayed within sixty (60) days after the expiration of such stay;

(f)      any other Lien with respect to which the Company (or any Lessee) shall have provided a bond, cash
         collateral or other security adequate in the reasonable opinion of the Collateral Agent; and

(g)      Liens approved in writing by the Collateral Agent.

Liens described in clauses (a) through (g) above are referred to herein as "Permitted Liens." The Company shall
promptly, at its own expense, take such action as may be necessary to duly discharge any Lien other than a
Permitted Lien arising at any time .

Section 3.2.      Possession, Operation and Use, Maintenance and Registration.

(a)      Possession.

                  The Company shall not, without the prior written consent of the Collateral Agent, lease or
otherwise in any manner deliver, transfer or relinquish possession of the Airframe or any Engine or install or
permit any Engine to be installed in any airframe other than the Airframe or enter into any Wet Lease; provided
that so long as no Special Default or Event of Default shall have occurred and be continuing at the time of such
lease, delivery, transfer or relinquishment of possession or installation and so long as the action to be taken
shall not deprive the Collateral Agent of the first priority Lien of this Mortgage on the Airframe and so long as
the Company (or any Lessee) shall comply with the provisions of Sections 3.2(c) and 3.6 hereof, the Company may,
without the prior written consent of the Collateral Agent:

    (i)  subject any Engine to normal pooling or similar arrangements, in each case customary in the airline
         industry and entered into by the Company in the ordinary course of its business; provided that (A) no
         such arrangement contemplates or requires the transfer of title to the Airframe, (B) if the Company's
         title to any Engine shall be divested under any such arrangement, such divestiture shall be deemed to be
         an Event of Loss with respect to such Engine and the Company shall (or shall cause Lessee to) comply
         with Section 3.4(f) hereof in respect thereof, and (C) any such arrangement shall be with a U.S. Air
         Carrier;

    (ii) deliver possession of the Airframe or any Engine to the manufacturer thereof (or for delivery thereto)
         or to any organization (or for delivery thereto) for testing, service, repair, maintenance or overhaul
         work on the Airframe or Engine or any part thereof or for alterations or modifications in or additions
         to such Airframe or Engine to the extent required or permitted by the terms of Section 3.4(d) hereof;

    (iii)install an Engine on an airframe which is owned by the Company free and clear of all Liens, except: (A)
         Permitted Liens and those which apply only to the engines (other than Engines), appliances, parts,
         instruments, appurtenances, accessories, furnishings and other equipment (other than Parts) installed on
         such airframe (but not to the airframe as an entirety), (B) the rights of third parties under customary
         interchange agreements provided that the Company's title to such Engine and the first priority Lien of
         this Mortgage shall not be divested or impaired as a result thereof and (C) mortgage liens or other
         security interests, provided that (as regards this subclause (C)) such mortgage liens or other security
         interests effectively provide that such Engine shall not become subject to such mortgage or security
         interest, notwithstanding the installation thereof on such airframe;

    (iv) install an Engine on an airframe which is leased to the Company or purchased by the Company subject to a
         conditional sale or other security agreement, provided that (x) such airframe is free and clear of all
         Liens, except: (A) the rights of the parties to the lease or conditional sale or other security
         agreement covering such airframe, or their assignees, and (B) Liens of the type permitted by clause
         (iii) of this Section 3.2(a) and (y) such lease, conditional sale or other security agreement
         effectively provides that such Engine shall not become subject to the lien of such lease, conditional
         sale or other security agreement, notwithstanding the installation thereof on such airframe;

    (v)  install an Engine on an airframe owned by the Company, leased to the Company or purchased by the Company
         which is subject to a conditional sale or other security agreement under circumstances where neither
         clause (iii) nor clause (iv) of this Section 3.2(a) is applicable, provided that such installation shall
         be deemed an Event of Loss with respect to such Engine and that the Company shall comply with Section
         3.4(f) hereof in respect thereof, the Collateral Agent not intending hereby to waive any right or
         interest it may have to or in such Engine under applicable law until compliance by the Company with such
         Section 3.4(f);

    (vi) subject the Airframe or any Engine to the Civil Reserve Air Fleet Program and transfer possession of the
         Airframe or any Engine to the United States of America or any instrumentality or agency thereof pursuant
         to the Civil Reserve Air Fleet Program, so long as the Company shall (A) promptly notify the Collateral
         Agent upon subjecting the Airframe or any Engine to the Civil Reserve Air Fleet Program in any contract
         year and provide the Collateral Agent with the name and address of the Contracting Office Representative
         for the Air Mobility Command of the United States Air Force to whom notices must be given, and (B)
         promptly notify the Collateral Agent upon transferring possession of the Airframe or any Engine to the
         United States of America or any agency or instrumentality thereof pursuant to such program;

    (vii)transfer possession of the Airframe or any Engine to the United States of America or any instrumentality
         or agency thereof pursuant to a contract, a copy of which shall be provided to the Collateral Agent; or

   (viii)the Company may, at any time, enter into any lease of the Airframe or any Engine with (A) a
         U.S. Air Carrier approved in writing by the Collateral Agent, or (B) any other Person approved in
         writing by the Collateral Agent (in each case under (A) or (B), upon the approval of the Majority in
         Interest of Noteholders which approval shall not be unreasonably withheld or delayed), in any such case,
         if the lessee under such lease is not subject to a proceeding under applicable bankruptcy, insolvency or
         reorganization laws on the date such lease is entered into.

                  The rights of any Lessee or other transferee who receives possession by reason of a transfer
permitted by this Section 3.2(a) (other than the transfer of an Engine which is deemed an Event of Loss) shall be
effectively subject and subordinate to (except to the extent such rights arise from a possessory lien for
services rendered or goods provided to the Aircraft by a maintenance organization which rights are not created by
contract and are preferred by law, and any Lease permitted by this Section 3.2(a) shall be expressly subject and
subordinate to, all the terms of this Mortgage and to the Lien of this Mortgage, including, without limitation,
the covenants contained in this Section 3.2 and the Collateral Agent's rights to foreclosure and possession
pursuant to Section 4.2 hereof and to avoid such Lease upon such repossession, and the Company shall remain
primarily liable hereunder for the performance of all of the terms of this Mortgage to the same extent as if such
lease or transfer had not occurred, and, except as otherwise provided herein, the terms of any such Lease shall
not permit any Lessee to take any action not permitted to be taken by the Company in this Mortgage with respect
to the Aircraft. No pooling agreement, lease or other relinquishment of possession of the Airframe or any Engine
or Wet Lease shall in any way discharge or diminish any of the Company's obligations to the Collateral Agent
hereunder or constitute a waiver of the Collateral Agent's rights or remedies hereunder. Any Lease permitted
under this Section 3.2(a) shall expressly prohibit any further sublease by the Lessee. The Collateral Agent
agrees, for the benefit of the Company and for the benefit of any mortgagee or other holder of a security
interest in any engine (other than an Engine) owned by the Company, any lessor of any engine (other than an
Engine) leased to the Company and any conditional vendor of any engine (other than an Engine) purchased by the
Company subject to a conditional sale agreement or any other security agreement, that no interest shall be
created hereunder in any engine so owned, leased or purchased and that neither the Collateral Agent nor its
successors or assigns will acquire or claim, as against the Company or any such mortgagee, lessor or conditional
vendor or other holder of a security interest or any successor or assignee of any thereof, any right, title or
interest in such engine as the result of such engine being installed on the Airframe; provided, however, that
such agreement of the Collateral Agent shall not be for the benefit of any lessor or secured party of any
airframe (other than the Airframe) leased to the Company or purchased by the Company subject to a conditional
sale or other security agreement or for the benefit of any mortgagee of or any other holder of a security
interest in an airframe owned by the Company, unless such lessor, conditional vendor, other secured party or
mortgagee has expressly agreed (which agreement may be contained in such lease, conditional sale or other
security agreement or mortgage) that neither it nor its successors or assigns will acquire, as against the
Collateral Agent, any right, title or interest in an Engine as a result of such Engine being installed on such
airframe. A Wet Lease of not more than six (6) months not involving a transfer of operational control of the
Aircraft shall be permitted, without the prior written consent of the Collateral Agent, so long as no Special
Default or Event of Default shall have occurred and be continuing. The Company shall provide to the Collateral
Agent (i) written notice of any Lease or Wet Lease hereunder (such notice to be given not later than five days
prior to entering into such lease or Wet Lease) and (ii) a copy of each Lease or Wet Lease which has a term of
more than six months and, upon request of the Collateral Agent, a copy of any other Lease or Wet Lease.

(b)      Lessee agrees that it shall cause any Lease or Wet Lease of more than six (6) months duration (or, if a
Special Default or Event of Default is continuing, any Lease or Wet Lease regardless of its duration) entered
into in accordance with the provisions of Section 3.2(a) to be assigned to Collateral Agent at the time such
Lease or Wet Lease is entered into pursuant to a Lease Assignment substantially in the form of Exhibit B hereto
with such changes as may be requested by Company, the consent of Collateral Agent not to be unreasonably
withheld, at least ten (10) days before the intended date of execution thereof.

(c)      Operation and Use.

                  The Company will not maintain, use, service, repair, overhaul or operate the Aircraft (or
permit any Lessee or other Person to maintain, use, service, repair, overhaul or operate the Aircraft) in
violation of any law or any rule, regulation, order or certificate of any government or governmental authority
(domestic or foreign) having jurisdiction, or in violation of any airworthiness certificate, license or
registration relating to the Aircraft issued by any such authority, except to the extent that the Company is
contesting in good faith the validity or application of any such law, rule, regulation or order in any reasonable
manner which does not adversely affect the first priority Lien of this Mortgage and does not involve any material
risk of sale, forfeiture or loss of the Aircraft.

                  The Company shall not operate the Aircraft, or permit any Lessee to operate the Aircraft, in
any area excluded from coverage by any insurance required by the terms of Section 3.6 hereof; provided, however,
that the failure of the Company to comply with the provisions of this sentence shall not give rise to an Event of
Default hereunder where such failure is attributable to extraordinary circumstances involving an isolated
occurrence or series of incidents not in the ordinary course of the regular operations of the Company (or any
Lessee) attributable to a hijacking, medical emergency, equipment malfunction, weather, navigational error, if in
each case the Company (or such Lessee, as the case may be) is taking all reasonable steps to remedy such failure
as soon as is reasonably practicable.

(d)      Maintenance.

                  The Company, at its own cost and expense, shall maintain, service, repair and overhaul (or
cause to be maintained, serviced, repaired and overhauled) the Aircraft so as to keep the Aircraft in as good an
operating condition as when initially subjected to the Lien hereof, ordinary wear and tear excepted, and as may
be necessary to enable the applicable airworthiness certification for the Aircraft to be maintained in good
standing at all times (other than temporary periods of storage in accordance with its FAA-approved maintenance
and storage program or during maintenance, repair, overhaul or modification permitted hereunder) under the
Federal Aviation Act, except when all Airbus A318 series aircraft powered by engines of the same type as those
with which the Airframe shall be equipped at the time of such grounding and registered in the United States have
been grounded by the FAA, in accordance with the Maintenance Program and utilizing the same standard of
maintenance, service, repair or overhaul used by the Company with respect to similar aircraft operated by the
Company in similar circumstances. The Company will not subject the Aircraft or any Engine to a fleet maintenance
contract under which a Lien may be imposed on such property in respect of services performed on other aviation
property. The Company shall maintain or cause to be maintained in the English language all records, logs and
other materials required to be maintained in respect of the Aircraft by the FAA or the applicable regulatory
agency or body of any other jurisdiction in which the Aircraft may then be registered.

(e)      Identification of Collateral Agent's Interest.

                  On or prior to the date of the Loan, or as soon as practicable thereafter, the Company agrees
to affix and maintain (or cause to be affixed and maintained), at its expense, in the cockpit of the Airframe
adjacent to the airworthiness certificate therein and on each Engine a nameplate bearing the inscription:

                  "SUBJECT TO A MORTGAGE AND SECURITY AGREEMENT IN FAVOR OF [***], AS COLLATERAL AGENT"

(such nameplate to be replaced, if necessary, with a nameplate reflecting the name of any successor Collateral
Agent). Except as above provided or as may be required by Law, the Company will not allow the name of any Person
(other than the Company) to be placed on the Airframe or on any Engine as a designation that might be interpreted
as a claim of security interest or ownership; provided that nothing herein contained shall prohibit the Company
(or any Lessee) from placing its customary colors and insignia on the Airframe or any Engine.

(f)      Registration.

                  The Company, at its own expense, will cause the Aircraft to be duly registered, and at all
times to remain duly registered, in the name of the Company under the Federal Aviation Act, provided, however,
that the Company may elect to effect a change in the registration of the Aircraft, at the Company's expense, with
the prior written consent of the Collateral Agent (which may be given or withheld in its sole discretion).

Section 3.3.      Inspection. At reasonable times and, so long as no Event of Default shall have occurred and be
continuing, on at least 15 days prior written notice to the Company, the Collateral Agent or its authorized
representatives may (not more than once every calendar year (unless an Event of Default has occurred and is
continuing)) inspect the Aircraft and inspect and make copies (at the Collateral Agent's expense) of the books
and records of the Company relating to the maintenance of the Aircraft; any such inspection of the Aircraft shall
be limited to a visual, walk-around inspection and shall not include opening any panels, bays or the like without
the express consent of the Company; provided that no exercise of such inspection rights shall interfere with the
normal operation or maintenance of the Aircraft by, or the business of, the Company or any Lessee. The Collateral
Agent shall not have any duty to make any such inspection and shall not incur any liability or obligation by
reason of not making any such inspection.

Section 3.4.      Replacement and Pooling of Parts; Alterations, Modifications and Additions; Substitution of
Engines.

(a)      Replacement of Parts.


                  The Company, at its own cost and expense, will so long as the Airframe or an Engine is subject
to the Lien of this Mortgage (as soon as reasonably practicable and subject to the provisions of this
Section 3.4) replace or cause to be replaced all Parts which may from time to time be incorporated or installed in
or attached to the Airframe or any Engine and which may from time to time become worn out, lost, stolen,
destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for use for any reason
whatsoever, except as otherwise provided in Section 3.4(d) hereof or if the Airframe or an Engine to which a Part
relates has suffered an Event of Loss. In addition, the Company (or any Lessee) may, at its own cost and expense,
remove in the ordinary course of maintenance, service, repair, overhaul or testing, any Parts, whether or not
worn out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or permanently rendered unfit for
use, provided that the Company (or such Lessee), except as otherwise provided in this Section 3.4, will, at its
own cost and expense, replace such Parts as promptly as practicable. All replacement Parts shall be free and
clear of all Liens (except Permitted Liens and pooling arrangements to the extent permitted by Section 3.4(c) and
except in the case of replacement property temporarily installed on an emergency basis) and shall be in as good
operating condition as, and shall have a value and utility at least equal to, the Parts replaced assuming such
replaced Parts were in the condition and repair required to be maintained by the terms hereof.

(b)      Parts.

                  Except as otherwise provided in Section 3.4(d) hereof, all Parts at any time removed from the
Airframe or any Engine shall remain subject to the Lien of this Mortgage, no matter where located, until such
time as such Parts shall be replaced by Parts that have been incorporated or installed in or attached to such
Airframe or Engine and which meet the requirements for replacement Parts specified in Section 3.4(a) hereof.
Immediately upon any replacement part becoming incorporated or installed in or attached to an Airframe or Engine
as provided in Section 3.4(a) hereof, without further act (subject only to Permitted Liens and any pooling
arrangement to the extent permitted by Section 3.4(c) hereof and except in the case of replacement property
temporarily installed on an emergency basis), (i) title to such replacement Part shall be owned by the Company,
(ii) the replaced Part shall thereupon be free and clear of all rights of the Collateral Agent and the Liens
created hereby and the replacement part shall be deemed a Part hereunder; and (iii) such replacement Part shall
become subject to the Lien of this Mortgage and be deemed part of such Airframe or Engine, as the case may be,
for all purposes hereof to the same extent as the Parts originally incorporated or installed in or attached to
such Airframe or Engine.

(c)      Pooling of Parts.

                  Any Part removed from the Airframe or any Engine as provided in Section 3.4(a) hereof may be
subjected by the Company (or any Lessee) to a normal pooling arrangement customary in the airline industry of
which the Company (or any Lessee) is a party entered into in the ordinary course of the Company's (or such
Lessee's) business; provided that the part replacing such removed Part shall be incorporated or installed in or
attached to such Airframe or Engine in accordance with Sections 3.4(a) and 3.4(b) hereof as promptly as
practicable after the removal of such removed Part. In addition, any replacement Part when incorporated or
installed in or attached to the Airframe or any Engine in accordance with Section 3.4(a) hereof may be owned by
any third party subject to such a normal pooling arrangement, provided that the Company (or any Lessee), at its
expense, as promptly thereafter as practicable, either (i) causes such replacement Part to become subject to the
Lien of this Mortgage, free and clear of all Liens except Permitted Liens (other than pooling arrangements), at
which time such temporary replacement Part shall become a Part or (ii) replaces such replacement Part by
incorporating or installing in or attaching to such Airframe or Engine a further replacement Part which is
subject to the Lien of this Mortgage, free and clear of all Liens except Permitted Liens (other than pooling
arrangements).

(d)      Alterations; Modifications and Additions.

                  The Company, at its own expense, will make (or cause to be made) such alterations and
modifications in and additions to the Airframe and any Engine as may be required from time to time by the FAA;
provided, however, that the Company may, in good faith, contest the validity or application thereof in any
reasonable manner which does not adversely affect the Collateral. In addition, the Company, at its own expense,
may from time to time add further parts or accessories and make such alterations and modifications in and
additions to the Airframe or any Engine as the Company may deem desirable in the conduct of its business,
including, without limitation, removal of Parts which the Company has determined in its reasonable judgment to be
obsolete or no longer suitable or appropriate for use on the Airframe or such Engine (such parts, "Obsolete
Parts"); provided that no such alteration, modification or addition shall materially diminish the value, utility
or remaining useful life of such Airframe or such Engine below the value, utility or remaining useful life
thereof immediately prior to such alteration, modification or addition, assuming such Airframe or Engine was then
in the condition required to be maintained by the terms of this Mortgage. All Parts incorporated or installed in
or attached or added to the Airframe or any Engine as the result of such alteration, modification or addition
(the "Additional Parts") shall become subject to the Lien of this Mortgage. Notwithstanding the foregoing
sentence, the Company may remove or suffer to be removed any Additional Part, provided that such Additional Part
(i) is in addition to, and not in replacement of or in substitution for, any Part originally incorporated or
installed in or attached to such Airframe or Engine at the time of delivery thereof hereunder or any Part in
replacement of, or in substitution for, any such Part, (ii) is not required to be incorporated or installed in or
attached or added to such Airframe or Engine pursuant to the terms of Section 3.2(a) or (c) hereof or the first
sentence of this Section 3.4(d), and (iii) can be removed from such Airframe or Engine without diminishing or
impairing the value, utility or remaining useful life which such Airframe or Engine would have had at the time of
removal had such alteration, modification or addition not occurred, assuming that such Airframe or Engine was in
the condition and repair required to be maintained by the terms hereof. Upon the removal by the Company of any
such Part as above provided, such Part shall, without further act, be free and clear of all rights of the
Collateral Agent and the Lien created hereby and such Part shall no longer be deemed a Part hereunder.

(e)      Notwithstanding anything to the contrary set forth in this Section 3.4, if at any relevant time a
replacement Part having the same remaining value and utility as a Part being removed from the Airframe or an
Engine is not readily available, the Company may replace such Part with a part not meeting such requirements
provided that the Company replaces such part with a Part meeting such requirements as soon as reasonably
practicable (taking into scheduling and operational needs and commitments of the Company) but in no event later
than the earlier of (x) 180 days after such non-complaint part is installed and (y) the next heavy maintenance
check or overhaul of the Airframe or Engine, as the case may be.

(f)      Substitution of Engines.

                  The Company shall have the right at its option at any time, on at least thirty (30) days' prior
written notice to the Collateral Agent, to substitute, and if an Event of Loss shall have occurred with respect
to an Engine (not involving an Event of Loss with respect to the Airframe with respect to which the Company is
required to prepay the Notes in accordance with Section 2.8(b) of the Credit Agreement), shall give notice
thereof to the Collateral Agent within ten (10) days after the occurrence of such Event of Loss, and shall,
within ninety (90) days after the occurrence of such Event of Loss substitute, a Replacement Engine; provided
that both Engines shall be of the same make and model. In such event, immediately upon the effectiveness of such
substitution on the date set forth in such notice and without further act, (i) the replaced Engine shall
thereupon be free and clear of all rights of the Collateral Agent and the Lien created hereby and shall no longer
be deemed an Engine hereunder, and (ii) such Replacement Engine shall become subject to the Lien of this
Mortgage, free and clear of all Liens except Permitted Liens, and be deemed part of the Aircraft for all purposes
hereof to the same extent as the Engine originally installed on or attached to the Airframe. The Company's right
to make a replacement hereunder shall be subject to the fulfillment of the following conditions precedent at the
Company's sole cost and expense:

    (i)  The following documents shall have been duly authorized, executed and delivered by the respective party
         or parties thereto and shall be in full force and effect, and an executed counterpart of each shall have
         been delivered to the Collateral Agent:

(A)      a Mortgage Supplement covering the Replacement Engine (filed for recording pursuant to the Federal
                  Aviation Act);

(B)      an Officer's Certificate of the Company stating (i) that the Replacement Engine is of at least equal
                  value, utility and remaining useful life as the Engine it replaces assuming such Engine had
                  been maintained in the condition required hereunder and (ii) each of the conditions specified
                  in this paragraph (f) with respect to such Replacement Engine, and any comparable provisions of
                  any Lease permitted hereby to which such Engine is subject, have been satisfied;

(C)      such Uniform Commercial Code financing statements covering the Lien created by this Mortgage as deemed
                  necessary or desirable by counsel for the Collateral Agent to protect the security interests of
                  the Collateral Agent in the Replacement Engine; and

(D)      a certificate, reasonably acceptable to the Collateral Agent in form and substance, of an aircraft
                  engineer (which may be an aircraft engineer employed by the Company) or qualified independent
                  aircraft appraiser certifying, with respect to such Replacement Engine, to the effect specified
                  in Section 3.4(f)(i)(B) hereof;

    (ii) Upon request by the Collateral Agent, the Company shall furnish the Collateral Agent with (A) an opinion
         addressed to the Collateral Agent, reasonably satisfactory in form and substance to the Collateral
         Agent, of the Company's counsel, which may be the Company's General Counsel or an Associate General
         Counsel, to the effect that (x) such documents reasonably requested by the Collateral Agent are
         sufficient to cause such Replacement Engine to be subject to the Lien of this Mortgage and (y) the
         Collateral Agent will continue to be entitled to the benefits of Section 1110 of the Bankruptcy Code (as
         then in effect) with respect to the Replacement Engine; provided that the opinion in clause (y) need not
         be delivered to the extent that the benefits of Section 1110 of the Bankruptcy Code were not, solely by
         reason of a change in law or interpretation thereof, available with respect to the Engine being
         substituted for immediately prior to such substitution, (B) upon recordation, an opinion of qualified
         FAA counsel, or if applicable, qualified counsel in the jurisdiction of the Aircraft's registration
         addressed to the Collateral Agent, in either case satisfactory in form and substance to the Collateral
         Agent as to the due recordation of the Mortgage Supplement as a first priority Lien on the Replacement
         Engine, registration of the ownership of the Replacement Engine to the extent registration of ownership
         to an engine may be accomplished apart from registration of title to the Airframe upon which such engine
         is installed and the freedom from Liens of record, and (C) such evidence of compliance with the
         insurance provisions of Section 3.6 hereof with respect to such Replacement Engine as the Collateral
         Agent may reasonably request; and

    (iii)The Company shall have delivered to the Collateral Agent (A) a copy of the bill of sale respecting such
         Replacement Engine or other evidence of the Company's ownership of such Replacement Engine, reasonably
         satisfactory to the Collateral Agent and (B) appropriate instruments assigning to the Collateral Agent
         the benefits, if any, of all manufacturer's and vendor's warranties generally available and permitted to
         be assigned by the Company with respect to such Replacement Engine.

                  Upon such substitution, (x) the Collateral Agent shall execute and deliver to the Company such
documents and instruments, prepared at the Company's expense, as the Company shall reasonably request, to
evidence the release of such replaced Engine from the Lien of this Mortgage; (y) the Collateral Agent shall
assign to the Company all claims it may have against any other Person relating to an Event of Loss of such
replaced Engine giving rise to such substitution; and (z) the Company shall receive all insurance proceeds and
proceeds in respect of any Event of Loss of such replaced Engine giving rise to such replacement to the extent
not previously applied as provided herein.

Section 3.5.      Loss, Destruction or Requisition.

(a)      Event of Loss With Respect to the Airframe.

                  Upon the occurrence of an Event of Loss with respect to the Airframe or an Engine, the Company
shall promptly (and in any event within five (5) days after such occurrence) give the Collateral Agent written
notice of such Event of Loss. In the event of an Event of Loss of the Airframe, the Company shall prepay the
Notes in accordance with Section 2.8(b) of the Credit Agreement.

(b)      Non-Insurance Payments Received on Account of an Event of Loss.

                  As between the Collateral Agent and the Company, any payments on account of an Event of Loss
(other than insurance proceeds or other payments the application of which is provided for in Section 3.6 hereof,
or elsewhere in this Mortgage, as the case may be, or payments in respect of damage to the business or property,
of the Company) with respect to the Aircraft, an Engine or any Part received at any time by the Collateral Agent
or by the Company from any governmental authority or other Person will be applied as follows:

    (i)  if such payments are received with respect to an Event of Loss to an Engine or Part (not involving an
         Event of Loss as to the Airframe) that has been replaced by the Company pursuant to Section 3.4(f)
         hereof, such payments shall be paid over to, or retained by, the Company; and

    (ii) if such payments are received with respect to an Event of Loss as to the Aircraft, such payments shall
         be applied to the prepayment to the Notes required pursuant to Section 2.8(b) of the Credit Agreement
         and the payment of any other Secured Obligations then due and payable and after the Notes and such other
         Secured Obligations shall have been paid in full, the balance, if any, of such payment shall be promptly
         paid over to, or retained by, the Company.

(c)      Requisition of Use.

                  In the event of a requisition for use by any government, so long as it does not constitute an
Event of Loss, of the Airframe and the Engines or engines installed on the Airframe so long as the Airframe or an
Engine is subject to the Lien of this Mortgage, the Company shall promptly notify the Collateral Agent of such
requisition and all of the Company's obligations under this Mortgage shall continue to the same extent as if such
requisition had not occurred. So long as no Special Default or Event of Default shall have occurred and be
continuing, any payments received by the Collateral Agent or the Company from such government with respect to
such requisition of use shall be paid over to, or retained by, the Company. In the event of an Event of Loss of
an Engine resulting from the requisition for use by a government of such Engine (but not the Airframe), the
Company will replace such Engine hereunder by complying with the terms of Section 3.4(f) hereof and any payments
received by the Collateral Agent or the Company from such government with respect to such requisition shall be
paid over to, or retained by, the Company.

(d)      Application of Payments During Existence of Special Default or Event of Default.

                  Any amount referred to in this Section 3.5 which is payable to the Company shall not be paid to
or retained by the Company, if at the time of such payment or retention a Special Default or an Event of Default
shall have occurred and be continuing, but shall be held by or paid over to the Collateral Agent as security for
the Secured Obligations and applied against the Secured Obligations as and when due. Upon the earlier of (a) such
time as there shall not be continuing any such Special Default or Event of Default or (b) the termination of this
Mortgage in accordance with Section 8.1, such amount, and any interest realized thereon pursuant to Section 7.1
hereof, shall be paid over to the Company to the extent not previously applied in accordance with the preceding
sentence.

Section 3.6.      Insurance.

(a)      Public Liability and Property Damage Insurance.

    (I)  Except as provided in clause (II) of this Section 3.6(a), and subject to the provisions of
Section 3.6(f) hereof, the Company will carry or cause to be carried at its expense (i) aircraft public liability
insurance (including, without limitation, passenger legal liability, bodily injury liability, aircraft war risk,
allied perils and hijacking insurance), property damage and contractual liability insurance (exclusive of
manufacturer's product liability insurance) with respect to the Aircraft, in an amount per occurrence not less
than the greater of (x) the amount of public liability and property damage insurance from time to time applicable
to aircraft owned or operated by the Company of the same type as the Aircraft and (y) [***] and (ii) cargo
liability insurance, in the case of both clause (i) and clause (ii), (A) of the type and covering the same risks
as from time to time applicable to aircraft operated by the Company of the same type as the Aircraft and (B)
which is maintained in effect with insurers of recognized responsibility acceptable to the Collateral Agent
(acting reasonably). For avoidance of doubt, any insurers acceptable to a majority of lessors or financiers of
similar aircraft within the Company's fleet shall be deemed acceptable to Collateral Agent. Any policies of
insurance carried in accordance with this paragraph (a) and any policies taken out in substitution or replacement
for any of such policies (A) shall be amended to name the Additional Insureds (but without imposing on any such
party liability to pay the premiums for such insurance) as additional insureds as their interests may appear, (B)
shall provide that in respect of the interest of any Additional Insured in such policies the insurance shall not
be invalidated by any action or inaction of the Company or any other Person and shall insure the Additional
Insureds regardless of any breach or violation of any warranty, declaration or condition contained in such
policies by the Company or any other Person, (C) may provide for self-insurance to the extent permitted by
Section 3.6(d) and (D) shall provide that if the insurers cancel such insurance for any reason whatever or if any
material change is made in such insurance which adversely affects the interest of any Additional Insured, or such
insurance shall lapse for non-payment of premium, such cancellation, lapse or change shall not be effective as to
any Additional Insured for thirty (30) days (ten (10) days for non-payment of premium) (seven (7) days in the
case of war risk and allied perils coverage) after issuance to the broker of record of written notice by such
insurers of such cancellation, lapse or change; provided, however, that if any notice period specified above is
not obtainable, such policies shall provide for as long a period of prior notice as shall then be obtainable.
Each liability policy (1) shall be primary without right of contribution from any other insurance which is
carried by any Additional Insured, (2) shall expressly provide that all of the provisions thereof, except the
limits of liability, shall operate in the same manner as if there were a separate policy covering each Additional
Insured, and (3) shall waive any right of the insurers to any set-off or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of any Additional Insured.

    (II) During any period that the Aircraft is on the ground and not in operation, the Company may carry or
cause to be carried, in lieu of the insurance required by clause (I) above, insurance otherwise conforming with
the provisions of said clause (I) except that (A) the amounts of coverage shall not be required to exceed the
amounts of public liability and property damage insurance from time to time applicable to aircraft owned or
operated by the Company of the same type as the Aircraft and which are on the ground and not in operation; and
(B) the scope of the risks covered and the type of insurance shall be the same as from time to time shall be
applicable to aircraft owned or operated by the Company of the same type which are on the ground and not in
operation.

(b)      Insurance Against Loss or Damage to the Aircraft.

    (I)  Except as provided in clause (II) of this Section 3.6(b) and subject to the provisions of Section 3.6(f)
hereof, the Company shall maintain or cause to be maintained in effect, at its expense, with insurers of
recognized responsibility, all-risk ground and flight aircraft hull insurance (with flight, taxi and ingestion
coverages) covering the Aircraft and all-risk ground and flight coverage of Engines and Parts while temporarily
removed from the Aircraft (providing for insurance on an agreed value basis) (including, without limitation, war
risk and allied perils, governmental confiscation and expropriation (other than by the government of the United
States) and hijacking insurance, if and to the extent the same is maintained by the Company with respect to other
aircraft owned or operated by the Company on the same routes, except that the Company shall maintain war risk and
governmental confiscation and expropriation (other than by the government of the United States) and hijacking
insurance if the Aircraft is operated on routes where the custom is for similarly situated air carriers flying
comparable routes to carry such insurance) which is of the type as from time to time applicable to aircraft owned
or operated by the Company of the same type as the Aircraft; provided that such insurance shall at all times
while the Aircraft is subject to this Mortgage be for an amount (subject to self-insurance to the extent
permitted by Section 3.6(d)) not less than 115% of the then aggregate outstanding principal amount of the Notes
(the "Loan Loss Value"). Any policies carried in accordance with this paragraph (b) covering the Aircraft and any
policies taken out in substitution or replacement for any such policies (i) shall be amended to name the
Additional Insureds as additional insureds, as their interests may appear (but without imposing on any such party
liability to pay premiums with respect to such insurance), (ii) may provide for self-insurance to the extent
permitted in Section 3.6(d), (iii) shall provide that (A) in the event of an Event of Loss or a loss involving
proceeds in excess of  [***], the proceeds in respect of such loss up to an amount equal to [***] of the
aggregate outstanding principal amount of the Notes, plus all accrued and unpaid interest thereon and any other
Obligations (including any Obligation arising under Section 8.4 of the Credit Agreement) then due and payable
(the "Balance Due"), shall be payable to Collateral Agent (except in the case of a loss with respect to an Engine
installed on an airframe other than the Airframe, in which case the Company shall arrange for any payment of
insurance proceeds in respect of such loss to be held for the account of the Collateral Agent whether such
payment is made to the Company (or any third party), it being understood and agreed that in the case of any
payment to the Collateral Agent otherwise than in respect of an Event of Loss, the Collateral Agent shall, upon
receipt of evidence satisfactory to it (acting reasonably) that the damage giving rise to such payment shall have
been repaired or that such payment shall then be required to pay for repairs then being made, pay the amount of
such payment to the Company or its order, and (B) the entire amount of any loss, other than an Event of Loss,
involving total proceeds of [***] or less or the amount of any proceeds of any loss in excess of the Balance Due
shall be paid to the Company or its order, unless in the case of (A) or (B) a Special Default or an Event of
Default shall have occurred and be continuing (in which event the same shall be held by Collateral Agent and
applied as provided in Section 3.6(g)) and the insurers shall have been notified thereof by the Collateral Agent,
(iv) shall provide that if the insurers cancel such insurance for any reason whatever, or such insurance lapses
for non-payment of premium or if any material change is made in the insurance which adversely affects the
interest of the Additional Insured such cancellation, lapse or change shall not be effective as to any Additional
Insured for thirty (30) days (10 days for non-payment of premium) (seven (7) days in case of hull war risk and
allied perils coverage) after issuance to the broker of record of written notice by such insurers of such
cancellation, lapse or change; provided, however, that if any notice period specified above is not obtainable,
such policies shall provide for as long a period of prior notice as shall then be obtainable, (v) shall provide
that in respect of the interest of the Additional Insureds in such policies the insurance shall not be
invalidated by any action or inaction of the Company or any other Person and shall insure the Additional Insureds
regardless of any breach or violation of any warranty, declaration or condition contained in such policies by the
Company or any other Person, (vi) shall be primary without any right of contribution from any other insurance
which is carried by any Additional Insured, (vii) shall waive any right of subrogation of the insurers against
any Additional Insured, and (viii) shall waive any right of the insurers to set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any liability of any Additional Insured to the
extent of any moneys due to it. In the case of a loss with respect to an engine (other than an Engine) installed
on the Airframe, the Collateral Agent shall hold any payment to it of any insurance proceeds in respect of such
loss for the account of the Company or any other third party that is entitled to receive such proceeds.

                  As between the Collateral Agent and the Company, it is agreed that all insurance payments
received as the result of the occurrence of an Event of Loss will be applied as follows:

                           (w)      so much of such payments remaining, after reimbursement of the Collateral
                  Agent for reasonable costs and expenses incurred by it in connection with such Event of Loss,
                  as shall not exceed the Balance Due shall be applied in reduction of the Company's obligation
                  to pay the Balance Due, if not already paid by the Company, or, if already paid by the Company,
                  shall be applied to reimburse the Company for its payment of such Balance Due, and the balance,
                  if any, of such payments remaining thereafter will be paid over to, or retained by, the
                  Company; and

                           (x)      if such payments are received with respect to an Engine under the
                  circumstances contemplated by Section 3.4(f) hereof, so much of such payments remaining, after
                  reimbursement of the Collateral Agent for reasonable costs and expenses incurred by it in
                  connection with such Event of Loss, shall be paid over to, or retained by, the Company;
                  provided that the Company shall have fully performed or, concurrently therewith, will fully
                  perform, the terms of Section 3.4(f) hereof with respect to the Event of Loss for which such
                  payments are made.

                  As between the Collateral Agent and the Company, the insurance payments for any property damage
or loss to the Airframe or any Engine not constituting an Event of Loss with respect thereto will be applied to
reimburse the Company for repairs or for replacement property in accordance with the terms of Sections 3.2(c) and
3.4 hereof, and any balance (or if already paid for by the Company, all such insurance proceeds) remaining after
compliance with such Sections with respect to such loss shall be paid to the Company.

    (II) During any period that the Aircraft is on the ground and not in operation, the Company may carry or
cause to be carried, in lieu of the insurance required by clause (I) above, insurance otherwise conforming with
the provisions of said clause (I) except that the scope of the risks and the type of insurance shall be the same
as from time to time applicable to aircraft owned by the Company of the same type similarly on the ground and not
in operation; provided that the Company shall maintain insurance against risk of loss or damage to the Aircraft
in an amount at least equal to the Balance Due during such period that the Aircraft is on the ground and not in
operation.

(c)      Reports, etc.

                  The Company will furnish, or cause to be furnished, to the Collateral Agent, on or before the
date of the Loan, signed by AON or any other independent firm of insurance brokers acceptable to the Collateral
Agent acting reasonably (the "Insurance Brokers"), an insurance certificate and Insurance Broker's letter of
undertaking describing in reasonable detail the insurance then carried and maintained with respect to the
Aircraft and stating the opinion of such firm that the insurance then carried and maintained with respect to the
Aircraft complies with the terms hereof; provided, however, that all information contained in the foregoing
report shall not be made available by the Collateral Agent or the Noteholders to anyone except (A) to permitted
transferees of the interest of the Collateral Agent or the Noteholders who agree to hold such information
confidential, (B) to the Collateral Agent's or the Noteholder's counsel or independent public accountants or
independent insurance advisors who agree to hold such information confidential or (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or regulation. In addition, the Company
will also cause such Insurance Brokers to deliver to the Collateral Agent, on or prior to the date of expiration
of any insurance policy referenced in a previously delivered certificate of insurance, a confirmation that the
policy has been renewed and within five (5) business days of such renewal, a renewal certificate of insurance and
Insurance Broker's letter of undertaking, substantially in the same form as delivered by the Company to the
Collateral Agent on the date of the Loan. In the event that the Company or any Lessee shall fail to maintain or
cause to be maintained insurance as herein provided, the Collateral Agent may at its sole option provide such
insurance and, in such event, the Company shall, upon demand, reimburse the Collateral Agent for the cost thereof
to the Collateral Agent, without waiver of any other rights the Collateral Agent may have.

(d)      Self-Insurance.

                  The Company may self-insure by way of deductible, premium adjustment or franchise provisions or
otherwise (including, with respect to insurance maintained pursuant to Section 3.6(b), insuring for a maximum
amount which is less than the Loan Loss Value) in the insurance covering the risks required to be insured against
pursuant to this Section 3.6 under a program applicable to all aircraft in the Company's fleet, but in no case
shall the aggregate amount of self-insurance in regard to Section 3.6(a) and Section 3.6(b) exceed $750,000 per
occurrence, provided that no self-insurance shall be allowed in the case of an Event of Loss to the Airframe.

(e)      Additional Insurance by the Collateral Agent and the Company.

                  The Company may at its own expense carry insurance with respect to its interest in the Aircraft
in amounts in excess of that required to be maintained by this Section 3.6, so long as such excess insurance is
not in conflict with the insurance otherwise required hereunder.

(f)      Indemnification by Government in Lieu of Insurance; Temporary Unavailability.

    (i)  Notwithstanding any provisions of this Section 3.6 requiring insurance, the Collateral Agent agrees to
         accept, in lieu of insurance against any risk with respect to the Aircraft, indemnification from, or
         insurance provided by, the United States Government or any agency or instrumentality thereof against
         such risk in an amount which, when added to the amount of insurance against such risk maintained by the
         Company (or any Lessee) with respect to the Aircraft (including permitted self-insurance) shall be at
         least equal to the amount of insurance against such risk otherwise required by this Section 3.6. Company
         shall furnish to the Collateral Agent a certificate of a responsible officer confirming in reasonable
         detail the amount and terms of any such indemnity or insurance as soon as is practicable.

    (ii) Notwithstanding any provisions of this Section 3.6 regarding insurance, should the availability or
         amount of any particular coverage be cancelled or restricted on a world fleet-wide basis, the Collateral
         Agent and Borrower shall consult in good faith with respect to a temporary modification of the
         requirements set forth herein concerning the cancelled or restricted coverage with a view toward
         permitting Borrower to continue to operate the Aircraft in accordance with then applicable international
         aviation insurance practice until the relevant coverage is reinstated or the restriction(s) affecting
         the same is/are lifted; provided that, in the case of a cancellation or material restriction, unless the
         Collateral Agent otherwise agrees,  the Aircraft shall be grounded by the Borrower during the
         continuance of such consultation until an agreement between the Borrower and the Collateral Agent is
         reached.

(g)      Application of Payments During Existence of a Special Default or an Event of Default.

                  Any amount referred to in paragraph (b) of this Section 3.6 which is payable to or retainable
by the Company shall not be paid to or retained by the Company if at the time of such payment or retention a
Special Default or an Event of Default shall have occurred and be continuing, but shall be held by or paid over
to the Collateral Agent as security for the Secured Obligations and applied against the Secured Obligations as
and when due. Upon the earlier of (a) such time as there shall not be continuing any such Special Default or
Event of Default or (b) the termination of this Mortgage in accordance with Section 8.1, such amount, and any
interest realized thereon pursuant to Section 7.1 hereof, shall be paid to the Company to the extent not
previously applied in accordance with the preceding sentence.

Section 3.7.      Filings.

                  The Company will take, or cause to be taken, at the Company's cost and expense, such action
with respect to the recording, filing, re-recording and re-filing of this Mortgage, each Mortgage Supplement and
each Lease Assignment, and any financing statements or other instruments as are necessary, or requested by the
Collateral Agent and appropriate, to maintain, so long as this Mortgage is in effect, the perfection of the Lien
created by this Mortgage and the other Collateral Documents, or will furnish to the Collateral Agent timely
notice of the necessity of such action, together with such instruments, in execution form, and such other
information as may be required to enable the Collateral Agent to take such action.

Section 3.8.      Corporate Existence.

                  The Company shall at all times maintain its corporate existence except as permitted by Section
3.9 hereof.

Section 3.9.      Merger, Consolidation.

                  The Company shall not consolidate with or merge into any other corporation or convey, transfer
or lease substantially all its assets as an entirety to any Person unless:

    (i)  the corporation formed by such consolidation or into which the Company is merged or the Person which
         acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety
         shall be a Certificated Air Carrier;

    (ii) the corporation formed by such consolidation or into which the Company is merged or the Person which
         acquires by conveyance, transfer or lease substantially all of the assets of the Company as an entirety
         shall execute and deliver to the Collateral Agent an agreement in form and substance reasonably
         satisfactory to Collateral Agent containing an assumption by such successor corporation or Person of the
         due and punctual performance and observance of each covenant and condition of this Mortgage and the
         Notes and any other Loan Document (to the extent any such covenant or condition in any such other Loan
         Document pertains to the Loan or the Notes) to be performed or observed by the Company;

    (iii)immediately after giving effect to such transaction, no Default or Event of Default shall have occurred
         and be continuing;

    (iv) such Person has an unsecured debt credit rating from S&P or from Moody's (as defined in the term
         "Permitted Investments") not less than that in effect immediately prior to such transaction;

    (v)  the rights and remedies of the Collateral Trustee and of the Noteholders under the Loan Documents are
         not adversely affected; and

    (vi) the Company shall have delivered to the Collateral Agent an Officer's Certificate, and, as to
         Sections 3.9(i), (ii) and (v) an opinion of counsel, each stating that such consolidation, merger,
         conveyance, transfer or lease and the assumption agreement mentioned in clause (ii) above comply with
         this Section 3.9 and that all conditions precedent herein provided for relating to such transaction have
         been complied with.

                  Upon any consolidation or merger, or any conveyance, transfer or lease of substantially all of
the assets of the Company as an entirety in accordance with this Section 3.9, the successor corporation or Person
formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease
is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under
this Mortgage and the other Loan Documents with the same effect as if such successor corporation or Person had
been named as the Company herein. No such conveyance, transfer or lease of substantially all of the assets of the
Company as an entirety shall have the effect of releasing the Company or any successor corporation or Person
which shall theretofore have become such in the manner prescribed in this Section 3.9 from its liability in
respect of any Loan Document to which it is a party.

Section 3.10.     Notice of Change of the Company's Location.

                  The Company will notify the Collateral Agent of any change in the location of the Company (for
purposes of Article 9 of the Uniform Commercial Code) promptly after making such change and in any event within a
reasonable period of time prior to the date by which it is necessary under applicable law to make any filing in
order to prevent the lapse of perfection (absent refiling) of financing statements filed under or with respect to
this Mortgage.

Section 3.11.     Interests in the Purchase Agreement.

                  The grant by the Company to the Collateral Agent of the Company's interests in and to the
Purchase Agreement Rights as set forth in granting clause (b) of Section 2.1 hereof is subject to the following:

(a)      If and so long as  [***] shall not have received notice from the Collateral Agent in writing addressed
         to its Chief Executive Officer [***] that an Event of Default under this Mortgage has occurred and is
         continuing, the Collateral Agent (1) authorizes the Company, on behalf of but to the exclusion of the
         Collateral Agent, to exercise in the Company's own name the Purchase Agreement Rights and (2) at the
         Company's expense, shall cooperate with the Company and take such actions as the Company reasonably
         deems necessary to enable the Company to enforce the Purchase Agreement Rights.

(b)      Effective upon the receipt by [***] of notice from the Collateral Agent that an Event of Default under
         this Mortgage has occurred and is continuing and thereafter until [***] shall have received written
         notice from the Collateral Agent that such Event of Default has been cured or waived, (which notice the
         Collateral Agent agrees to give promptly after such cure or waiver has been accepted or given, as the
         case may be): (1) at the Collateral Agent's option, the authorization given to the Company under clause
         (a) of this Section 3.11 to enforce the Purchase Agreement Rights shall henceforth cease to be effective
         and the Collateral Agent and its successors and assigns, to the exclusion of the Company, shall be
         entitled to assert and enforce the Purchase Agreement Rights as substitute party plaintiff or otherwise
         and the Company, at the request of the Collateral Agent or its successors or assigns and at the
         Company's expense, shall cooperate with and take such action as reasonably necessary to enable the
         Collateral Agent and its successors and assigns to enforce Purchase Agreement Rights, and the Collateral
         Agent, if it shall elect to enforce such Purchase Agreement Rights, shall use its best efforts to assert
         and enforce Purchase Agreement Rights, and (2) the Company will be deemed to have irrevocably
         constituted the Collateral Agent and its successors and permitted assigns the Company's true and lawful
         attorney (it being acknowledged that such appointment is coupled with an interest, namely the Collateral
         Agent's rights acquired and to be acquired hereunder) with full power (in the name of the Company or
         otherwise) to ask, require, demand, receive, compound and give acquittance for any and all monies and
         claims due and to become due under, or arising out of, the Purchase Agreement in respect of Purchase
         Agreement Rights, and for such period as the Collateral Agent may exercise rights with respect thereto
         under this clause (2), to endorse any checks or other instruments or orders in connection therewith and
         to file any claims or take any orders in connection therewith and to file any action or institute (or,
         if previously commenced, assume control of) any proceedings and to obtain any recovery in connection
         therewith which the Collateral Agent may deem to be necessary or advisable in the premises.

(c)      Notwithstanding granting clause (b) of Section 2.1, this Section 3.11 and anything in this Mortgage to
         the contrary, all amounts that [***] or the Manufacturer is obligated to pay to the Company pursuant to
         the Purchase Agreement Rights (a "Manufacturer Payment") will be payable and applicable as follows: all
         the Manufacturer Payments shall be paid to the Company unless and until [***] shall have received
         written notice from the Collateral Agent that an Event of Default under this Mortgage has occurred and
         is continuing, whereupon [***] and the Manufacturer will make any and all such payments directly to the
         Collateral Agent, until [***] shall have received written notice from the Collateral Agent that all
         Events of Default under this Mortgage have been cured or waived (which notice the Collateral Agent
         agrees to give promptly after such cure or waiver has been accepted or given, as the case may be). Any
         amounts received by the Collateral Agent pursuant to the immediately preceding sentence, to the extent
         not theretofore applied in satisfaction of the Secured Obligations, shall be returned to the Company
         promptly after all Events of Default hereunder have been cured or waived.

(d)      For all purposes of this Mortgage, [***] shall not be deemed to have knowledge of a declaration of an
         Event of Default under this Mortgage or of the discontinuance or waiver of an Event of Default unless
         and until the Manufacturer shall have received written notice addressed to [***] as provided in
         paragraph (a) above, and in acting in accordance with the terms and conditions of the Purchase Agreement
         and this Mortgage, [***] and the Manufacturer may rely conclusively upon any such notice.

(e)      Anything herein contained to the contrary notwithstanding: (1) the Company shall at all times remain
         liable to [***] and the Manufacturer under or pursuant to the Purchase Agreement to perform all of its
         duties and obligations thereunder to the same extent as if this Mortgage had not been executed; (2) the
         exercise by the Collateral Agent of any of the Company's rights assigned hereunder shall not release the
         Company from any of its duties or obligations to [***] or the Manufacturer under or pursuant to the
         Purchase Agreement except to the extent that such exercise by the Collateral Agent shall constitute
         performance of such duties and obligations; and (3) except as provided in clause (f) of this Section
         3.11, the Collateral Agent shall not have any obligation or liability under the Purchase Agreement by
         reason of, or arising out of, this Mortgage or be obligated to perform any of the obligations or duties
         of the Company under the Purchase Agreement or to make any payment or make any inquiry as to the
         sufficiency of any payment received by it or to present or to file any claim or to take any other action
         to collect or enforce any claim for any payment assigned hereunder.

(f)      Without in any way releasing the Company from any of its duties or obligations under the Purchase
         Agreement, the Collateral Agent confirms for the benefit of [***]and the Manufacturer that, insofar as
         the Purchase Agreement Rights are concerned, in exercising any rights under the Purchase Agreement, or
         in making any claim under or pursuant to the Purchase Agreement, the terms and conditions of the
         Purchase Agreement shall apply to, and be binding upon, the Collateral Agent to the same extent as the
         Company.

(g)      Nothing contained in this Mortgage shall (1) subject [***] or the Manufacturer to any liability to which
         it would not otherwise be subject under the Purchase Agreement or (2) modify in any respect [***] or the
         Manufacturer's contract rights thereunder.

Section 3.12.     General Indemnity. Subject to the next following paragraph but without limiting any other
rights that any Indemnitee may have under the other Loan Documents or applicable law, the Company hereby agrees
to indemnify each Indemnitee on an after-tax basis against, and agrees to protect, save and keep harmless each of
them from any and all Expenses imposed on, incurred by or asserted against any Indemnitee arising out of or
resulting from (i) the operation, possession, use, maintenance, overhaul, testing, registration, reregistration,
delivery, non-delivery, lease, nonuse, modification, alteration, or sale of any Aircraft, Airframe or Engine, or
any engine used in connection with any Airframe or any part of any of the foregoing or any Inflight Equipment, by
the Company, any Lessee or any other Person whatsoever, whether or not such operation, possession, use,
maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse,
modification, alteration, or sale is in compliance with the terms of this Mortgage, including, without
limitation, claims for death, personal injury or property damage or other loss or harm to any person whatsoever
and claims relating to any laws, rules or regulations pertaining to such operation, possession, use, maintenance,
overhaul, testing, registration, reregistration, delivery, non-delivery, lease, non-use, modification,
alteration, sale or return including environmental control, noise and pollution laws, rules and regulations;
(ii) the manufacture, design, purchase, acceptance, rejection, delivery, or condition of the Aircraft, Airframe or
any Engine, any engine used in connection with any Airframe, any Inflight Equipment, or any part of any of the
foregoing including, without limitation, latent and other defects, whether or not discoverable, or trademark or
copyright infringement of any trademarks and/or copyrights of third parties; (iii) the Loan Documents, or the
transactions contemplated thereby, or any breach of or failure by the Company to perform or observe, or any other
noncompliance by the Company with, any covenant or agreement to be performed, or other obligation of the Company
under any of the Loan Documents, or the falsity of any representation or warranty of the Company in any of the
Loan Documents; and (iv) any Event of Default hereunder or the enforcement against the Company of any of the
terms hereof (including, without limitation, Article IV hereof).

                  The foregoing indemnity shall not extend to any Expense of any Indemnitee to the extent
attributable to one or more of the following: (1) acts or omissions involving the willful misconduct or gross
negligence of such Indemnitee or any Person acting on behalf of such Indemnitee (other than gross negligence
imputed to such Indemnitee solely by reason of its interest in an Aircraft or participation in the Loan
Documents, as finally determined by a court of competent jurisdiction); (2) any Tax, or increase in tax liability
under any tax law (such matter being the subject to the indemnity in Section 2.12 of the Credit Agreement or an
exclusion thereto; (3) any Expense for which any Indemnitee receives compensation or indemnification under any
other provision hereof or of the Credit Agreement, or a failure on the part of the Administrative Agent to
distribute in accordance with the Loan Documents any amounts received and distributable by it thereunder; (4) any
breach of any undertaking or any misrepresentation contained herein or in any other Loan Document to which such
Indemnitee is a party or any agreement relating hereto or thereto by such Indemnitee and in each case not
attributable directly to any breach of undertaking, any misrepresentation or any noncompliance with any of the
terms hereof or any other Loan Document or any agreement relating hereto or thereto by the Company; (5) any
Expenses as a result of a violation of the Securities Act (as defined below) relating to or arising out of the
offer, issuance, sale or delivery by such Indemnitee (or any person who controls such Indemnitee within the
meaning of Section 15 of the Securities Act of 1933 (the "Securities Act"), as amended) of the Loan; or (6) any
Expense of a Lender which is incurred as a result of the sale, assignment, conveyance or other transfer, whether
voluntary or involuntary, of the Loan or an interest therein, other than (a) as a result of an Event of Default,
or (b) for which the Borrower is responsible under Section 2.14 or 2.15 of the Credit Agreement or any other
provision of the Loan Documents.

                  If a claim is made against an Indemnitee involving one or more Expenses and such Indemnitee has
notice thereof, such Indemnitee (or its agent) shall promptly after receiving such notice give notice of such
claim to the Company; provided that the failure to provide such notice shall not release the Company from any of
its obligations to indemnify hereunder except to the extent that the Company is prejudiced as a result of the
failure to give such notice in a timely fashion, and no payment by the Company to an Indemnitee pursuant to this
Section 3.12 shall be deemed to constitute a waiver or release of any right or remedy which the Company may have
against such Indemnitee for any actual damages as a result of the failure by such Indemnitee to give the Company
such notice. The Company shall be entitled, at its sole cost and expense, acting through a single counsel
reasonably acceptable to the respective Indemnitee, so long as the Company has acknowledged in writing its
responsibility for such Expense hereunder (unless such Expense is covered by the second paragraph of this Section
3.12, except that such acknowledgment does not apply if the decision of a court or arbitrator provides that the
Company is not liable hereunder), (A) in any judicial or administrative proceeding that involves solely a claim
for one or more Expenses, to assume responsibility for and control thereof, (B) in any judicial or administrative
proceeding involving a claim for one or more Expenses and other claims related or unrelated to the transactions
contemplated by the Loan Documents, to assume responsibility for and control of such claim for Expenses to the
extent that the same may be and is severed from such other claims (and such Indemnitee shall use its reasonable
efforts to obtain such severance), and (C) in any other case, to be consulted by such Indemnitee with respect to
judicial proceedings subject to the control of such Indemnitee and to be allowed, at the Company's sole expense,
to participate therein. The Indemnitee may participate at its own expense and with its own counsel in any
judicial proceeding controlled by the Company pursuant to the preceding provisions. Notwithstanding any of the
foregoing, the Company shall not be entitled to assume responsibility for and control of any such judicial or
administrative proceedings if any Event of Default shall have occurred and be continuing, if such proceedings
will involve a material risk of the sale, forfeiture or loss of an Aircraft unless the Company shall have posted
a bond or other security reasonably satisfactory to the relevant Indemnitee with respect to such risk or if such
proceedings could entail any risk of criminal liability being imposed on such Indemnitee.

                  Each Indemnitee shall supply the Company with such information reasonably requested by the
Company as is necessary or advisable for the Company to control or participate in any proceeding to the extent
permitted by this Section 3.12. Such Indemnitee shall not enter into a settlement or other compromise with
respect to any Expense without the prior written consent of the Company, which consent shall not be unreasonably
withheld or delayed, unless such Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 3.12. In the case of any Expense indemnified by Company hereunder which is covered by a policy of
insurance maintained by Company, each Indemnitee agrees, at Company's expense, to cooperate reasonably with the
insurers in the exercise of their rights to investigate, defend or compromise such loss or liability as may be
reasonably required to retain the benefits of such insurance with respect to such loss or liability.

                  To the extent of any payment of any Expense pursuant to this Section 3.12, the Company, without
any further action, shall be subrogated to any claims the Indemnitee may have relating thereto. The Indemnitee
agrees to give such further assurances or agreements and to cooperate with the Company to permit the Company to
pursue such claims, if any, to the extent reasonably requested by the Company.

                  In the event that the Company shall have paid an amount to an Indemnitee pursuant to this
Section 3.12, and such Indemnitee subsequently shall be reimbursed in respect of such indemnified amount from any
other Person, such Indemnitee shall promptly pay the Company the amount of such reimbursement, including interest
received attributable thereto, provided that no Special Default or Event of Default has occurred and is
continuing (in which event such amount shall be paid over promptly to the Collateral Agent and applied in the
same manner as provided in Section 3.6(g)).

Section 3.13.     General Covenant. The Company agrees to timely pay and perform each of its covenants and
agreements contained in the other Loan Documents.

                                                   Article IV

                                         REMEDIES OF THE COLLATERAL AGENT
                                             UPON AN EVENT OF DEFAULT

Section 4.1.      Event of Default. Each of the following events shall constitute an Event of Default (whether
any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to
or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body) and each such Event of Default shall continue so long as, but only as long
as, it shall not have been remedied:

(a)      (i)  The Company shall fail to make any payment within two (2) Business Days after the same shall have
         become due of principal of, or interest on, any Loan or any Note; or (ii) the Company shall fail to make
         any payment when the same shall become due of any other Obligations, and such failure shall continue
         unremedied for five (5) Business Days after the receipt by the Company of written notice of such failure
         from the Collateral Agent or the Administrative Agent;

(b)      The Company shall have failed to perform or observe (or caused to be performed and observed) any other
         covenant or agreement to be performed or observed by it under this Mortgage, the Credit Agreement or any
         other Loan Document, and such failure shall continue unremedied for a period of thirty (30) days after
         receipt by the Company of written notice thereof from the Collateral Agent or the Administrative Agent;
         or

(c)      any representation or warranty made by the Company herein or in the Credit Agreement or any document or
         certificate furnished by the Company in connection herewith or therewith or pursuant hereto or thereto
         shall prove to have been incorrect in any material respect at the time made and, capable of cure, if not
         cured within ten (10) Business Days after actual knowledge thereof by a senior officer of the Borrower
         or, if earlier, written notice thereof from the Administrative Agent; or

(d)      the commencement of an involuntary case or other proceeding in respect of the Company in an involuntary
         case under the federal bankruptcy laws, as now or hereafter constituted, or any other applicable federal
         or state bankruptcy, insolvency or other similar law in the United States or seeking the appointment of
         a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company
         or for all or substantially all of its property, or seeking the winding-up or liquidation of its affairs
         and the continuation of any such case or other proceeding undismissed and unstayed for a period of sixty
         (60) consecutive days or an order, judgment or decree shall be entered in any proceeding by any court of
         competent jurisdiction appointing, without the consent of the Company, a receiver, trustee or liquidator
         of the Company, or of any substantial part of its property, or sequestering any substantial part of the
         property of the Company and any such order, judgment or decree or appointment or sequestration shall be
         final or shall remain in force undismissed, unstayed or unvacated for a period of sixty (60) days after
         the date of entry thereof; or

(e)      the commencement by the Company of a voluntary case under the Federal bankruptcy laws, as now
         constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency or
         other similar law in the United States, or the consent by the Company to the appointment of or taking
         possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar
         official) of the Company or for all or substantially all of its property, or the making by the Company
         of any assignment for the benefit of creditors or the Company shall take any corporate action to
         authorize any of the foregoing; or

(f)      The Company shall fail to carry and maintain on or with respect to the Aircraft (or cause to be carried
         and maintained) insurance required to be maintained in accordance with the provisions of Section 3.6
         hereof; or

(g)      the Lien of the Mortgage ceases to be a valid and enforceable, first and prior perfected Lien on the
         Collateral; or

(h)      the Company fails or ceases to be a Certificated Air Carrier or shall have been suspended as a
         Certificated Air Carrier and such suspension shall not be lifted or vacated within thirty (30) days, or
         if reinstatement of the same cannot reasonably be accomplished within such thirty (30) day period, such
         further period, not to exceed ninety (90) days, during which the Company is diligently pursuing such
         reinstatement provided that during any such period, but for such suspension, no other Event of Default
         shall have occurred; or

(i)      the Company shall default in the payment when due of any principal of or interest on, or fail to make a
         scheduled rental payment on, any of its other indebtedness or any lease obligation; or (ii) any event
         specified in any note, agreement, indenture, lease or other document evidencing or relating to any
         indebtedness or any lease obligation shall occur, and, after giving effect to any applicable notice
         and/or grace periods, the effect of such default (in the case of clause (i)) or event (in the case of
         clause (ii)) is to cause, or to permit the holder or holders of such indebtedness or lease obligation
         (or a trustee or agent on behalf of such holder or holders) to cause, such indebtedness or lease
         obligation to become due or to be terminated, or to be prepaid in full (whether by redemption, purchase,
         offer to purchase or otherwise), prior to its stated maturity; provided that, (x) the outstanding amount
         of such indebtedness and (y) the capitalized amount of such lease obligation shall, singly or in the
         aggregate, be in excess of [***] and (z) in respect of any lease obligation, the event giving rise to
         any such default is not frivolous or vexatious; or

(j)      for so long as the Loan is held in whole or in part by a Lender, the maturity of any Related Obligations
         then held in whole or in part by such Lender or its Affiliates shall have been accelerated; or

(k)      for so long as the Loan is held in whole or in part by an [***] Lender, the Company shall default under
         the Purchase Agreement or any other contractual or financial obligation between the Company or its
         Affiliates, on the one hand, and an [***] Lender, or its Affiliates, on the other hand

provided, however, that, notwithstanding anything to the contrary contained in Section 4.1(b) or (c) hereof, any
failure of the Company to perform or observe any covenant, condition, agreement or any error in a representation
or warranty shall not constitute an Event of Default if such failure or error is caused solely by reason of an
event that constitutes an Event of Loss so long as the Company is continuing to comply with all of the terms of
Section 3.5 hereof.

Section 4.2.      Remedies with Respect to Collateral.

(a)      Remedies Available.

                  Upon the occurrence of any Event of Default and at any time thereafter so long as the same
shall be continuing, the Collateral Agent (in accordance with the provisions of Article 5 hereof) may, and upon
the written instructions of a Majority in Interest of Noteholders, the Collateral Agent shall, do one or more of
the following:

(A)      cause the Company, upon the written demand of the Collateral Agent, at the Company's expense, to deliver
                           promptly, and the Company shall deliver promptly, all or such part of the Airframe or
                           any Engine or other Collateral as the Collateral Agent may so demand to the Collateral
                           Agent or its order, or the Collateral Agent, at its option, may enter upon the
                           premises where all or any part of the Airframe or any Engine or other Collateral are
                           located and take immediate possession (to the exclusion of the Company and all Persons
                           claiming under or through the Company) of and remove the same by summary proceedings
                           or otherwise together with any engine which is not an Engine but which is installed on
                           the Airframe, subject to all of the rights of the owner, lessor, lienor or secured
                           party of such engine; provided that such engine shall be held for the account of any
                           such owner, lessor, lienor or secured party or, if owned by the Company, may at the
                           option of the Collateral Agent, be exchanged with the Company for an Engine in
                           accordance with the provisions of Section 3.4(f) hereof;

(B)      sell all or any part of the Airframe and any Engine or other Collateral at public or private sale,
                           whether or not the Collateral Agent shall at the time have possession thereof, as the
                           Collateral Agent may determine, or lease or otherwise dispose of all or any part of
                           the Airframe or such Engine or other Collateral as the Collateral Agent, in its sole
                           discretion, may determine, all free and clear of any rights or claims of whatsoever
                           kind of the Company, provided the same is conducted in accordance with applicable law;
                           or

(C)      exercise any or all of the rights and powers and pursue any and all remedies of a secured party under
                           applicable law, including, without limitation, the Uniform Commercial Code of the
                           State of New York.

                  Upon every taking of possession of Collateral under this Section 4.2, the Collateral Agent may,
from time to time, at the expense of the Collateral Agent, make all such expenditures for maintenance, insurance,
repairs, replacements, alterations, additions and improvements to and of the Collateral, as it may deem proper.
In each such case, the Collateral Agent shall have the right to maintain, store, lease, control or manage the
Collateral and to exercise all rights and powers of the Company relating to the Collateral in connection
therewith, as the Collateral Agent shall deem prudent, including the right to enter into any and all such
agreements with respect to the maintenance, insurance, storage, leasing, control, management or disposition of
the Collateral or any part thereof as the Collateral Agent may determine; and the Collateral Agent shall be
entitled to collect and receive directly all tolls, rents, revenues, issues, income, products and profits of the
Collateral and every part thereof, without prejudice, however, to the right of the Collateral Agent under any
provision of this Mortgage to collect and receive all cash held by, or required to be deposited with, the
Collateral Agent hereunder. Such tolls, rents, revenues, issues, income, products and profits shall be applied to
pay the expenses of storage, leasing, control, management or disposition of the Collateral, and of all
maintenance, repairs, replacements, alterations, additions and improvements, and to make all payments which the
Collateral Agent may be required or may elect to make, if any, for taxes, assessments, insurance or other proper
charges upon the Collateral or any part thereof (including the employment of engineers and accountants to
examine, inspect and make reports upon the properties and books and records of the Company), and all other
payments which the Collateral Agent may be required or authorized to make under any provision of this Mortgage,
as well as just and reasonable compensation for the services of the Collateral Agent, and of all Persons properly
engaged and employed by the Collateral Agent.

                  In addition, the Company shall be liable for all legal fees and other out-of-pocket costs and
expenses incurred by reason of the occurrence of any Event of Default or the exercise of the Collateral Agent's
remedies with respect thereto, including all costs and expenses incurred in connection with the retaking or
return of the Airframe or any Engine in accordance with the terms hereof or under applicable law, including,
without limitation, the Uniform Commercial Code of the State of New York, which amounts shall, until paid, be
secured by the Lien of this Mortgage.

                  If an Event of Default shall have occurred and be continuing and the Notes shall have been
accelerated pursuant to this Section 4.2, at the request of the Collateral Agent the Company shall promptly
execute and deliver to the Collateral Agent such instruments of title and other documents as the Collateral Agent
may deem necessary or advisable to enable the Collateral Agent or an agent or representative designated by the
Collateral Agent, at such time or times and place or places as the Collateral Agent may specify, to obtain
possession of all or any part of the Collateral to which the Collateral Agent shall at the time be entitled
hereunder. If the Company shall for any reason fail to execute and deliver such instruments and documents after
such request by the Collateral Agent, the Collateral Agent may obtain a judgment conferring on the Collateral
Agent the right to immediate possession and requiring the Company to execute and deliver such instruments and
documents to the Collateral Agent, to the entry of which judgment the Company hereby specifically consents to the
fullest extent it may lawfully do so.

                  Nothing in the foregoing shall affect the right of each Noteholder to receive all payments of
principal of, and interest on, the Note or Notes held by such Noteholder and all other amounts owing to such
Noteholder as and when the same may be due.

(b)      Notice of Sale.

                  The Collateral Agent shall give the Company at least fifteen (15) days' prior written notice of
the date fixed for any public sale of the Airframe or any Engine or of the date on or after which any private
sale will be held, which notice the Company hereby agrees is reasonable notice, and any such public sale shall be
conducted in general so as to afford the Company (and any Lessee) a reasonable opportunity to bid.

(c)      Receiver.

                  If any Event of Default shall occur and be continuing, to the extent permitted by law, the
Collateral Agent shall be entitled, as a matter of right as against the Company, without notice or demand and
without regard to the adequacy of the security for the Notes or the solvency of the Company, upon the
commencement of judicial proceedings by it to enforce any right under this Mortgage, to the appointment of a
receiver of the Collateral and of the tolls, rents, revenues, issues, income, products and profits thereof.

(d)      Concerning Sales.

                  At any sale under this Article, any Lender or the Collateral Agent or the Administrative Agent
may bid for and purchase the property offered for sale, may make payment on account thereof as herein provided,
and, upon compliance with the terms of sale, may hold, retain and dispose of such property without further
accountability therefor. Any purchaser shall be entitled, for the purpose of making payment for the property
purchased, to deliver any of the Notes in lieu of cash in the amount which shall be payable thereon as principal
and/or accrued interest. Said Notes, in case the amount so payable to the holders thereof shall be less than the
amounts due thereon, shall be returned to the holders thereof after being stamped or endorsed to show partial
payment.

Section 4.3.      Waiver of Appraisement, etc., Laws.

                  To the full extent that it may lawfully so agree, the Company agrees that it will not at any
time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension,
or redemption law now or hereafter in force, in order to prevent or hinder the proper enforcement of this
Mortgage or the absolute sale of the Collateral as permitted hereunder, or any part thereof, or the possession
thereof by any purchaser at any proper sale under this Article; but the Company, for itself and all who may claim
under it, so far as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws. The
Company, for itself and all who may claim under it, waives, to the extent that it lawfully may, all right to have
the property in the Collateral marshalled upon any foreclosure hereof, and agrees that any court having
jurisdiction to foreclosure this Mortgage may order the sale of the Collateral as an entirety.

Section 4.4.      Remedies Cumulative.

                  Each and every right, power and remedy herein specifically given to the Collateral Agent or
otherwise in this Mortgage shall be cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing in the Loan Documents or at law, in equity or by statute,
and each and every right, power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed expedient by the Collateral Agent,
and the exercise or the beginning of the exercise of any power or remedy shall not be construed to be a waiver of
the right to exercise at the time or thereafter any other right, power or remedy. No delay or omission by the
Collateral Agent in the exercise of any right, remedy or power or in the pursuance of any remedy shall impair any
such right, power or remedy or be construed to be a waiver of any default on the part of the Company or to be an
acquiescence therein. Notwithstanding the foregoing, nothing herein shall be deemed to permit duplicative
recovery by Collateral Agent, any Lender or Noteholder of any amount due and owing to it hereunder or under any
other Loan Document.

Section 4.5.      Discontinuance of Proceedings.

                  If the Collateral Agent shall have proceeded to enforce any right, power or remedy under this
Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been discontinued or abandoned for
any reason, then and in every such case the Company and the Collateral Agent shall be restored to their former
positions and rights hereunder with respect to the property, subject to the Lien of this Mortgage, and all
rights, remedies and powers of the Collateral Agent shall continue, as if no such proceedings had been undertaken
(but otherwise without prejudice).

                                                   Article V

                                          DUTIES OF THE COLLATERAL AGENT

Section 5.1.      Action Upon Event of Default.

                  Subject to the terms of Sections 4.2 and 5.3 hereof, the Collateral Agent shall take such
action, or refrain from taking such action, with respect to an Event of Default (including with respect to the
exercise of any rights or remedies under the Collateral Documents), as the Collateral Agent shall be instructed
in writing by a Majority in Interest of Noteholders. If the Collateral Agent shall not have received instructions
as above provided within twenty (20) days after the mailing of any request for such instructions to the
Noteholders, the Collateral Agent may, subject to instructions thereafter received pursuant to the preceding
provisions of this Section 5.1, but shall not be obligated to, take such action, or refrain from taking such
action, under or with respect to the Collateral Documents and with respect to such Event of Default as it shall
determine to be advisable in the best interests of the Noteholders; provided that the Collateral Agent may not
sell the Airframe or any Engine without the consent of a Majority in Interest of Noteholders.

Section 5.2.      Action Upon Instructions.

                  Subject to the terms of Sections 4.2, 5.1, 5.3 and Article 6 hereof, upon the written
instructions at any time of a Majority in Interest of Noteholders, the Collateral Agent shall take such of the
following actions as may be specified in such instructions and permitted by the Collateral Documents: (i) give
such notice, direction or consent, or exercise such right, remedy or power hereunder or, subject to the
provisions of Article 2 and Section 3.11 hereof, in respect of all or any part of the Collateral, or under any
Lease Assignment; and/or (ii) take such other action as shall be specified in such instruction; it being
understood that without the written instructions of a Majority in Interest of Noteholders the Collateral Agent
shall not take any action pursuant to this Section 5.2. The Collateral Agent will execute and file or cause to be
filed (at the expense of the Company) such continuation statements with respect to financing statements relating
to the security interest created hereunder in the Collateral or under any Lease Assignment as may be specified
from time to time in written instructions of a Majority in Interest of Noteholders (which instructions may, by
their terms, be operative only at a future date and which shall be accompanied by the execution form of such
continuation statement so to be filed).

Section 5.3.      Indemnification.

                  The Collateral Agent shall not be required to take any action or refrain from taking any action
under Section 5.1 or 5.2 or Article 4 hereof if it shall have reasonable grounds for believing that repayment of
any funds expended by it or adequate indemnification against any risks incurred in connection therewith is not
reasonably assured to it. The Collateral Agent shall not be required to take any action under Section 5.1 or 5.2
or Article 4 hereof, nor shall any other provision of any Collateral Document be deemed to impose a duty on the
Collateral Agent to take any action, if the Collateral Agent shall have been advised in writing by independent
counsel that such action is contrary to the terms hereof or is otherwise contrary to law.

Section 5.4.      No Duties Except as Specified in Collateral Documents or Instructions.

                  The Collateral Agent shall not have any duty or obligation to manage, control, use, sell,
operate, store, dispose of or otherwise deal with the Aircraft or any other part of the Collateral, or to
otherwise take or refrain from taking any action under, or in connection with, any Collateral Document, except as
expressly provided by the terms thereof or as expressly provided in written instructions received pursuant to the
terms of Section 5.1 or 5.2 hereof; and no implied duties or obligations shall be read into any Collateral
Document against the Collateral Agent. The Collateral Agent nevertheless agrees that it will, at its own cost and
expense, promptly take such action as may be necessary duly to discharge any Liens on any part of the Collateral,
or on any properties of the Company assigned, pledged or mortgaged under the Collateral Documents, which result
from claims against the Collateral Agent in its individual capacity not related to the administration of such
properties or any other transaction under this Mortgage or any document included in the Collateral.

Section 5.5.      No Action Except Under Collateral Documents or Instructions.

                  The Collateral Agent agrees that it will not manage, control, use, sell, operate, store,
dispose of or otherwise deal with the Aircraft or other property constituting part of the Collateral or subject
to any Lease Assignment except (i) in accordance with the powers granted to, or the authority conferred upon, the
Collateral Agent pursuant to the applicable Collateral Documents, or (ii) in accordance with the express terms
hereof or with written instructions pursuant to Section 5.1 or 5.2 hereof.

                                                   Article VI

                                            SUPPLEMENTS AND AMENDMENTS
                                       TO THIS MORTGAGE AND OTHER DOCUMENTS

Section 6.1.      Supplemental Mortgages.

                  With the written consent of a Majority in Interest of Noteholders, the Company may, and the
Collateral Agent, subject to Section 6.2 hereof, shall, at any time and from time to time, enter into a Mortgage
or Mortgages supplemental hereto for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Mortgage or of modifying in any manner the rights and obligations of
the Company under this Mortgage; provided, however, without the consent of each Noteholder affected thereby, no
such supplemental Mortgage shall:

(i)      create any Lien with respect to the Collateral except such as are permitted by this Mortgage, or deprive
         any Noteholder of the benefit of the Lien on the Collateral created by this Mortgage; or

(ii)     change the definition of "Majority in Interest of Noteholders" so as to reduce the percentage of
         principal amount of the Notes, the consent of whose holders is required for any such supplemental
         mortgage, or the consent of whose holders is required for any waiver (of compliance with certain
         provisions of this Mortgage, or of certain defaults hereunder and their consequences) provided for in
         this Mortgage; or

(iii)    modify any provisions of this Section 6.1, except to provide that certain other provisions of this
         Mortgage cannot be modified or waived without the consent of each Noteholder affected thereby.

Section 6.2.      Collateral Agent Protected.

                  If in the opinion of the Collateral Agent any document required to be executed pursuant to the
terms of Section 6.1 hereof adversely affects any right, duty, immunity or indemnity in favor of the Collateral
Agent under this Mortgage, the Collateral Agent may in its discretion decline to execute such document.

                                                   Article VII

                                           INVESTMENT OF SECURITY FUNDS

Section 7.1.      Investment of Security Funds.

                  Any monies paid to or retained by the Collateral Agent which are required to be paid to the
Company or applied for the benefit of the Company (including, without limitation, amounts payable to the Company
under Sections 3.5(b), 3.5(d), 3.6(b) and 3.6(g) hereof), but which the Collateral Agent is entitled to hold
under the terms hereof pending the occurrence of some event or the performance of some act (including, without
limitation, the remedying of an Event of Default), shall, until paid to the Company or applied as provided
herein, be invested by the Collateral Agent at the written authorization and direction of the Company from time
to time at the sole expense and risk of the Company in Permitted Investments. After the occurrence and during the
continuance of a Special Default or an Event of Default, Permitted Investments will be selected by the Collateral
Agent at its discretion. At the time of such payment or application, there shall be remitted to the Company any
gain (including interest received) realized as the result of any such investment (net of any fees, commissions,
other expenses or losses, if any, incurred in connection with such investment) unless a Special Default or an
Event of Default shall have occurred and be continuing in which event the same shall be held by Collateral Agent
and applied in the same manner as is provided in Section 3.6(g). The Collateral Agent shall not be liable for any
loss relating to a Permitted Investment made pursuant to this Article 7. The Company will promptly pay to the
Collateral Agent, on demand, the amount of any loss (net of any gains, including interest received) realized as
the result of any such investment (together with any reasonable fees, commissions and other expenses, if any,
incurred in connection with such investment).

                                                   Article VIII

                                                   MISCELLANEOUS

Section 8.1.      Termination of Mortgage.

                  Upon the payment in full of the principal of, and interest on, all Notes, and all other Secured
Obligations then due and payable (and regardless of whether any Default or Event of Default (or any "default" or
"event of defaults" under any other Loan Document) shall have occurred and be continuing), the Collateral Agent
shall, upon the written request of the Company execute and deliver to, or as directed in writing by, the Company
an appropriate instrument (in due form for recording) releasing the Aircraft and the balance of the Collateral
from the Lien of this Mortgage and, in such event, this Mortgage shall terminate and this Mortgage shall be of no
further force or effect.

Section 8.2.      Alterations to Mortgage.

                  This Mortgage shall not be varied except by an instrument in writing of even date herewith or
subsequent hereto executed by each of the parties hereto through its duly authorized representative.

Section 8.3.      No Legal Title to Collateral in Noteholder.

                  No Noteholder shall have legal title to any part of the Collateral. No transfer, by operation
of law or otherwise, of a Note or other right, title and interest of a Noteholder in and to the Collateral or
this Mortgage shall operate to terminate this Mortgage or entitle any successor or transferee of such Noteholder
to an accounting or to the transfer to it of legal title to any part of the Collateral.

Section 8.4.      Sale of the Aircraft by Collateral Agent Is Binding.

                  Any sale or other conveyance of the Aircraft, the Airframe, any Engine or any other part of the
Collateral or any interest therein by the Collateral Agent made pursuant to the terms of this Mortgage shall bind
the Noteholders and the Company, and shall be effective to transfer or convey all right, title and interest of
the Collateral Agent, the Company, and the Noteholders in and to the Aircraft, the Airframe, any Engine or any
interest therein. No purchaser or other grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such sale or conveyance or as to the application of any sale or other proceeds with
respect thereto by the Collateral Agent. Notwithstanding the foregoing, nothing herein contained shall be deemed
to constitute a waiver by the Company of any right it may have against the Collateral Agent and/or Majority
Lenders as a result of any sale or other conveyance in contravention of the terms and conditions of this
Agreement.

Section 8.5.      Benefit of Mortgage.

                  Nothing in this Mortgage, whether express or implied, shall be construed to give to any Person
other than the Company, the Collateral Agent, and the Noteholders any legal or equitable right, remedy or claim
under or in respect of this Mortgage or any Note.

Section 8.6.      Section 1110 of the Bankruptcy Code.

                  It is the intention of the parties hereto that the security interest created hereby entitles
the Collateral Agent on behalf of the Administrative Agent and Noteholders to all of the benefits of Section 1110
of the Bankruptcy Code in the event of any reorganization of the Company under the Bankruptcy Code.

Section 8.7.      Notices.

                  Unless otherwise expressly specified or permitted by the terms hereof, all notices required or
permitted under the terms and provisions hereof shall be in writing, and shall become effective when received,
or, if promptly confirmed by first-class mail, postage prepaid, when dispatched by telegram, telex, telecopy or
other written telecommunication addressed:

    (i)      if to the Company, at its office at

                      Frontier Center One
                      7001 Tower Road
                      Denver, Colorado 80249-7312
                      Telecopy: (720) 374-4379
                      Attention:    Chief Financial Officer
                                    General Counsel

                      or at such other address as the Company shall from time to time designate by written notice
                      to the Collateral Agent in accordance with this Section 8.7; and

    (ii)     if to the Collateral Agent, at its office at

                      [***]

                      or at such other address as the Collateral Agent shall from time to time designate by
                      written notice to the Company in accordance with this Section 8.7.

Section 8.8.      Severability.

                  Should any one or more provisions of this Mortgage be determined to be illegal or unenforceable
by a court of any jurisdiction, such provision shall be ineffective to the extent of such illegality or
unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability
of such provisions in any other jurisdiction. The Company and the Collateral Agent agree, as to such jurisdiction
and to the extent permitted by such jurisdiction's laws, to replace any provision of this Mortgage which is so
determined to be illegal or unenforceable by a valid provision which has as nearly as possible the same effect;
provided that such replacement provision shall not expand the Company's or the Collateral Agent's obligations
hereunder.

Section 8.9.      No Waiver; Cumulative Remedies.

                  No failure on the part of the Collateral Agent to exercise, and no course of dealing with
respect to, and no delay in exercising, any remedy hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by the Collateral Agent of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.

Section 8.10.     Separate Counterparts.

                  This Mortgage may be executed in any number of counterparts (and each of the parties hereto
shall not be required to execute the same counterpart). Each counterpart of this Mortgage including a signature
page executed by each of the parties hereto shall be an original counterpart of this Mortgage, but all of such
counterparts together shall constitute one instrument.

Section 8.11.     Successors and Assigns.

                  All covenants and agreements contained herein shall be binding upon, and inure to the benefit
of, the Company and its successors and permitted assigns, and the Collateral Agent and its successors and
permitted assigns, and the Noteholders, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by a Noteholder (unless withdrawn by such Noteholder or successor or assign prior
to it being acted upon by the Collateral Agent) shall bind the successors and assigns of such Noteholder.

Section 8.12.     Headings.

                  The headings of the various Articles and Sections herein are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.

Section 8.13.     Governing Law.

                  THIS MORTGAGE IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW
OF THE STATE OF NEW YORK.

Section 8.14.     Normal Commercial Relations.

                  Anything contained in this Mortgage to the contrary notwithstanding, the Company, any
Noteholder or the Collateral Agent or any Affiliate of the Company, any Noteholder or the Collateral Agent may
enter into commercial banking or other financial transactions with each other, and conduct banking or other
commercial relationships with each other, fully to the same extent as if this Mortgage were not in effect,
including, without limitation, the making of loans or other extensions of credit for any purpose whatsoever.

Section 8.15.     Language. All correspondence, documents and any other written matters in connection with this
Mortgage shall be in English.

Section 8.16.     Interpretation. In the event of any inconsistency between the terms of this Mortgage and the
terms of the Letter Agreement, the terms of this Mortgage will prevail over the terms of the Letter Agreement.

Section 8.17.     Execution of Financing Statements. Pursuant to any applicable law, the Company authorizes the
Collateral Agent to file or record financing statements and other filing or recording documents or instruments
with respect to the Collateral without the signature of the Company in such form and in such offices as the
Collateral Agent determines appropriate to perfect the security interests of the Collateral Agent under this
Agreement. The Company hereby ratifies and authorizes the filing by the Collateral Agent of any financing
statement with respect to the Collateral made prior to the date hereof.








                  IN WITNESS WHEREOF, the parties hereto have caused this Mortgage to be duly executed by their
respective officers, as the case may be, there unto duly authorized, as of the day and year first above written.

                                                     FRONTIER AIRLINES, INC.



                                                     By:                                                  
                                                     Title:

                                                     [***],
                                                       as Collateral Agent



                                                     By:                                                  
                                                     Title:






                                                                                                                  6

                                                                                                 APPENDIX A

                                     FRONTIER AIRLINES, INC., FINANCING OF ONE
                                               AIRBUS A318 AIRCRAFT

                                            DEFINITIONS RELATING TO THE
                                          MORTGAGE AND SECURITY AGREEMENT

                  The definitions stated herein shall apply equally to both the singular and plural forms of the
terms defined.

                  "Additional Insured" means the Collateral Agent and the Noteholders.

                  "Administrative Agent" has the meaning given to such term in the Credit Agreement.

                  "Affiliates" means, as to any Person, any other Person that, directly or indirectly, controls,
is controlled by or is under common control with such Person or is a director or officer of such Person. For
purposes of this definition, (i) the term "control" (including the terms "controlling," "controlled by" and
"under common control with") of a Person means the possession, direct or indirect, of the power to vote 5% or more
of the voting stock of such Person or to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting stock, by contract or otherwise.

                  "Agent" or "Agents" means the Collateral Agent and the Administrative Agent, collectively.

                  "Aircraft" means the Airframe together with the two Engines delivered in connection therewith
(or any Replacement Engine substituted for any of said Engines pursuant to Section 3.4 of the Mortgage), whether
or not any of such initial or substitute Engines may from time to time be installed on such Airframe or may be
installed on any other airframe or on any other aircraft.

                  "Airframe" means (A) the Airbus A318-111 aircraft delivered by the Manufacturer under the
Purchase Agreement (excluding the Engines or engines from time to time installed thereon), identified by U.S.
registration mark and manufacturer's serial number in the initial Mortgage Supplement; and (B) any and all Parts
(other than Engines or engines) so long as the same shall be incorporated or installed in or attached to such
Airframe.

                   "Bankruptcy Code" means Title 11 of the United States Code, as amended from time to time, and
any successor provisions thereof.

                  "Business Day" means any day, other than a Saturday or Sunday or other day which shall be in
New York, New York, [***] or Denver, Colorado a legal holiday or a day on which banking institutions are
authorized or required by law or other government action to close.

                  "Certificated Air Carrier" means a Citizen of the United States holding a carrier operating
certificate issued by the Secretary of Transportation pursuant to Chapter 447 of Title 49, United States Code,
for aircraft capable of carrying ten or more individuals or 6,000 pounds or more of cargo.

                  "Citizen of the United States" has the meaning specified in Section 40102(a)(15) of Title 49 of
the United States Code.

                  "Civil Reserve Air Fleet Program" means the Civil Reserve Air Fleet Program, currently
administered by the United States Air Force Military Command pursuant to Executive Order No. 11490, as amended,
or any substantially similar program.

                  "Collateral" has the meaning given such term in Section 2.1 of the Mortgage.

                  "Collateral Agent" has the meaning specified in the recitals to the Mortgage.

                  "Collateral Documents" means the Mortgage and each Lease Assignment.

                  "Company" has the meaning specified in the recitals to the Mortgage.

                  "Credit Agreement" means the Credit Agreement, dated as of July 30, 2003, between the Company
and [***], as the initial Lender and as Administrative Agent, as amended, supplemented or otherwise modified from
time to time.

                  "Default" means an event which, with the giving of notice, lapse of time or both would become
an Event of Default.

                  "Dollars" and "$" means the lawful currency of the United States of America.

                  "Engine" means: (A) each of the two CFM International Model CFM56-5B 8/P engines installed on
the Airframe at the time of delivery to the Company of such Airframe and listed by manufacturer's serial number
in the initial Mortgage Supplement, whether or not from time to time installed on the Airframe or installed on
any other aircraft; and (B) any Replacement Engine that may from time to time be substituted, pursuant to Section
3.4 of the Mortgage, for such Engine; together in each case with any and all Parts incorporated or installed in
or attached thereto.

                  "Event of Default" has the meaning given such term in Section 4.1 of the Mortgage.

                  "Event of Loss" with respect to the Aircraft, Airframe or either Engine means any of the
following events with respect to such property:

                  (i)......the loss of such property or the use thereof due to the destruction of or damage to
such property which renders repair uneconomic or which renders such property permanently unfit for normal use by
the Company for any reason whatsoever; (ii) any damage to such property which results in an insurance settlement
with respect to such property on the basis of a total loss, or a constructive or compromised total loss; (iii)
the theft or disappearance of such property, or the confiscation, condemnation or seizure of, or requisition of
title to, or use of, such property by any governmental or purported governmental authority (other than a
requisition for use by the United States government, or any agency or instrumentality of any thereof) which in
the case of any event referred to in this clause (iii) (other than a requisition of title) shall have resulted in
the loss of possession of such property by the Company for a period in excess of 90 consecutive days or, if
earlier, the date on which the Company has confirmed to the Collateral Agent in writing that it cannot recover
such property; (iv) as a result of any law, rule, regulation, order or other action by the Federal Aviation
Administration or other governmental body of the government of registry of the Aircraft having jurisdiction, the
use of such property in the normal course of the business of air transportation shall have been prohibited for a
period of 180 consecutive days, unless the Company, prior to the expiration of such 180 day period, shall have
undertaken and shall be diligently carrying forward all steps which are necessary or desirable to permit the
normal use of such property by the Company, but in any event if such use shall have been prohibited for a period
of 12 months, provided that no Event of Loss shall be deemed to have occurred if such prohibition is applicable
to the Company's entire U.S. registered fleet of Airbus A318 aircraft and the Company, prior to the expiration of
such 12-month period, shall have conformed at least one such aircraft in its fleet to the requirements of any
such law, rule, regulation, order or other action and commenced regular commercial use of the same in such
jurisdiction and shall be diligently carrying forward, in a manner which does not discriminate against the
Aircraft in so conforming the Aircraft, all steps which are necessary or desirable to permit the normal use of
the Aircraft by the Company, but in any event if such use shall have been prohibited for a period of three years,
and (v) any divestiture of title to an Engine treated as an Event of Loss pursuant to Section 3.2(a) of the
Mortgage. An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.

                  "Expense" means any liability, obligation, loss, charge, penalty, claim, action, suit, out of
pocket cost, expense and disbursement (including reasonable legal fees and expenses) of whatever kind or nature,
excluding overhead.

                  "Federal Aviation Act" means Title 49 of the United States Code, as amended, or any successor
or substitute provisions.

                  "Federal Aviation Administration" and "FAA" mean the United States Federal Aviation
Administration, and any agency or instrumentality of the United States government succeeding to its functions.

                  "Indemnitee" means the Noteholders, the Collateral Agent, the Administrative Agent, and their
respective successors, permitted assigns, directors, officers and employees.

                  "Lease" means any lease permitted by the terms of Section 3.2(a)(viii) of the Mortgage.

                  "Lease Assignment" means an assignment of a Lease or Wet Lease, substantially the form of
Exhibit B hereto.

                  "Lender" has the meaning provided in the Credit Agreement.

                  "Lessee" means any lessee permitted by the terms of Section 3.2(a)(viii) of the Mortgage.

                  "Lien" means any lien (statutory or otherwise), security interest or other charge or
encumbrance of any kind, or any other type of preferential arrangement, including, without limitation, the lien
or retained security title of a conditional vendor.

                  "Loan" means the Loan made under the Credit Agreement, evidenced by the Notes.

                  "Loan Documents" means the Mortgage, each Mortgage Supplement, the Notes, the Credit Agreement
and each Lease Assignment.

                  "Loan Loss Value" has the meaning given such term in Section 3.6(b)(I) of the Mortgage.

                  "Maintenance Program" means the Company's maintenance program for the Aircraft which is
approved by the FAA.

                  "Majority in Interest of Noteholders" or "Required Noteholders" means, as of a particular date
of determination, the holders of more than 66?% in aggregate unpaid principal amount of all Notes, if any,
outstanding as of such date, excluding any Notes owned or held, directly or indirectly, by the Company or any
Affiliate of the Company.

                  "Manufacturer" means Airbus.

                  "Mortgage" means the Mortgage and Security Agreement covering the Collateral dated as of July
30, 2003 between the Company and the Collateral Agent, as the same may be amended, modified or supplemented from
time to time.

                  "Mortgage Supplement" means (a) the Mortgage and Security Agreement Supplement No. 1 dated July
30, 2003, substantially in the form of Exhibit A to the Mortgage, which shall describe with particularity the
Aircraft and the Engines and which creates a security interest in the Aircraft and the Engines and (b) any other
supplement to the Mortgage from time to time executed and delivered.

                  "Noteholder" means and includes each Person holding a Loan evidenced by a Note or Notes from
time to time for so long as such holder shall hold such Note or Notes.

                  "Notes" means the promissory notes of the Company delivered under the Credit Agreement.

                  "Obligations" means the Company's obligation to make due and punctual (i) payment of the
principal of and interest from time to time due on the Loan and Notes (including interest at the rate specified
in the Credit Agreement after the occurrence and during the continuance of an Event of Default), (ii) payment of
all sums payable by the Company under the Mortgage and (iii) payment of all other sums payable by the Company to
the Noteholders under Sections 2.9, 2.12 and 8.4 of, or elsewhere under, the Credit Agreement.

                  "Obsolete Parts" has the meaning given such term in Section 3.4(d) of the Mortgage.

                  "Officer's Certificate" means, as to any company, a certificate signed by the Chairman, the
Vice Chairman, the President, any Executive Vice President, any Director, any Senior Vice President, any Vice
President, any Assistant Vice President, the Treasurer or any Assistant Treasurer, the Secretary, or any
Assistant Secretary of such company.

                  "Parts" means any and all appliances, parts, instruments, appurtenances, accessories,
furnishings, seats, buyer furnished equipment, and other equipment of whatever nature (other than (a) complete
Engines or engines, (b) any items leased by the Company from a third party and (c) cargo containers) which may
from time to time be incorporated or installed in or attached to any Airframe or any Engine.

                  "Permitted Investments" means (i) direct obligations of the United States of America and
agencies guaranteed by the United States government having a final maturity of 90 days or less from date of
purchase thereof; (ii) certificates of deposit issued by, bankers' acceptances of, or time deposits with, any
bank, trust company or national banking association incorporated under the laws of the United States of America
or one of the states thereof having combined capital and surplus and retained earnings as of its last report of
condition of at least $500,000,000 and having a rating of Aa or better by Moody's Investors Service, Inc.
("Moody's") or AA or better by Standard & Poor's Corporation ("S&P") and having a final maturity of 90 days or
less from date of purchase thereof; and (iii) commercial paper of any holding company of a bank, trust company or
national banking association described in (ii) and commercial paper of any corporation or finance company
incorporated or doing business under the laws of the United States of America or any state thereof having a
rating assigned to such commercial paper of Al by S&P or P1 by Moody's and having a final maturity of 90 days or
less from the date of purchase thereof; provided that the aggregate amount at any one time so invested in
certificates of deposit issued by any one bank shall not be in excess of 5% of such bank's capital and surplus.

                  "Permitted Liens" has the meaning given such term in Section 3.1 of the Mortgage.

                  "Person" means an individual, partnership, corporation, business trust, joint stock company,
trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

                  "Purchase Agreement" means the Airbus A318 Purchase Agreement, dated as of March 10, 2000,
between [***] and the Company, relating to the purchase by the Company of the Aircraft and other aircraft, as
originally executed or as modified, amended or supplemented in accordance with the terms thereof, but only
insofar as the foregoing relates to the Aircraft.

                  "Purchase Agreement Rights" means (a) all of the Company's rights under Sections 12 and 13 of
the Purchase Agreement to the extent the same relate to the Aircraft or an aircraft subject to a Related
Obligation, and (b) all claims and rights of the Company, if any, for payments of or in respect of or
incorporated by reference to predelivery payments made or required to be made by the Company under the Purchase
Agreement in respect of the Aircraft or any other aircraft, whether such claims are under the Purchase Agreement
(except for any such payments expressly required to be paid to the Company in accordance with the terms of the
Purchase Agreement), under the Uniform Commercial Code or other applicable law, or otherwise.

                  "Related Loan Documents" means the "Loan Documents" as defined in the definitive credit
agreement(s) and mortgage and security agreement(s) for the Related Obligations.

                  "Related Obligations" shall mean "Obligations" as defined in any mortgage and security
agreement entered into by the Company pursuant to the term sheet with respect to the financing of any other A318
aircraft thereunder.

                  "Replacement Engine" means a CFM International model CFM56-5B 8/P engine (or engine of the same
manufacturer of the same or a comparable or an improved model and suitable for installation and use on the
Airframe) which has a value, utility and remaining useful life (except for maintenance cycle condition) at least
equal to the Engine which it is replacing, assuming such Engine was of the value, utility and remaining useful
life (except for maintenance cycle condition) required by the terms of the Mortgage, and which shall have been
made subject to the Lien of the Mortgage pursuant to Section 3.4 of the Mortgage.

                  "Secured Obligations" means the Obligations and the Related Obligations.

                  "Special Default" means a Default under Sections 4.1(a), (d), or (e) of the Mortgage.

                  "Taxes" has the meaning specified in the Credit Agreement.

                  "U.S. Air Carrier" means any Certificated Air Carrier as to which there is in force an air
carrier operating certificate issued pursuant to Part 121 of the regulations under the Federal Aviation Act, or
which may operate as an air carrier by certification or otherwise under any successor or substitute provisions
therefor or in the absence thereof.

                  "Wet Lease" means any arrangement whereby the Company agrees to furnish the Airframe and
Engines or engines installed thereon to a third party pursuant to which such Airframe and Engines or engines (i)
shall be operated solely by regular employees of the Company possessing all current certificates and licenses
that would be required under the Federal Aviation Act for the performance by such employees of similar functions
within the United States of America or such other jurisdiction of registry (it is understood that cabin
attendants need not be regular employees of the Company) and (ii) shall be maintained by the Company in
accordance with its normal maintenance practices.









                                                                                                Exhibit A
                                                                                                    To
                                                                                                 Mortgage

                                               MORTGAGE AND SECURITY
                                            AGREEMENT SUPPLEMENT NO.___

                  Mortgage and Security Agreement Supplement No. ___dated ________, ("Mortgage Supplement") of
 FRONTIER AIRLINES, INC. (the "Company").



                                               W I T N E S S E T H:

                  WHEREAS, the Mortgage and Security Agreement, dated as of July 30, 2003, (the "Mortgage"),
between the Company and [***], as Collateral Agent (the "Collateral Agent"), provides for the execution and
delivery of supplements thereto substantially in the form hereof which shall particularly describe the Aircraft
(such term and other defined terms in the Mortgage being used herein with the same meanings), and shall
specifically grant a security interest in the Aircraft to the Collateral Agent; and

                  [WHEREAS, the Mortgage relates to the Airframe and Engines described in Annex A attached hereto
and made a part hereof, and a counterpart of the Mortgage is attached to and, made a part of this Mortgage
Supplement;]1

                  [WHEREAS, the Company has, as provided in the Mortgage, heretofore executed and delivered to
the Collateral Agent _ Mortgage Supplement(s) for the purpose of specifically subjecting to the Lien of the
Mortgage certain airframes and/or engines therein described, which Mortgage Supplement(s) is/are dated and
has/have been duly recorded with the FAA as set forth below, to wit:

Date                                     Recordation Date                       FAA Document Number]2




                  NOW, THEREFORE, in order to secure the prompt payment of the Secured Obligations, subject to
the terms and conditions of the Mortgage, and in consideration of the premises and of the covenants contained in
the Mortgage, and of other good and valuable consideration given to the Company at or before the delivery hereof,
the receipt whereof is hereby acknowledged, the Company has mortgaged, assigned, pledged, hypothecated and
granted, and does hereby mortgage, assign, pledge, hypothecate and grant, a continuing security interest in, and
mortgage lien on, the property comprising all its right, title and interest in and to the Airframe and Engines
described in Annex A attached hereto, whether or not such Engines shall be installed in or attached to the
Airframe or any other aircraft, to the Collateral Agent, its successors and assigns, for the benefit and security
of the Agents and Noteholders;

                  To have and to hold all and singular the aforesaid property unto the Collateral Agent, its
successors and assigns, for the benefit and security of the Agents and Noteholders and for the uses and purposes
and subject to the terms and provisions set forth in the Mortgage.

                  This Mortgage Supplement shall be construed as supplemental to the Mortgage and shall form a
part thereof, and the Mortgage is hereby incorporated by reference herein and is hereby ratified, approved and
confirmed and terms not otherwise defined herein shall have the meaning provided in the Mortgage.

                  THIS MORTGAGE SUPPLEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL RESPECTS,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK.







                  IN WITNESS WHEREOF, the Company has caused this Supplement No. _ to be duly executed by one of
its duly authorized officers, as of the day and year first above written.

                                                     FRONTIER AIRLINES, INC.


                                                     By:                                                  
                                                     Title:






                                                                                                 Annex A
                                                                                              to Mortgage
                                                                                            Supplement No. __


                                        DESCRIPTION OF AIRFRAME AND ENGINES

                                                     AIRFRAME

                                                            FAA                         Manufacturer's
                                                            Registration                Serial
Manufacturer                   Model                        No.                         No.

Airbus G.I.E.                  A318-111                     N802FR                      1991


                                                      ENGINES

                                                               Manufacturer's
                                                               Serial
Manufacturer                     Model                         No.

CFM International Inc.           CFM56-5B 8/P                  L/H : 575614
                                                                     ======
                                                               R/H : 575615
                                                                     ======


Each Engine is of 750 or more "rated take-off horsepower" or the equivalent of such horsepower.







                                                                                EXHIBIT B to Mortgage and
                                                                                      Security Agreement



                                             FORM OF LEASE ASSIGNMENT

                  LEASE ASSIGNMENT dated as of __________ (this "Assignment"), from FRONTIER AIRLINES, INC., a
Colorado corporation (the "Assignor"), to [***], as Collateral Agent (the "Assignee").

                                               W I T N E S S E T H :

                  WHEREAS, the Assignor and the Assignee have entered into the Mortgage and Security Agreement
dated as of July 30, 2003 (as the same may be amended, supplemented or otherwise modified from time to time, the
"Mortgage"), pursuant to which the Assignor has mortgaged to the Assignee the Aircraft and the other "Collateral"
described therein;

                  WHEREAS, the Assignor, as lessor, is entering into a [Lease Agreement] [Wet Lease Agreement]
dated as of __________ (as the same may be amended, supplemented or otherwise modified from time to time, the
"Lease") with __________, as Lessee (the "Lessee"), and, in connection therewith, Assignor desires to assign such
Lease as collateral security to Assignee in accordance with the provisions of Section 3.2(b) of the Mortgage;

                  WHEREAS, in order to induce the Assignee to accept this Assignment the Assignor has caused the
Lessee to execute and deliver in favor of the Assignee a Consent and Agreement substantially in the form annexed
hereto as Exhibit A; and

                  WHEREAS, capitalized terms used in this Assignment which are not otherwise defined in this
Assignment are used as they are defined in the Mortgage;

                  NOW, THEREFORE, in consideration of the promises and obligations contained herein, the parties
hereto hereby agree as follows:

                  I       Assignment of Lease.  For value received and to secure the due and punctual payment
and performance by the Company of the Secured Obligations and the performance and observance by the Company of
all agreements, covenants, and provisions contained in the Loan Documents and in the Related Loan Documents, all
of which obligations are hereby incorporated by this reference as fully as if set forth in their entirety herein
(the "Obligations"), the Assignor hereby assigns, transfers and conveys to the Assignee, its successors and
assigns, all its right, title and interest in, to and under the Lease, including, but not limited to:

                  1       all the Assignor's right and interest in the Aircraft, Airframe, Engines, Parts and
related equipment at any time subject to the Lease;

                  2       the Lease, including, without limitation, (x) all rents or other amounts or payments
of any kind paid or payable by the Lessee under the Lease (including, without limitation, all claims for damages
or other sums arising upon sale or other disposition of, or loss of use of or requisition of title or use of, the
Aircraft, Airframe, Engines, Parts and related equipment at any time subject to the Lease or upon any Event of
Default specified therein (a "Lease Event of Default") or in respect thereof and all collateral security or
credit support with respect to the Lease (whether cash or in the nature of a guarantee, letter of credit, credit
insurance, lien on or security interest in property or otherwise) (any such support or collateral security being
herein called "Additional Collateral") for the obligations of the Lessee thereunder as well as all rights of the
Assignor to enforce payment of any such rents, amounts or payments, (y) all rights of the Assignor to exercise
any election or option to make any decision or determination or to give or receive any notice, consent, waiver or
approval or to take any other action under or in respect of the Lease or to accept surrender or redelivery of the
Aircraft or any part thereof, as well as the rights, powers and remedies on the part of the Assignor, whether
acting under the Lease or by statute or at law or in equity, or otherwise, arising out of any default under the
Lease, and (z) any right to restitution from the Lessee or any guarantor of the Lessee in respect of any
determination of invalidity of the Lease; and

                  3       all proceeds of the foregoing;

                  This Assignment is a present assignment and shall be effective, and the security interests
created hereby shall attach immediately upon execution of this Assignment; provided, however, that it is
expressly agreed that the Assignee shall not be entitled to exercise or receive, and that the Assignor shall be
entitled to exercise and receive, any of the claims, rights, powers, privileges, remedies and other benefits
(including, without limitation, the right to receive all moneys due or to become due under or arising out of the
Lease) of the Assignor described above (including without limitation, the right to consent, waive or amend any
term or provision of any Additional Collateral unless and until an Event of Default under the Mortgage shall have
occurred and be continuing).  Notwithstanding the foregoing the Assignor shall not, at any time prior to
termination of the Lease and redelivery of the Aircraft, consent to any amendment, supplement, change or
modification to, or any waiver of, any provision of the Lease or any transfer of any interest of the Lessee if,
as a result thereof, the Lease would thereby cease to meet the qualifications set forth in Section 3.2(a) of the
Mortgage for a Lease.

                  II      Performance of Assignor's Obligations.  It is expressly agreed that anything herein
contained to the contrary notwithstanding, (i) the Assignor shall remain liable under the Lease and all related
documentation to perform all of its obligations thereunder, to the same extent as if this Assignment had not been
executed, and nothing in the Lease or this Assignment shall relieve the Assignor of any of its obligations under
the Mortgage or any of the Loan Documents, (ii) the Assignee shall not have any obligation or liability under the
Lease by reason of or arising out of this Assignment, nor shall the Assignee be required or obligated in any
manner to perform or fulfill any obligation of the Assignor under or pursuant to the Lease, or to make any
payment, or to make any inquiry as to the nature or sufficiency of any payment received by it, or to present or
file any claim or to take any other action to collect or enforce the payment of any amounts to which it or they
may be entitled hereunder at any time or times and (iii) at any time when an Event of Default under the Mortgage
has occurred and is continuing, at the Assignee's option, the Assignee may perform, or cause to be performed, all
or any part of the obligations and agreements of the Assignor under the Lease or any related documentation,
without releasing the Assignor therefrom.  Notwithstanding the foregoing, in the event that the Assignee (or its
successors or assigns) exercises any right or power of the Assignor under or with respect to the Lease it shall
be liable to perform any corresponding obligations of the Assignor to the Lessee.

                  III     Event of Default.  Upon the occurrence of any Event of Default under the Mortgage and
at any time thereafter so long as the same shall be continuing, the Assignee may, at its option, exercise any one
or more of the remedies set forth below, in the Lease, or which may otherwise be available to it under the New
York Uniform Commercial Code or other applicable law, as the Assignee in its sole discretion may determine, which
remedies are cumulative and in addition to every other right or remedy provided by law:

                  3.1      Collection of Lease Payments. The Assignee may collect and retain all rents, proceeds,
         payments and other moneys due or to become due under the Lease and/or the other property assigned
         hereunder and apply such amounts to the payment of the Secured Obligations, all as the Assignee, in its
         discretion, shall determine; and/or

                  3.2     Maintenance of Lease.  The Assignee may assume all or any part of the Assignor's
         right, title and interest in the Lease and/or the other property assigned hereunder and maintain the
         Lease and/or the other property assigned hereunder in full force and effect, with the Assignee
         substituted for the Assignor or beneficiary thereunder, and in any such event all of the right, title
         and interest of the Assignor therein shall be extinguished and the Assignee shall be entitled to collect
         and retain all rents and payments thereunder; and/or

                  3.3     Sale.  The Assignee may sell at public or private sale, without appraisal, for such
          price as it may deem fair, the Lease and all the Assignor's right, title and interest therein, in which
         case the Assignee will give the Assignor and the Lessee at least 15 calendar days' notice of the date
         fixed for any public sale or of the date on or after which will occur the execution of any contract
         providing for any private sale thereof, and each purchaser at any such sale shall hold such property
         absolutely free from any claim or right on the part of the Assignor, the Assignor hereby waiving and
         releasing (to the extent permitted by applicable law) all rights of redemption, stay, appraisal,
         reclamation and turnover which the Assignor now has or may at any time in the future have under any rule
         of law or statute now existing or hereafter enacted.

                  IV      Expenses and Fees.  The Assignor shall pay to the Assignee and its successors and
assigns on demand all reasonable attorney's fees and other reasonable expenses incurred by the Assignee in
exercising its rights and remedies provided hereunder and in enforcing the terms hereof, together with interest
on such sums at the rate for overdue payments provided in Section 2.7 of the Credit Agreement, from the date when
such expenses are so incurred to the date of payment thereof.

                  V       Waiver; Invalidity Of Remedies.  The Assignor waives any right to require the Assignee
to pursue any other remedy it may have against the Assignor or any guarantor or surety or provider of credit
support.  The invalidity or unenforceability of any remedy in any jurisdiction shall not invalidate such remedy
or render it unenforceable in any other jurisdiction.  The invalidity or unenforceability of any of the remedies
provided herein in any jurisdiction shall not in any way affect the right to enforcement in such jurisdiction or
elsewhere of any of the other remedies provided herein.

                  VI      Power of Attorney.  Effective upon the occurrence of an Event of Default under the
Mortgage, the Assignor does hereby constitute the Assignee, and its successors and assigns, the Assignor's true
and lawful attorney-in-fact, irrevocably with full power (in the name of the Assignor or otherwise) and at the
expense of the Assignor but for the use and benefit of the Assignee, at any time after an Event of Default under
the Mortgage has occurred and for so long as it is continuing, to enforce each and every term and provision of
the Lease and other property assigned hereunder (including, without limitation, the Additional Collateral), to
ask, require, demand, receive, collect, compound and give acquittance and discharge for any and all moneys and
claims for moneys (in each  case including insurance and requisition proceeds) due and to become due under or
arising out of the Lease, and other property assigned hereunder (including, without limitation, the Additional
Collateral), to endorse any checks or other instruments or orders in connection therewith, to settle, compromise,
compound or adjust any such claims, to exercise and enforce any and all claims, rights, powers or remedies of
every kind and description of the Assignor under or arising out of the Lease and other property assigned
hereunder (including,  without limitation, the Additional Collateral), to file, commence, prosecute, compromise
and settle in the name of the Assignor or the Assignee or otherwise any suits, actions or proceedings at law or
in equity in any court, to collect any such moneys or to enforce any rights in respect thereto on all other
claims, rights, powers and remedies of every kind and description of the Assignor under or arising out of the
Lease and the other property assigned hereunder (including without limitation, the Additional Collateral) and
generally to sell, assign, transfer, pledge, make any agreement with respect to or otherwise deal with any of
such claims, rights, powers and remedies as fully and completely as though the Assignee were the absolute owner
thereof for all purposes, and at such times and in such manner as may seem to the Assignee to be necessary or
advisable or convenient or proper in its absolute discretion; provided that this power of attorney shall not
apply to any right, power or privilege which, by the terms of this Assignment other than this Paragraph VI, is
reserved to or not assigned by the Assignor.

                  VII     Execution of Additional Documents.  The Assignor agrees that at any time or from time
to time, at its own expense, upon the written request of the Assignee, the Assignor shall promptly and duly
execute and deliver any and all such further instruments, documents and financing statements and do such other
acts and things as the Assignee may deem necessary or desirable in order to obtain the full benefits of this
Assignment and the rights and powers granted herein.

                  VIII    Assignment.  The Assignor shall not assign, delegate, pledge or otherwise encumber any
of its rights or obligations hereunder except as provided in Section 3.9 of the Mortgage.

                  IX      Assignor's Representations and Warranties.  The Assignor represents and warrants that
the Lease is in full force and effect and is enforceable in accordance with its terms as against it, that neither
the Assignor nor the Assignee is in default thereunder, that a true and correct copy of the executed original of
the Lease to be held by the Assignee has been delivered to Assignee, and that it has not assigned, transferred or
pledged, and hereby covenants that it will not assign or transfer (except as permitted by Section VIII), or
pledge, the whole or any part of the rents, moneys, claims, rights, powers, remedies, title or interests hereby
assigned to any Person other than the Assignee and its successors and assigns.

                  X       GOVERNING LAW.  THIS ASSIGNMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.  THIS
ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  XI      Counterparts.  This Assignment may be executed in several counterparts, each of which
shall be deemed an original, and all such counterparts shall constitute one and the same instrument.

                  XII.    Miscellaneous

                  .  This Assignment may not be amended, supplemented, modified or waived without the prior
written consent of the Assignee.  This Assignment shall be binding upon, and inure to the benefit of, the parties
hereto and their respective successors and assigns.  Except as otherwise provided in this Agreement, all notices
hereunder shall be in writing and shall be given in the manner and at the addresses provided for notices under
the Lease.






                  IN WITNESS WHEREOF, the Assignor and the Assignee have duly executed this Assignment as of the
date first set forth above.

                                                     FRONTIER AIRLINES, INC.,
                                                          as Assignor


                                                     By:                     
                                                         Name:
                                                         Title:


                                                     [***],
                                                           as Assignee


                                                     By:                     
                                                          Name:
                                                          Title:








                                                                                          EXHIBIT A
                                                                                          TO LEASE
                                                                                         ASSIGNMENT




                                               CONSENT AND AGREEMENT

                  ____________, a __________ corporation (the "Lessee"), hereby acknowledges receipt of notice of
and consents to all the terms of the foregoing Lease Assignment (the "Assignment", terms being used herein as
therein defined or incorporated therein by reference) and agrees that:

1.       The Lessee shall be fully bound by all terms and conditions of the Assignment.

2.       All representations, warranties, indemnities, covenants and agreements of the Lessee hereunder and under
the Lease shall inure to the benefit of, and to the extent provided in the Assignment shall be enforceable by,
the Assignee, its successors and assigns, to the same extent as if originally named the Lessor therein.

3.       None of the Assignee and its successors and assigns shall be liable for any of the obligations or duties
of the Assignor under the Lease except as provided in the Assignment.

4.       Upon receipt of written notice from the Assignee that an Event of Default has occurred under the
Mortgage, the Lessee agrees to thereafter pay all rent, reserves, damages and other amounts becoming due under
the Lease directly to the Assignee.

5.       The Lessee hereby represents and warrants that (a) the Lessee is a Company validly existing under the
laws of the jurisdiction of its organization, (b) the making and performance of the Lease and this Consent and
Agreement have been duly authorized by all necessary action on the part of the Lessee, and do not contravene the
Lessee's organizational documents or any indenture, credit agreement or other contractual agreement to which the
Lessee is a party or by which it is bound, (c) the Lease constitutes, as of the date thereof and at all time
thereafter to and including the date of this Consent and Agreement, and this Consent and Agreement constitutes,
legal, valid and binding obligations of the Lessee enforceable against the Lessee in accordance with their
respective terms except to the extent such enforceability is affected by moratorium, insolvency, bankruptcy,
reorganization and other losses affecting creditors' rights in general and general principles of equity, and (d)
no "Event of Default" or "Default" under the Lease has occurred and is continuing.

6.       The Lessee covenants and agrees that if an Event of Default exists under the Mortgage and the Lease is
terminated, the Lessee will at the request of the Assignee enter into a new lease directly with the Assignee in
respect of the Aircraft on the same terms and conditions as the Lease.

7.       It is understood that:

(a)      Notices to the Lessee pursuant to or in connection with the Assignment shall be in writing and shall be
         addressed to the Lessee at [ADDRESS], Attention:  __________________.

(b)      This Consent and Agreement may be signed in any number of counterparts with the same effect as if the
         signature to all such counterparts were upon the same instrument, and all such counterparts shall
         constitute but one instrument.

(c)      This Consent and Agreement shall be governed by and construed in accordance with the laws of the State
         of New York.

8.       The Lessee hereby confirms that as of the date hereof, except for the transactions contemplated by this
Consent and Agreement, it has not received notice from any Person of, and has not consented to, any assignment by
any Person of any rights in, to or under the Lease.

                                                                             ,
                                                     [Name of Lessee]



                                                     By:                     
                                                     Title:

Dated:          

EX-10

                                     EXHIBIT 10.23

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

                                  CODE SHARE AGREEMENT

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

                                    R E C I T A L S

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

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

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

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

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

                                   A G R E E M E N T


 1.  Rights, Responsibilities and Obligations of Partner:

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

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

         1.3      Fleet.

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

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

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

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

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

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

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

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

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

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

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

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


         1.7      Maintenance.


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


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


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


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

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

2.   Rights, Responsibilities and Obligations of Frontier.

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

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

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

3.   Compliance with Regulations.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         6.2      Settlement of Actual Costs.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

7.       Term and Termination.

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

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

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

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

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

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

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

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

                                              [***]

                           where,


                           [***]

                           with all calculations rounded up to the nearest whole number

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

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

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

8.       Service Mark License For Services Provided By Partner.

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

         8.2      Terms and Conditions Governing Service Mark License.

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

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

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

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


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


         9.5      Insurance.


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


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

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

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


                                  c. Property Damage                    Included in
                                                                        Combined Single
                                                                            Limit

                                                                        Per Accident

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

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

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

                                  Cargo Liability                       [***] any One
                                                                        Aircraft.

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

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

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


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


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


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


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


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


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


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


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


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


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


10.  Confidentiality.

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


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


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


12.      Defaults and Remedies.

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

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


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


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


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


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


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


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


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


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


13.  Records and Reports.


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


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

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


15.      Miscellaneous Provisions.

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


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

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


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


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


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


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


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


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

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

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

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

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

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

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

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







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


                                                              Frontier Airlines, Inc.,
                                                              a Colorado corporation


                                                              By:                             
                                                              Name:                           
                                                              Title:                          

                                                              HORIZON AIR INDUSTRIES, INC.
                                                              a Washington corporation


                                                              By:                             
                                                              Name:                           
                                                              Title:                          





                                        EXHIBITS


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






                                      EXHIBIT 1.1


                    PARTNER'S OPERATIONAL AND MAINTENANCE PRACTICES


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

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

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






                                      EXHIBIT 1.3.1

Initial Fleet - 8 + 1 Spare

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

                   [***]2004                                2 Core; 2 New

                   [***]2004                                1 Core; Used

                   [***]2004                                1 Core; Used

                   [***]2004                                1 Core; Used








                                     EXHIBIT 1.3.3

                       CONFIGURATION AND INTERIOR DECOR STANDARDS




Aircraft seating configuration

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

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


Carpeting

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


Emergency cards

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








                                     EXHIBIT 1.6.1


                    PILOT AND FLIGHT ATTENDANT APPEARANCE STANDARDS



Pilots

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


Flight Attendants

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






                                     EXHIBIT 6.1.1

                          FIXED, VARIABLE AND PASS THRU COSTS

                                         [***]





                                     EXHIBIT 6.1.2

                           TRAINING/START-UP PASS THRU COSTS

                                         [***]





                                     EXHIBIT 6.3.3

                          MTX VARIABLE COST ADJUSTMENT FORMULA

                                         [***]






                                      EXHIBIT 6.6

                                  BACKUP DOCUMENTATION

     Cost                            Backup Required                    Minimum Frequency


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

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

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

Property Taxes                 Assessment & Evidence of Payment   Semi-annually

Deicing                        Invoices & Evidence of Payment     Monthly

Fuel Costs                     Invoices & Evidence of Payment     Monthly

Catering                       Invoices & Evidence of Payment     Monthly

Landing Fees                   Invoices & Evidence of Payment     Monthly

Security Fees                  Invoices & Evidence of Payment     Monthly

Station Rent                   Lease Document; Invoices &         Monthly
                               Evidence of Payment

Aircraft Ownership Costs       Lease or Finance Documents         When added to Fleet

Station Costs                  Subcontracts; All Invoices         Monthly
                               and Evidence of Payment















                                       SCHEDULE A

                                 CERTAIN DEFINED TERMS

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

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

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

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

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

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

EX-31

                                                                         Exhibit 31.1
                                            CERTIFICATION

I, Jeff  S. Potter, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of Frontier Airlines, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements made, in light
         of the circumstances under which such statements were made, not misleading with respect
         to the period covered by this report;

     3.  Based on my knowledge, the financial statements, and other financial information included
         in this report, fairly present in all material respects the financial condition, results
         of operations and cash flows of the registrant as of, and for, the periods presented in
         this report;

     4.  The registrant's other certifying officer(s) and I are responsible for establishing and
         maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
         and 15d-15(e)) and have:

              (a) Designed such disclosure controls and procedures, or caused such disclosure controls
              and procedures to be designed under our supervision, to ensure that material information
              relating to the registrant, including its consolidated subsidiaries, is made known to us
              by others within those entities, particularly during the period in which this report is
              being prepared;

              (b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC
              Release 34-47986];

              (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures
              and presented in this report our conclusions about the effectiveness of the disclosure
              controls and procedures, as of the end of the period covered by this report based on
              such evaluation; and

              (d) Disclosed in this report any change in the registrant's internal control over
              financial reporting that occurred during the registrant's most recent fiscal quarter
              (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
              affected, or is reasonably likely to materially affect, the registrant's internal control
              over financial reporting; and

     5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent
         evaluation of internal control over financial reporting, to the registrant's auditors and the
         audit committee of the registrant's board of directors (or persons performing the equivalent
         functions):

              (a) All significant deficiencies and material weaknesses in the design or operation of
              internal control over financial reporting which are reasonably likely to adversely affect
              the registrant's ability to record, process, summarize and report financial information;
              and

              (b) Any fraud, whether or not material, that involves management or other employees who
              have a significant role in the registrant's internal control over financial reporting.

Date:   November 7, 2003
                                                       By:  /s/ Jeff  S. Potter
                                                          Jeff S. Potter
                                                          President and Chief Executive Officer

EX-31

                                                                         Exhibit 31. 2
                                        CERTIFICATION
I, Paul H. Tate, certify that:

     1.  I have reviewed this quarterly report on Form 10-Q of Frontier Airlines, Inc.;

     2.  Based on my knowledge, this report does not contain any untrue statement of a material
         fact or omit to state a material fact necessary to make the statements made, in light
         of the circumstances under which such statements were made, not misleading with respect
         to the period covered by this report;

     3.  Based on my knowledge, the financial statements, and other financial information included
         in this report, fairly present in all material respects the financial condition, results
         of operations and cash flows of the registrant as of, and for, the periods presented in
         this report;

     4.  The registrant's other certifying officer(s) and I are responsible for establishing and
         maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
         and 15d-15(e)) and have:

              (a) Designed such disclosure controls and procedures, or caused such disclosure controls
              and procedures to be designed under our supervision, to ensure that material information
              relating to the registrant, including its consolidated subsidiaries, is made known to us
              by others within those entities, particularly during the period in which this report is
              being prepared;

              (b) [Paragraph omitted in accordance with SEC transition instructions contained in SEC
              Release 34-47986];

              (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures
              and presented in this report our conclusions about the effectiveness of the disclosure
              controls and procedures, as of the end of the period covered by this report based on
              such evaluation; and

              (d) Disclosed in this report any change in the registrant's internal control over
              financial reporting that occurred during the registrant's most recent fiscal quarter
              (the registrant's fourth fiscal quarter in the case of an annual report) that has materially
              affected, or is reasonably likely to materially affect, the registrant's internal control
              over financial reporting; and

     5.  The registrant's other certifying officer(s) and I have disclosed, based on our most recent
         evaluation of internal control over financial reporting, to the registrant's auditors and the
         audit committee of the registrant's board of directors (or persons performing the equivalent
         functions):

              (a) All significant deficiencies and material weaknesses in the design or operation of
              internal control over financial reporting which are reasonably likely to adversely affect
              the registrant's ability to record, process, summarize and report financial information;
              and

              (b) Any fraud, whether or not material, that involves management or other employees who
              have a significant role in the registrant's internal control over financial reporting.

Date:   November 7, 2003.
                                                       By:  /s/ Paul H.Tate                                                                                                        Paul H. Tate
                                                          Chief Financial Officer

EX-32

                                                                         Exhibit 32

                                           CERTIFICATION PURSUANT TO
                                            18 U.S.C. SECTION 1350,
                                            AS ADOPTED PURSUANT TO
                                 SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Frontier  Airlines,  Inc. (the "Company") on Form
10-Q for the period ending June 30, 2003 as filed with the Securities and Exchange Commission
on the date hereof (the "Report"),  the undersigned as the Company's  principal  executive
officer and principal  financial officer certify,  pursuant to 18 U.S.C.ss.1350, as adopted
pursuant toss.906 of the Sarbanes-Oxley Act of 2002, that:

(1)      The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all material respects,
the financial condition and result of operations of the Company.

Date:   November 7, 2003

By:  /s/ Jeff  S. Potter
   Jeff S. Potter
   President and Chief Executive Officer


By: /s/ Paul H. Tate
   Paul H. Tate
   Senior Vice President and Chief Financial Officer