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C-352414v02!.04848.00010

            AIR TRANSPORTATION HOLDING COMPANY, INC.
            1998 OMNIBUS LONG-TERM COMPENSATION PLAN
                                
                                
ARTICLE 1 - PURPOSE AND TERM OF PLAN

1.1    Purpose.   The  purposes  of  the  Plan  are  to  aid  Air
Transportation   Holding   Company,   Inc.   ("AirT")   and   its
Subsidiaries  (AirT  and  its  Subsidiaries  collectively   being
referred  to herein as the "Company") in attracting and retaining
Key  Employees  through  a competitive compensation  package,  to
stimulate  the  efforts of such Key Employees  and to  strengthen
their  desire to remain with the Company, to aid the  Company  in
attracting superior individuals to serve as Nonemployee Directors
and  to  provide  appropriate compensation  to  such  Nonemployee
Directors  for  their  Service.   Toward  these  objectives,  the
Committee  may  grant Employee Stock Options, stock  appreciation
rights,  Performance Restricted Stock Awards, Performance  Awards
payable  in  Common Stock or cash, performance units,  and  other
incentive Awards to Key Employees on the terms and subject to the
conditions set forth in the Plan.  In addition, the Plan provides
for  the  grant  of options to Nonemployee Directors  upon  their
initial  election  or  appointment as a Director  and  that  each
Nonemployee Director may elect to take all or part of his or  her
compensation as Director in the form of options.

1.2   Term.   The  Plan shall become effective as of  August  13,
1998, subject to its approval by the shareholders of AirT at  the
1998  Annual  Meeting of the shareholders.  No  Awards  shall  be
exercisable  or  payable before approval of  the  Plan  has  been
obtained from Air T's shareholders.  Awards shall not be  granted
pursuant  to Articles 7, 8, 9, 10 or 11 of the Plan after  August
13,  2001; except that the Committee may grant Awards after  such
date  in  recognition of performance for Performance  Cycles  and
Performance Periods commencing prior to such date.

ARTICLE 2 - DEFINITIONS

2.1   Approved  Reason.  "Approved Reason"  means  a  reason  for
terminating employment with the Company that, in the  opinion  of
the  Committee,  is  in the best interests  of  the  Company,  as
determined by the Committee on a case-by-case basis in  its  sole
discretion.

2.2   Award.   "Award"  means any form  of  stock  option,  stock
appreciation  right, performance unit, Performance Award  payable
in  cash  or  shares  of  Common  Stock,  shares  of  Performance
Restricted Stock under the Performance Restricted Stock  Program,
or  other incentive Award granted under the Plan, whether singly,
in  combination, or in tandem, to a Participant by the  Committee
pursuant   to   such   terms,   conditions,   restrictions,   and
limitations, if any, as the Committee may establish by the  Award
Notice or otherwise, and any Formula Option or Deferral Option.

2.3   Award  Notice.  "Award Notice" means a written notice  from
the   Company  to  a  Participant  that  establishes  the  terms,
conditions, restrictions, and limitations applicable to an  Award
in  addition  to  those  established by  this  Plan  and  by  the
Committee's exercise of its administrative powers.

2.4   Award  Payment  Date.  "Award Payment Date"  means,  for  a
Performance Cycle or Performance Period, the date the Awards  for
such  Performance Cycle or Performance Period shall  be  paid  to
Participants.  The Award Payment Date for a Performance Cycle  or
Performance  Period  shall  occur  as  soon  as  administratively
possible  following the completion of the certifications required
pursuant  to  Subsection 9.5.3, in the  case  of  a   Performance
Cycle,  and  Subsection  10.5.3, in the  case  of  a  Performance
Period.

2.5  Board.  "Board" means the Board of Directors of AirT.

2.6   Cause.  "Cause," in the case of a Key Employee,  means  (a)
the willful and continued failure by an Employee to substantially
perform  his or her duties with his or her employer after written
warnings  identifying  the  lack of substantial  performance  are
delivered  to the Employee by his or her employer to specifically
identify  the  manner  in which the employer  believes  that  the
Employee  has not substantially performed his or her  duties,  or
(b)  the willful engaging by an Employee in illegal conduct  that
is materially and demonstrably injurious to AirT or a Subsidiary.

"Cause" means, in the case of a Nonemployee Director, termination
of such Nonemployee Director's Service by AirT's shareholders for
cause pursuant to the Bylaws of AirT.

2.7  CEO.  "CEO" means the Chief Executive Officer of AirT.

2.8   Change In Control.  "Change In Control" means, (i)  as  the
result  of a tender offer, merger, consolidation, sale of assets,
or  any  combination of such transactions, the persons  who  were
members of the Board immediately before the transaction cease  to
constitute  at least a majority thereof, and (ii) such occurrence
would be a change of control of the Company of a nature that such
event  would be required to be reported in response to Item  1(a)
of  the  Current  Report on Form 8-K, as in effect  on  the  date
hereof,  promulgated pursuant to Section 13 of the  Exchange  Act
(whether or not the Company is required to file such a report).

2.9   Change  In Control Price.  "Change In Control Price"  means
the  merger or tender price paid for a share of Common Stock upon
a Change of Control.

2.10  Change In Ownership.  "Change In Ownership" means a  Change
In  Control  that results directly or indirectly  in  the  Common
Stock  ceasing  to  be actively traded on the primary  securities
exchange or quotation system on which the Common Stock is  traded
immediately prior to such Change in Control.

2.11  Code.  "Code" means the Internal Revenue Code of  1986,  as
amended  from time to time, including regulations thereunder  and
successor provisions and regulations thereto.

2.12 Committee.  "Committee" means the Compensation Committee  of
the  Board,  unless and until its members are  not  qualified  to
serve on the Committee pursuant to the provisions of the Plan, in
which case the Board will designate the members of the Committee;
provided that the Committee shall at all times consist of two  or
more  Directors,  each of whom is both a "Non-Employee  Director"
within  the meaning of Rule 16b-3 under the Exchange Act  and  an
"outside director" within the meaning of the definition  of  such
term  as contained in Treasury Regulation Section 1.162-27(e)(3),
or  any  successor definition; provided further that no  Director
shall be appointed a member of the Committee who has received any
Award  other than an Award under Article 12 in the year prior  to
such  appointment; provided further that no Committee member  may
receive an Award other than pursuant to Article 12.

2.13  Common Stock.  "Common Stock" means Common Stock, $.20  par
value  per  share,  of AirT, which may be newly issued,  treasury
stock,  shares  issued  and outstanding  or  shares  owned  by  a
Subsidiary.

2.14 Company.  "Company" means AirT and its Subsidiaries.

2.15 Covered Employee.  "Covered Employee" means an Employee  who
is  a "Covered Employee" within the meaning of Section 162(m)  of
the Code.

2.16  Deferral Stock Option.  "Deferral Stock Option "  means  an
award of stock options to a Nonemployee Director pursuant to  the
election  of  such  Nonemployee Director to  receive  such  stock
option in lieu of cash compensation in accordance with Subsection
12.3 of this Plan.

2.17 Director.  "Director" means a director of AirT.

2.18  Disability.  "Disability," in the case of a  Key  Employee,
means  a  disability  under  the  terms  of  the  AirT  long-term
disability  plan maintained by the Company or any successor  plan
thereto.

2.19  Disability.   "Disability," in the case  of  a  Nonemployee
Director, means the permanent and lasting inability, by reason of
physical or mental infirmity, or both, of an employee to  perform
his  or  her  duties  as  Director.   Such  Disability  shall  be
determined exclusively by the Board, with or without reference to
the certificate of a qualified physician.

2.20 Effective Date.  "Effective Date" means the date an Award is
determined  to be effective by the Committee upon  its  grant  of
such Award.

2.21  Employee.  "Employee" means either (a) a salaried  employee
of AirT or (b) a salaried employee of a Subsidiary.

2.22  Employee  Stock Option.  "Employee Stock Option"  means  an
Award  granted to a Key  Employee in the form of a  stock  option
pursuant to Article 7.

2.23  Exchange Act.  "Exchange Act" means the Securities Exchange
Act  of  1934,  as  amended from time to  time,  including  rules
thereunder and successor provisions and rules thereto.

2.24  Formula Option.  "Formula Option " means an Option  granted
to a Nonemployee Director of the Company pursuant to Section 12.2
of the Plan.

2.25  Good  Reason.   "Good Reason" means any  of  the  following
(without the Participant's written consent):

           (i)   the assignment to the Participant by the Company
of  duties inconsistent with the Participant's position,  duties,
responsibilities and status with the Company immediately prior to
a  Change in Control, or a change in the Participant's titles  or
offices  as  in effect immediately prior to Change in Control  of
the  Company,  or  any  removal of the Participant  from  or  any
failure  to  reelect  the Participant to any of  such  positions,
except  in  connection  with the termination  of  his  employment
because of Disability, Retirement or Cause or as a result of  the
Participant's  death or by the Participant other  than  for  Good
Reason;

           (ii)  a  reduction by the Company in the Participant's
base  salary  as  in effect immediately prior to  the  Change  in
Control;

           (iii)      any  failure by the Company to continue  in
effect  any  benefit  plan  or  arrangement  (including,  without
limitation,  the  Company's profit sharing  plan,  Group  Annuity
Contract, group life insurance plan, senior participant  survivor
life  insurance  supplement, and medical,  dental,  accident  and
disability  plans) in which the Participant is  participating  at
the time of a Change in Control (or any other plans providing the
Participant  with  substantially similar  benefits)  (hereinafter
referred  to as "Benefit Plans"), or the taking of any action  by
the  Company  which  would  adversely  affect  the  Participant's
participation in or materially reduce the Participant's  benefits
under  any  such Benefit Plan or deprive the Participant  of  any
material fringe benefit enjoyed by the Participant at the time of
a Change in Control;

           (iv)  any failure by the Company to continue in effect
any incentive plan or arrangement (including, without limitation,
any  annual  incentive  compensation plan, long-term  performance
incentive plan, long-term incentive bonus plan, as amended, bonus
and  contingent bonus arrangements and credits and the  right  to
receive  performance  awards and similar  incentive  compensation
benefits) in which the Participant is participating at  the  time
of  a  Change  in  Control (or any other  plans  or  arrangements
providing  him  with substantially similar benefits)  hereinafter
referred to as "Incentive Plans") or the taking of any action  by
the  Company  which  would  adversely  affect  the  Participant's
participation   in  any  such  Incentive  Plan  or   reduce   the
Participant's  benefits under any such Incentive Plan,  expressed
as  a  percentage of his base salary, by more than 10  percentage
points  in  any  fiscal  year  as  compared  to  the  immediately
preceding fiscal year.

           (v)   any failure by the Company to continue in effect
any  plan  or  arrangement to receive securities of  the  Company
(including, without limitation, this Plan, and any other plan  or
arrangement   to  receive  and  exercise  stock  options,   stock
appreciation rights, restricted stock or grants thereof) in which
the  Participant  is participating at the time  of  a  Change  in
Control  of  the Company (or plans or arrangements providing  him
with substantially similar benefits) (hereinafter referred to  as
"Securities  Plans") or the taking of any action by  the  Company
which  would adversely affect the Participant's participation  in
or  materially reduce the Participant's benefits under  any  such
Securities Plan;

           (vi)  the  Participant's relocation to any place  more
than thirty (30) miles from the location at which the Participant
performed the Participant's duties prior to a Change in  Control,
except  for  required travel by the Participant on the  Company's
business   to  an  extent  substantially  consistent   with   the
Participant's business travel obligations at the time of a Change
in Control; or

           (vii)      any  failure by the Company to provide  the
Participant  with the number of paid vacation days to  which  the
Participant is entitled at the time of a Change in Control.

2.26  Initial Election Date.  "Initial Election Date" means,  for
each  Director,  the  later to occur of  (i)  the  date  of  such
Director's   election  at  the  1998  annual   meeting   of   the
shareholders  of AirT or (ii) the date of the Director's  initial
election or appointment to the Board.

2.27  Key Employee.  "Key Employee" means a senior level Employee
who   holds   a  position  of  responsibility  in  a  managerial,
administrative, or professional capacity.

2.28  Negative  Discretion.   "Negative  Discretion"  means   the
discretion authorized by the Plan to be applied by the  Committee
in  determining the size of an Award for a Performance Period  or
Performance  Cycle  if, in the Committee's  sole  judgment,  such
application is appropriate.  Negative Discretion may only be used
by the Committee to eliminate or reduce the size of an Award.  By
way  of  example and not by way of limitation, in no event  shall
any discretionary authority granted to the Committee by the Plan,
including  but not limited to Negative Discretion,  be  used  to:
(a) grant Awards for a Performance Period or Performance Cycle if
the  Performance Goals for such Performance Period or Performance
Cycle have not been attained; or (b) increase an Award above  the
maximum  amount payable under Section 7.7, 8.7, 9.10 or  10.7  of
the Plan.

2.29 Nonemployee Director.  "Nonemployee Director" means a member
of the Board who is not an Employee.

2.30 Nonemployee Director Option.  "Nonemployee Director Option "
means a Formula Option or a Deferral Option.

2.31   Nonemployee   Director  Option  Agreement.    "Nonemployee
Director Option Agreement" means an Option Agreement between  the
Company  and  the  Nonemployee Director  pursuant  to  which  the
Nonemployee Director Option is awarded stock options as set forth
in the Plan.

2.32 AirT.  "AirT" means Air Transportation Holding Company, Inc.

2.33  Participant.  "Participant" means any Key Employee who  has
been selected for a grant of stock options pursuant to Article 7,
any  Key  Employee  who has been selected for a  grant  of  stock
appreciation  rights pursuant to Article 8, any Key Employee  who
for  a Performance Cycle has been selected to participate in  the
Performance Restricted Stock Program pursuant to Article  9,  any
Key  Employee who for a Performance Period has been  selected  to
participate   in  the  Performance  Award  Program  pursuant   to
Article 10, any Key Employee who has been selected for a grant of
performance  units  pursuant to Article 11, and  any  Nonemployee
Director  who  is eligible to receive a grant of Formula  Options
pursuant  to  Section  12.2, or who elects  to  receive  Deferral
Options pursuant to Article 12.

2.34   Performance  Awards.   "Performance  Awards"   means   the
Performance Awards granted to Key Employees pursuant  to  Article
10.    All   Performance  Awards  are  intended  to  qualify   as
"performance-based  compensation" under  Section  162(m)  of  the
Code.

2.35 Performance Criteria.  "Performance Criteria" means the  one
or  more criteria that the Committee shall select for purposes of
establishing the Performance Goal(s) for a Performance Period  or
Performance Cycle.  The Performance Criteria that will be used to
establish  such  Performance Goal(s)  shall  be  limited  to  the
following: Return On Net Assets ("RONA"), return on shareholders'
equity, return on assets, return on capital, shareholder returns,
profit  margin,  earnings  per  share,  net  earnings,  operating
earnings,  Common  Stock price per share,  and  sales  or  market
share.  To the extent required by Section 162(m) of the Code, the
Committee shall, within the first 90 days of a Performance Period
or  Performance  Cycle (or, if longer, within the maximum  period
allowed under Section 162(m) of the Code), define in an objective
fashion  the  manner of calculating the Performance  Criteria  it
selects to use for such Performance Period or Performance Cycle.

2.36  Performance Cycle.  "Performance Cycle" means  the  one  or
more  periods  of  time, which may be of varying and  overlapping
durations, but which shall be at least one year in length, as the
Committee  may select, over which the attainment of one  or  more
Performance Goals will be measured for the purpose of determining
a  Participant's right to and the payment of an Award  under  the
Performance Restricted Stock Program.

2.37  Performance Formula.  "Performance Formula"  means,  for  a
Performance  Period  or  Performance  Cycle,  the  one  or   more
objective formulas applied against the relevant Performance Goals
to   determine,  with  regard  to  the  Award  of  a   particular
Participant, whether all, some portion but less than all, or none
of  the  Award  has  been  earned for the Performance  Period  or
Performance Cycle.  In the case of an Award under the Performance
Restricted Stock Program, in the event the Performance Goals  for
a  Performance Cycle are achieved, the Performance Formula  shall
determine  what percentage of the Participant's Target Award  for
the Performance Cycle will be earned.

2.38   Performance  Goal.   "Performance  Goal"  means,   for   a
Performance  Period or Performance Cycle, the one or  more  goals
established  by  the  Committee for  the  Performance  Period  or
Performance  Cycle  based  upon the  Performance  Criteria.   The
Committee is authorized at any time during the first 90 days of a
Performance  Period  or  Performance  Cycle,  or  at   any   time
thereafter (but only to the extent the exercise of such authority
after  the  first 90 days of a Performance Period or  Performance
Cycle would not cause the Awards granted to the Covered Employees
for  the  Performance  Period or Performance  Cycle  to  fail  to
qualify as "performance-based compensation" under Section  162(m)
of  the Code), in its sole and absolute discretion, to adjust  or
modify the calculation of a Performance Goal for such Performance
Period  or Performance Cycle in order to prevent the dilution  or
enlargement of the rights of Participants, (a) in the  event  of,
or  in  anticipation  of, any unusual or extraordinary  corporate
item,  transaction, event or development; (b) in recognition  of,
or  in  anticipation of, any other unusual or nonrecurring events
affecting  the  Company,  or  the  financial  statements  of  the
Company,  or  in response to, or in anticipation of,  changes  in
applicable laws, regulations, accounting principles, or  business
conditions; and (c) in view of the Committee's assessment of  the
business  strategy  of  the  Company, performance  of  comparable
organizations,  economic and business conditions  and  any  other
circumstances deemed relevant.

2.39  Performance Period.  "Performance Period" means the one  or
more  periods  of  time,  which may be  varying  and  overlapping
durations, but which shall be at least one year in length, as the
Committee  may select, over which the attainment of one  or  more
Performance Goals will be measured for the purpose of determining
a Participant's right to and the payment of a Performance Award.

2.40   Performance  Restricted  Stock.   "Performance  Restricted
Stock" means an Award of Common Stock subject to the restrictions
set  forth  in Section 9.6 awarded to a Key Employee pursuant  to
Article 9.

2.41 Performance Restricted Stock Award.  "Performance Restricted
Stock Award" means an Award granted pursuant to Article 9 in  the
form  of  shares of Performance Restricted Stock.  All Restricted
Stock  Awards  are  intended  to  qualify  as  "performance-based
compensation" under Section 162(m) of the Code.

2.42   Performance   Restricted  Stock   Program.    "Performance
Restricted  Stock  Program" means the program  established  under
Article  9  of the Plan pursuant to which selected Key  Employees
receive  Awards for a Performance Cycle in the form of shares  of
Performance Restricted Stock based upon attainment of Performance
Goals  for such Performance Cycle.  All Awards granted to Covered
Employees  under  the Performance Restricted  Stock  Program  are
intended  to  qualify  as "performance-based compensation"  under
Section 162(m) of the Code.

2.43 Plan.  "Plan" means this Air Transportation Holding Company,
Inc.  1998  Omnibus Long-Term Compensation Plan,  as  amended  or
modified from time to time.

2.44  Retirement.   "Retirement" means, in  the  case  of  a  Key
Employee,  for  all  Plan purposes other than  Section  18.12,  a
termination of employment from the Company on or after attainment
of Normal Retirement Age as defined under the AirT 401(k) Plan.

"Retirement"  means, in the case of a Nonemployee  Director,  for
all  Plan  purposes other than Section 18.12, the termination  of
such Nonemployee Director's Service on or after age 70, or at any
earlier age with the consent of the Board.

2.45  Restriction Period.  "Restriction Period" means the  period
of  time  beginning  on  the  Effective  Date  of  the  grant  of
Performance  Restricted Stock and ending three (3) year(s)  after
such date, or such longer period as the Committee shall determine
in its sole discretion.

2.46 Service.  "Service" means service as a Director.

2.47  Subsidiary.   "Subsidiary" means  a  corporation  or  other
business  entity  in  which AirT directly or  indirectly  has  an
ownership interest of 80 percent or more.

2.48  Target  Award.   "Target Award" means,  for  a  Performance
Cycle,  the target Award amount, expressed as a number of  shares
of Performance Restricted Stock, established for each Participant
selected  by the Committee for the Performance Cycle.  The  fact,
however,  that  a Target Award is established for  a  Participant
shall  not  in any manner entitle such Participant to receive  an
Award for such Performance Cycle.

2.49  Unit.  "Unit" means a bookkeeping entry used by the Company
to  record  and account for the grant of performance units  until
the performance unit is paid, cancelled, forfeited or terminated,
as the case may be.

ARTICLE 3 - ELIGIBILITY

Only  Key  Employees are eligible to participate in Awards  under
Articles  7,  8,  9,  10  and 11 of the Plan.   Only  Nonemployee
Directors  shall participate in Awards under Article  12  of  the
Plan.   For purposes of Articles 7, 8, 9, 10, and 11 of the Plan,
the  Committee shall select, from time to time, Participants from
those  Key  Employees who, in the opinion of the  Committee,  can
further  the Plan's purposes.  Once a Participant is so selected,
the  Committee shall determine the type or types of Awards to  be
made  to the Participant and shall establish in the related Award
Notices the terms, conditions, restrictions, and limitations,  if
any,  applicable to the Awards in addition to those set forth  in
this Plan and the administrative rules and regulations issued  by
the Committee.

ARTICLE 4 - PLAN ADMINISTRATION

4.1    Responsibility.   The  Committee  shall  have  total   and
exclusive   responsibility  to  control,  operate,  manage,   and
administer the Plan in accordance with its terms.

4.2   Authority of the Committee.  The Committee shall  have  all
the  authority that may be necessary or helpful to enable  it  to
discharge its responsibilities with respect to the Plan.  Without
limiting  the generality of the preceding sentence, the Committee
shall  have the exclusive right to: (a) interpret the  Plan;  (b)
determine  eligibility for the participation  in  the  Plan;  (c)
decide all questions concerning eligibility for and the amount of
Awards  payable  under  the  Plan;  (d)  construe  any  ambiguous
provision  of the Plan; (e) correct any default; (f)  supply  any
omission;   (g)   reconcile   any   inconsistency;   (h)    issue
administrative guidelines as an aid to administer  the  Plan  and
make  changes  in such guidelines as it from time to  time  deems
proper;  (i) make regulations for carrying out the Plan and  make
changes in such regulations as it from time to time deems proper;
(j)  determine  whether  Awards  should  be  granted  singly,  in
combination, or in tandem; (k) to the extent permitted under  the
Plan, grant waivers of Plan terms, conditions, restrictions,  and
limitations; (l) accelerate the vesting, exercise, or payment  of
an  Award or the Performance Period of an Award when such  action
or  actions  would  be in the best interest of the  Company;  (m)
establish  such other types of Awards, besides those specifically
enumerated in Article 5 hereof, that the Committee determines are
consistent  with the Plan's purpose; (n) subject to Section  7.2,
grant  Awards  in replacement of Awards previously granted  under
this  Plan  or  any  other  executive compensation  plan  of  the
Company;  (o) establish and administer the Performance Goals  and
certify whether, and to what extent, they have been attained; and
(p) take any and all other action it deems necessary or advisable
for  the proper operation or administration of the Plan; provided
that  in no event shall the Committee have the power to determine
eligibility  for participation under Article 12 or  to  determine
the  number, price, vesting period, or timing of Formula  Options
granted  under  Article  12  (all  of  which  determinations  are
automatic under the provisions of the Plan).

4.3   Discretionary  Authority.  The Committee  shall  have  full
discretionary  authority in all matters related to the  discharge
of  its responsibilities and the exercise of its authority  under
the  Plan, including without limitation its construction  of  the
terms  of  the  Plan  and its determination  of  eligibility  for
participation and Awards under the Plan.  It is the intent of the
Plan  that  the  decisions of the Committee and its  action  with
respect  to the Plan shall be final, binding and conclusive  upon
all  persons having or claiming to have any right or interest  in
or under the Plan.

4.4   Section  162(m) of the Code.  With regard  to  all  Covered
Employees,  the Plan shall, for all purposes, be interpreted  and
construed in accordance with Section 162(m) of the Code.

4.5   Action by the Committee.  The Committee may act only  by  a
majority of its members.  Any determination of the Committee  may
be  made,  without a meeting, by a writing or writings signed  by
all  of the members of the Committee.  In addition, the Committee
may  authorize  any  one  or more of its number  to  execute  and
deliver documents on behalf of the Committee.

4.6  Delegation of Authority.  The Committee may delegate some or
all  of  its  authority under the Plan to any person  or  persons
provided  that  any  such  delegation be  in  writing;  provided,
however,  that only the Committee may select and grant Awards  to
Participants who are subject to Section 16 of the Exchange Act or
are Covered Employees.

ARTICLE 5 - FORMS OF AWARDS

5.1  In General.  Awards may, at the Committee's sole discretion,
be paid in the form of stock options pursuant to Article 7, stock
appreciation rights pursuant to Article 8, Performance Restricted
Stock  Awards pursuant to Article 9, Performance Awards  pursuant
to  Article 10, performance units pursuant to Article 11, and any
form established by the Committee pursuant to Section 4.2(m),  or
a  combination thereof.  Awards may also be paid in the  form  of
Formula Options and Deferral Options pursuant to Article 12.  All
Awards  shall  be subject to the terms, conditions,  restrictions
and  limitations  of the Plan.  The Committee may,  in  its  sole
judgment,  subject an Award, except Formula Options and  Deferral
Options  granted  pursuant to Article 12, to  such  other  terms,
conditions,  restrictions, and limitations  (including,  but  not
limited  to, the time and conditions of exercise and restrictions
on   transferability  and  vesting),  provided   they   are   not
inconsistent  with  the  terms  of  the  Plan.   Awards  under  a
particular  Article  of the Plan need not be uniform  and  Awards
under  two  or more Articles may be combined into a single  Award
Notice.  Any combination of Awards may be granted at one time and
on  more than one occasion to the same Participant.  For purposes
of the Plan, the value of any Award granted in the form of Common
Stock shall be the closing price at which a share of Common Stock
trades  on  the date of the grant's Effective Date, or  the  next
preceding trading day if such date was not a trading date, on the
primary  securities  exchange or quotation system  on  which  the
Common Stock is then traded.

ARTICLE 6 - SHARES SUBJECT TO PLAN

6.1   Available Shares.  The maximum number of shares  of  Common
Stock that shall be available for grant of Awards under the  Plan
(including  incentive stock options) during its term,  shall  not
exceed  165,000.  (Such amount shall be subject to adjustment  as
provided in Section 6.2.)  Any shares of Common Stock related  to
Awards that terminate by expiration, forfeiture, cancellation, or
otherwise  without the issuance of such shares shall be available
again for grant under the Plan.  Moreover, shares of Common Stock
with  respect  to  which  a  stock appreciation  right  has  been
exercised and paid in cash shall again become eligible for  grant
under  the  Plan;  provided that if such shares of  Common  Stock
subject to Awards are settled in cash in lieu of Common Stock  or
are  exchanged  with the Committee's permission  for  Awards  not
involving Common Stock, such shares shall not be available  again
for grant under the Plan.  The maximum number of shares available
for  issuance under the Plan shall not be reduced to reflect  any
dividends  or  dividend  equivalents  that  are  reinvested  into
additional  shares  of  Common Stock or  credited  as  additional
performance  shares.   The shares of Common Stock  available  for
issuance  under  the Plan may be authorized and unissued  shares,
treasury shares, shares issued and outstanding or shares owned by
a Subsidiary.

6.2  Adjustment to Shares.

      6.2.1  In General.  The provisions of this Subsection 6.2.1
are subject to the limitation contained in Subsection 6.2.2.   If
there is any change in the number of outstanding shares of Common
Stock through the declaration of stock dividends, stock splits or
the  like, the number of shares available for Awards, the  shares
subject to any Award and the option prices or exercise prices  of
Awards  shall be automatically adjusted.  If there is any  change
in  the number of outstanding shares of Common Stock through  any
change  in  the  capital account of AirT, or  through  a  merger,
consolidation,   separation  (including  a  spin-off   or   other
distribution  of stock or property), reorganization  (whether  or
not such reorganization comes within the meaning of such term  in
Section  368(a) of the Code) or partial or complete  liquidation,
the  Committee shall make appropriate adjustments in the  maximum
number  of  shares of Common Stock that may be issued  under  the
Plan  and  any  adjustments and/or modifications  to  outstanding
Awards  as  it,  in its sole discretion, deems  appropriate.   In
event  of  any other change in the capital structure  or  in  the
Common  Stock of AirT, the Committee shall also be authorized  to
make such appropriate adjustments in the maximum number of shares
of  Common  Stock available for issuance under the Plan  and  any
adjustments and/or modifications to outstanding Awards as it,  in
its  sole  discretion, deems appropriate.  The maximum number  of
shares   available  for  issuance  under  the   Plan   shall   be
automatically  adjusted to the extent necessary  to  reflect  any
dividend equivalents paid in the form of Common Stock.

      6.2.2   Covered Employees.  In no event shall the Award  of
any Participant who is a Covered Employee be adjusted pursuant to
Subsection 6.2(a) to the extent it would cause such Award to fail
to  qualify  as  "performance-based compensation"  under  Section
162(m) of the Code.

ARTICLE 7 - EMPLOYEE STOCK OPTION PROGRAM

7.1   In General.  Awards may be granted to Key Employees in  the
form of Employee Stock Options.  These Employee Stock Options may
be  incentive stock options within the meaning of Section 422  of
the Code or non-qualified stock options (i.e., stock options that
are  not incentive stock options), or a combination of both.  All
Awards under the Plan issued to Covered Employees in the form  of
Employee   Stock  Options  shall  qualify  as  "performance-based
compensation" under Section 162(m) of the Code.

7.2   Terms  and Conditions of Stock Options.  An Employee  Stock
Option shall be exercisable in whole or in such installments  and
at  such times as may be determined by the Committee.  The  price
at  which  Common  Stock may be purchased  upon  exercise  of  an
Employee Stock Option shall be not less than 100% of the  closing
price at which a share of Common Stock trades on the date of  the
grant's Effective Date, or the next preceding trading day if such
date  was  not a trading date, on the primary securities exchange
or  quotation  system on which the Common Stock is  then  traded.
Moreover,  all Options shall expire not later than 10 years  from
the  Effective  Date of the grant.  Employee Stock Options  shall
not  be  repriced, i.e., there shall be no grant of  an  Employee
Stock  Option(s) to a Participant in exchange for a Participant's
agreement  to  cancellation  of  a higher-priced  Employee  Stock
Option(s) that was previously granted to such Participant.

7.3   Restrictions Relating to Incentive Stock Options.  Employee
Stock  Options  issued  in  the form of incentive  stock  options
shall,  in  addition to being subject to the terms and conditions
of   Section   7.2,  comply  with  Section  422  of   the   Code.
Accordingly, the aggregate fair-market value (determined  at  the
time the option was granted) of the Common Stock with respect  to
which incentive stock options are exercisable for the first  time
by a Participant during any calendar year (under this Plan or any
other  plan  of the Company) shall not exceed $100,000  (or  such
other  limit as may be required by the Code).  The price at which
Common Stock may be purchased upon exercise of an incentive stock
option shall not be less than 100% of the closing price at  which
a  share  of  Common  Stock trades on the  date  of  the  grant's
Effective  Date, or the next preceding trading day if  such  date
was  not  a  trading date, on the primary securities exchange  or
quotation  system  on  which the Common  Stock  is  then  traded,
provided that in the case of an incentive stock option granted to
a  Key  Employee who at the time of grant owns (as is defined  in
Section  424(d)  of  the  Code)  stock  of  the  Company  or  the
Subsidiaries  possessing  more than 10%  of  the  total  combined
voting power of all classes of stock of the Company or any of the
Subsidiaries,  the price at which Common Stock may  be  purchased
upon  exercise of such incentive stock option shall be  not  less
than  110%  of such price, on the Effective Date of the incentive
stock  option's grant.  In no event may the price at which Common
Stock  may  be  purchased upon exercise of such  incentive  stock
option be less than the par value of the Common Stock subject  to
such  incentive stock option.  From the maximum number of  shares
available  for  issuance under the Plan under  Section  6.1,  the
number  of  shares  of Common Stock that shall be  available  for
incentive stock options granted under the Plan is 165,000.

7.4   Additional Terms and Conditions.  The Committee may, by way
of  the  Award  Notice or otherwise, establish such other  terms,
conditions,  restrictions,  and  limitations,  if  any,  of   any
Employee  Stock Option Award, provided they are not  inconsistent
with the Plan.

7.5   Exercise.  Upon exercise, the option price of  an  Employee
Stock  Option  may  be paid in cash, shares of  Common  Stock,  a
combination of the foregoing, or such other consideration as  the
Committee  may  deem appropriate.  The Committee shall  establish
appropriate   methods   for  accepting  Common   Stock,   whether
restricted or unrestricted, and may impose such conditions as  it
deems appropriate on the use of such Common Stock to exercise  an
Employee  Stock Option.  Subject to Section 18.9, Employee  Stock
Options  awarded under the Plan may be exercised by  way  of  any
broker-assisted  exercise  program,  provided  such  program   is
available  at  the time of the Employee Stock Option's  exercise.
The  Committee  may permit a Participant to satisfy  any  amounts
required  to be withheld under the applicable Federal, state  and
local tax laws, in effect from time to time, by electing to  have
the  Company withhold a portion of the shares of Common Stock  to
be delivered for the payment of such taxes.

7.6   Nontransferability of Employee Stock Options.  No  Employee
Stock  Option  granted pursuant to the Plan shall be transferable
otherwise than by will or by the laws of descent and distribution
or pursuant to a qualified domestic relations order as defined by
the Code.  During the lifetime of an optionee, the Employee Stock
Option shall be exercisable only by the optionee personally or by
the optionee's legal representative.

7.7    Maximum  Award  Payable.   Notwithstanding  any  provision
contained  in  the  Plan to the contrary, the maximum  number  of
shares for which Employee Stock Options may be granted under  the
Plan  to any one Participant for a calendar year is 50,000 shares
of Common Stock.

ARTICLE 8 - STOCK APPRECIATION RIGHTS

8.1   In General.  Awards may be granted to employees in the form
of  stock appreciation rights ("SARs").  An SAR may be granted in
tandem  with all or a portion of a related Employee Stock  Option
under  the  Plan  ("Tandem SARs"), or may be  granted  separately
("Freestanding SARs").  A Tandem SAR may be granted either at the
time of the grant of the related Employee Stock Option or at  any
time  thereafter  during the term of the Employee  Stock  Option.
SARs  shall entitle the recipient to receive a payment  equal  to
the appreciation in market value of a stated number of shares  of
Common  Stock from the exercise price to the market value on  the
date  of  exercise.  All Awards under the Plan issued to  Covered
Employees  in  the form of an SAR shall qualify as  "performance-
based compensation" under Section 162(m) of the Code.

8.2  Terms and Conditions of Tandem SARs.  A Tandem SAR shall  be
exercisable  to  the  extent, and only to the  extent,  that  the
related  Employee Stock Option is exercisable, and the  "exercise
price"  of such an SAR (the base from which the value of the  SAR
is  measured at its exercise) shall be the option price under the
related  Employee  Stock Option.  However, at  no  time  shall  a
Tandem  SAR be issued if the option price of its related Employee
Stock  Option  is less than the fair-market value of  the  Common
Stock,  as determined by the Committee, on the Effective Date  of
the  Tandem SAR's grant.  If a related Employee Stock  Option  is
exercised  as to some or all of the shares covered by the  Award,
the  related Tandem SAR, if any, shall be cancelled automatically
to  the  extent of the number of shares covered by  the  Employee
Stock Option exercise.  Upon exercise of a Tandem SAR as to  some
or  all  of the shares covered by the Award, the related Employee
Stock  Option shall be cancelled automatically to the  extent  of
the  number  of shares covered by such exercise, and such  shares
shall  not again be eligible for grant in accordance with Section
6.1.   Moreover, all Tandem SARs shall not expire later  than  10
years from the Effective Date of the SAR's grant.

8.3   Terms  and  Conditions of Freestanding SARs.   Freestanding
SARs shall be exercisable in whole or in such installments and at
such  times as may be determined by the Committee.  The  exercise
price  of a Freestanding SAR shall be not less than 100%  of  the
closing price at which a share of Common Stock trades on the date
of  the grant's Effective Date, or the next preceding trading day
if  such  date was not a trading date, on the primary  securities
exchange  or quotation system on which the Common Stock  is  then
traded.   Moreover, all Freestanding SARs shall not expire  later
than  10 years from the Effective Date of the Freestanding  SAR's
grant.

8.4   Deemed  Exercise.  The Committee may provide  that  an  SAR
shall  be deemed to be exercised at the close of business on  the
scheduled expiration date of such SAR if at such time the SAR  by
its  terms remains exercisable and, if so exercised, would result
in a payment to the holder of such SAR.

8.5   Additional Terms and Conditions.  The Committee may, by way
of  the  Award  Notice or otherwise, determine such other  terms,
conditions,  restrictions, and limitations, if any,  of  any  SAR
Award, provided they are not inconsistent with the Plan.

8.6   Nontransferability of SARs.  No SAR granted pursuant to the
Plan  shall be transferable otherwise than by will or by the laws
of  descent and distribution or pursuant to a qualified  domestic
relations  order as defined by the Code.  During the lifetime  of
the  Participant to whom the SAR was granted, the  SAR  shall  be
exercisable  only  by  such  Participant  personally  or  by  the
holder's legal representative.

8.7    Maximum  Award  Payable.   Notwithstanding  any  provision
contained  in  the  Plan to the contrary, the maximum  number  of
shares  for which SARs may be granted under the Plan to  any  one
Participant for a calendar year is 10,000 shares of Common Stock.

ARTICLE 9 - PERFORMANCE RESTRICTED STOCK PROGRAM

9.1   Purpose.  The purposes of the Performance Restricted  Stock
Program are:  (a) to promote the interests of the Company and its
shareholders  by  providing  a means  to  acquire  a  proprietary
interest  in the Company to selected Key Employees who are  in  a
position  to  make  a substantial contribution to  the  continued
progress  and success of the Company; (b) to attract  and  retain
qualified  individuals to serve as Employees in those  positions;
(c) to enhance long-term performance of the Company by linking  a
meaningful portion of the compensation of selected Key  Employees
to  the achievement of specific long-term financial objectives of
the  Company;  and  (d)  to  motivate  and  reward  selected  Key
Employees  to  undertake actions to increase  the  price  of  the
Common Stock.

9.2  Eligibility.  Any Key Employee is eligible to participate in
the  Performance Restricted Stock Program.  Within the  first  90
days  of  a Performance Cycle (or, if longer, within the  maximum
period  allowed under Section 162(m) of the Code), the  Committee
will select those Key Employees who will be Participants for such
Performance Cycle.  However, designation of a Key Employee  as  a
Participant  for  a  Performance Cycle shall not  in  any  manner
entitle  the Participant to receive payment of an Award  for  the
cycle.   The  determination as to whether or not such Participant
becomes  entitled  to  payment of an Award for  such  Performance
Cycle  shall be decided solely in accordance with the  provisions
of this Article 9.  Moreover, designation of a Key Employee as  a
Participant for a particular Performance Cycle shall not  require
designation  of  such  Key  Employee  as  a  Participant  in  any
subsequent Performance Cycle and designation of one Key  Employee
as  a Participant shall not require designation of any other  Key
Employee  as a Participant in such Performance Cycle  or  in  any
other Performance Cycle.

9.3  Description of Awards.  Awards granted under the Performance
Restricted   Stock   Program  provide   Participants   with   the
opportunity  to  earn  shares  of Performance  Restricted  Stock,
subject  to the terms and conditions of Section 9.6 below.   Each
Award  granted  under  the  Plan for a  Performance  Cycle  shall
consist of a Target Award expressed as fixed number of shares  of
Performance Restricted Stock.  In the event the Performance Goals
for  the  Performance Cycle are achieved, the Performance Formula
shall  determine,  with regard to a particular Participant,  what
percentage  of the Participant's Target Award for the Performance
Cycle  will  be  earned.   All of the  Awards  issued  under  the
Performance  Restricted Stock Program to  Covered  Employees  are
intended  to  qualify  as "performance-based compensation"  under
Section 162(m) of the Code.

9.4   Procedure for Determining Awards.  Within the first 90 days
of  a Performance Cycle (or, if longer, within the maximum period
allowed  under  Section 162(m) of the Code), the Committee  shall
establish  in  writing for such Performance Cycle the  following:
the  specific Performance Criteria that will be used to establish
the   Performance  Goal(s),  the  kind(s)  and  level(s)  of  the
Performance Goal(s), whether the Performance Goal(s)  is(are)  to
apply  to  the Company, AirT, a Subsidiary, or any  one  or  more
subunits of the foregoing, the amount of the Target Award and the
Performance Formula.

9.5  Payment of Awards.

      9.5.1      Condition  to  Receipt  of  Awards.   Except  as
provided  in Section 9.8, a Participant must be employed  by  the
Company  on  the  Performance Cycle's Award Payment  Date  to  be
eligible for an Award for such Performance Cycle.

      9.5.2      Limitation.  A Participant shall be eligible  to
receive an Award for a Performance Cycle only if:

               9.5.2.1   the Performance Goals for such cycle are
achieved; and

                9.5.2.2    the  Performance  Formula  as  applied
against  such  Performance  Goals determines  that  all  or  some
portion of the Participant's Target Award has been earned for the
Performance Period.

      9.5.3      Certification.  Following the  completion  of  a
Performance Cycle, the Committee shall meet to review and certify
in writing whether, and to what extent, the Performance Goals for
the  Performance  Cycle  have been achieved.   If  the  Committee
certifies  that  the  Performance Goals have  been  achieved,  it
shall,  based upon application of the Performance Formula to  the
Performance Goals for such cycle, also calculate and  certify  in
writing for each Participant what percentage of the Participant's
Target Award has been earned for the cycle.  The Committee  shall
then  determine the actual size of each Participant's  Award  for
the  Performance  Cycle and, in so doing,  shall  apply  Negative
Discretion, if and when it deems appropriate.

      9.5.4      Negative Discretion.  In determining the  actual
size  of an individual Award to be paid for a Performance  Cycle,
the Committee may, through the use of Negative Discretion, reduce
or eliminate the amount of the Award earned under the Performance
Formula for the Performance Cycle if, in its sole judgment,  such
reduction or elimination is appropriate.

      9.5.5     Timing of Award Payments.  The Awards granted  by
the   Committee  for  a  Performance  Cycle  shall  be  paid   to
Participants  on  the  Award Payment Date  for  such  Performance
Cycle.

      9.5.6      New Participants.  Participants who are employed
by  the  Company after the Committee's selection of  Participants
for  the  Performance  Cycle, as well as Key  Employees  who  are
selected  by  the Committee to be Participants after  such  date,
shall,  in  the event Awards are paid for the Performance  Cycle,
only be entitled to a pro rata Award.  The amount of the pro rata
Award   shall  be  determined  by  multiplying  the   Award   the
Participant would have otherwise been paid if he or she had  been
a Participant for the entire Performance Cycle by a fraction, the
numerator  of which is the number of full months he  or  she  was
eligible  to  participate  in  the Performance  Restricted  Stock
Program during the Performance Cycle and the denominator of which
is the total number of full months in the Performance Cycle.  For
purposes  of  this calculation, a partial month of  participation
shall be treated as a full month of participation to the extent a
Participant  participates  in  the Performance  Restricted  Stock
Program for 15 or more days of such month; and shall not be taken
into consideration to the extent the Participant participates  in
the Performance Restricted Stock Program for less than 15 days of
such month.

      9.5.7      Noncompetition.   No Participant  shall  receive
payment  of  an Award if, subsequent to the commencement  of  the
Performance  Cycle and prior to the Award Payment Date  for  such
cycle,  the  Participant engages in the conduct prohibited  under
Section 13.3.

9.6   Performance Restricted Stock: Terms and Conditions.  Shares
of Performance Restricted Stock shall be subject to the following
terms and conditions:

      9.6.1      Subject to the provisions of the  Plan  and  the
Performance  Restricted Stock Agreement referred to in  paragraph
9.6.4,  until  the  expiration  of the  Restriction  Period,  the
Participant  shall  not be permitted to sell,  assign,  transfer,
pledge,  or  otherwise encumber shares of Performance  Restricted
Stock.

      9.6.2      Except as provided in this Section 9.6  and  the
Performance  Restricted Stock Agreement,  the  Participant  shall
have, with respect to the shares of Performance Restricted Stock,
all  of the rights of a shareholder of the Company holding shares
of  the Common Stock, including, if applicable, the right to vote
the  shares and the right to receive any cash dividends.   If  so
determined   by  the  Committee  in  the  applicable  Performance
Restricted  Stock Agreement, dividends payable  in  Common  Stock
shall  be  paid  in the form of Performance Restricted  Stock  on
which such dividend was paid, held subject to the same conditions
and restrictions of the underlying Performance Restricted Stock.

      9.6.3      Except to the extent otherwise provided  in  the
applicable  Performance Restricted Stock Agreement, this  Section
9.6.3,  and  Articles 16 and 17, upon a Participant's termination
of  employment during an unexpired Restriction Period, all shares
still  subject to such unexpired Restriction Period held by  that
Participant shall be forfeited by that Participant.  In the event
of  the  termination  of employment of a Participant  because  of
death,  Disability,  Retirement, or for an Approved  Reason,  the
unexpired  Restriction Period(s) shall lapse  as  to  a  pro-rata
portion  of  such  Performance Restricted Stock,  which  pro-rata
portion   shall  be  equal  to  the  portion  of  the  applicable
Restriction  Period(s) that has elapsed as of the  date  of  such
termination of employment, and such pro-rata portion shall become
free   of   all   restrictions  and  become  fully   vested   and
transferable.    The   remaining  portion  of   the   Performance
Restricted Stock for which the Restriction Period has not expired
shall be forfeited by the Participant.

      Notwithstanding anything contained in this Section 9.6.3 to
the  contrary, as to any Participant who, on the date of  his  or
her  termination  of  employment because  of  death,  Disability,
Retirement  or  for  an  Approved Reason, holds  any  Performance
Restricted Stock that has not been outstanding for a period of at
least  six  months  from the Effective Date of  such  Performance
Restricted  Stock  and  who on the date of  such  termination  is
required  to  report under Section 16 of the Exchange  Act,  such
Performance   Restricted  Stock  shall   not   become   free   of
restrictions, vested, and transferable pursuant to  this  Section
9.6.3 until the first business day next following the end of such
six-month period.

      9.6.4     Each Performance Restricted Stock award shall  be
confirmed  by,  and  be subject to the terms  of,  a  Performance
Restricted Stock Agreement.

9.7   Performance  Restricted  Stock  Certificates.   Shares   of
Performance Restricted Stock shall be evidenced in such manner as
the   Committee   may  deem  appropriate,  including   book-entry
registration or issuance of one or more stock certificates.   Any
certificate issued in respect of shares of Performance Restricted
Stock  shall  be  registered in the name of such Participant  and
shall   bear  an  appropriate  legend  referring  to  the  terms,
conditions,  and  restrictions  applicable  to  such  Performance
Restricted Stock, substantially in the following form:

      "The transferability of this certificate and the shares  of
stock  represented hereby are subject to the terms and conditions
(including forfeiture) of the Air Transportation Holding Company,
Inc.  Omnibus  Long-Term  Compensation  Plan  and  a  Performance
Restricted  Stock Agreement.  Copies of such Plan  and  Agreement
are on file at the offices of the Company.

      The  Committee may require that the certificates evidencing
such  shares  be  held  in  custody  by  the  Company  until  the
restrictions thereon shall have lapsed and that, as  a  condition
of  any  Award  of Performance Restricted Stock, the  Participant
shall  have delivered a stock power, endorsed in blank,  relating
to the Common Stock covered by such Award.

      If  and  when  the  applicable Restriction  Period  expires
without  a prior forfeiture of the Performance Restricted  Stock,
unlegended certificates for such shares shall be delivered to the
Participant promptly upon surrender of the legended certificates.

9.8   Termination of Employment During Performance Cycle.  In the
event  a Participant's employment is terminated prior to an Award
Payment  Date for a Performance Cycle for any reason  other  than
death,  Disability, Retirement or for an Approved Reason, all  of
such  Participant's Awards for such Performance  Cycle  shall  be
forfeited.  In the event a Participant terminates employment  due
to  death, Disability, or Retirement, or for an Approved  Reason,
prior  to  the  Award Payment Date for a Performance  Cycle,  the
Participant   shall  receive,  if  Awards  are  paid   for   such
Performance Cycle and if he or she complies with the requirements
of  Subsection 9.5.7 through the Award Payment Date, a  pro  rata
Award.   The amount of the pro rata Award shall be determined  by
multiplying  the Award the Participant would have otherwise  been
paid  if  he  or  she  had been a Participant through  the  Award
Payment  Date  for  the  Performance Cycle  by  a  fraction,  the
numerator of which is the number of full months he or she  was  a
Participant during such Performance Cycle and the denominator  of
which  is  the  total  number of full months in  the  Performance
Cycle.   For  purposes of this calculation, a  partial  month  of
participation  shall:   (1)  be  treated  as  a  full  month   of
participation  to  the extent a Participant participates  in  the
Performance Restricted Stock Program for 15 or more days of  such
month; and (2) not be taken into consideration to the extent  the
Participant  participates  in  the Performance  Restricted  Stock
Program for less than 15 days of such month.  Such pro rata Award
shall  be paid in the form of shares of Common Stock, not subject
to  any restrictions, limitations or escrow requirements.  In the
event of Disability, or Retirement or termination for an Approved
Reason,  the  pro  rata  Award shall  be  paid  directly  to  the
Participant  and,  in  the event of death, to  the  Participant's
estate.

9.9   Awards.  On or promptly after the Award Payment Date for  a
Performance  Cycle, the Committee shall issue to each Participant
the Award, in the form of shares of Performance Restricted Stock,
he  or she has earned for such Performance Cycle.  Such shares of
Performance  Restricted  Stock shall be subject  to  such  terms,
conditions, limitations, and restrictions of Section 9.6 and such
other as the Committee, in its sole judgment, determines.

9.10   Maximum  Award  Payable.   Notwithstanding  any  provision
contained in the Plan to the contrary, the Maximum Award  Payable
to  any one Participant under the Plan for a Performance Cycle is
5,000 shares of Performance Restricted Stock.

ARTICLE 10 - PERFORMANCE AWARD PROGRAM

10.1  Eligibility.   Only  Key Employees  shall  be  eligible  to
receive  Performance  Awards.  Within the  first  90  days  of  a
Performance  Period  (or, if longer, within  the  maximum  period
allowed  under  Section 162(m) of the Code), the Committee  shall
select  those  Key  Employees who will be Participants  for  such
Performance Period.  However, designation of a Key Employee as  a
Participant  for  a Performance Period shall not  in  any  manner
entitle  the Participant to receive a Performance Award  for  the
Performance  Period.   The  entitlement  of  any  Participant  to
payment of a Performance Award for such Performance Period  shall
be  decided  solely  in accordance with the  provisions  of  this
Article  10.   Moreover,  designation of  a  Key  Employee  as  a
Participant for a particular Performance Period shall not require
designation  of  such  Key  Employee  as  a  Participant  in  any
subsequent  Performance  Period,  and  designation  of  one   Key
Employee  as a Participant shall not require designation  of  any
other Key Employee as a Participant in such Performance Period or
in  any  other Performance Period.  All of the Performance Awards
issued  under the Performance Award Program to Covered  Employees
are intended to qualify as "performance-based compensation" under
Section 162(m) of the Code.

10.2  Calculation of Performance Incentive Base  Salary.   Within
the  first 90 days of a Performance Period (or, if longer, within
the maximum period allowed under Section 162(m) of the Code), the
Committee shall calculate the Participant's Performance Incentive
Base  Salary  for  the  Performance Period then  beginning.   The
Performance  Incentive  Base Salary for  any  Performance  Period
shall  be  the  Participant's base salary  as  of  the  date  the
Performance  Goal(s) for such Performance Period is  set  by  the
Committee.   Once  the  Performance  Incentive  Base  Salary   is
determined, the Performance Incentive Base Salary will not change
for that Performance Period.

10.3  Procedure  for  Determining  Awards.   With  regard  to   a
particular  Performance Period, the Committee  shall,  using  its
full  discretion,  select the length of such Performance  Period.
Within  the first 90 days of a Performance Period (or, if longer,
within  the  maximum period allowed under Section 162(m)  of  the
Code),  the  Committee  shall  establish  in  writing  for   such
Performance  Period  (i) the specific Performance  Criteria  that
will  be  used  to  establish the Performance  Goal(s)  for  such
Performance  Period  and  the  kind(s)  and  level(s)   of   such
Performance  Goal(s)  and  (ii) an  award  matrix  detailing  the
Performance Award for each Participant if such Performance  Goals
are  attained.   The amount of a Participant's Performance  Award
will   be  calculated  from  the  Performance  Formula  for   the
Performance Period, which Performance Formula shall be  equal  to
the  product of the Participant's Incentive Base Salary  and  the
percentage derived from the award matrix.

10.4  Performance  Awards.   On the  Award  Payment  Date  for  a
Performance Period, the Committee shall issue to each Participant
the  Award, in the form of cash or Common Stock, as the Committee
may  determine  in its sole discretion.  Shares of  Common  Stock
shall  be  subject  to such terms, conditions,  limitations,  and
restrictions as the Committee, in its sole judgment, determines.

10.5 Payment of Awards.

     10.5.1    Condition to Receipt of Awards. Except as provided
in  Sections 10.6 and Articles 16 and 17, a Participant  must  be
employed by the Company on the Performance Period's Award Payment
Date to be eligible for an Award for such Performance Period.

      10.5.2     Limitation.  A Participant shall be eligible  to
receive  an  Award  for a Performance Period only  if:   (i)  the
Performance  Goals for such Performance Period are achieved;  and
(ii)  the Performance Formula as applied against such Performance
Goals  determines  that all or some portion  of  the  Performance
Award  has  been  earned by that Participant for the  Performance
Period.

      10.5.3     Certification.  Following the  completion  of  a
Performance  Period,  the  Committee shall  meet  to  review  and
certify  in  writing whether, and to what extent, the Performance
Goals  for  the  Performance Period have been achieved.   If  the
Committee   certifies  that  the  Performance  Goals  have   been
achieved,  it  shall, based upon application of  the  Performance
Formula  to  the  Performance Goals for such Performance  Period,
also  calculate and certify in writing for each Participant  what
percentage  of  the  Performance Award has been  earned  for  the
Performance Period.  The Committee shall then determine the  size
of each Participant's Award for the Performance Period and, in so
doing,  shall  apply Negative Discretion if  and  when  it  deems
appropriate.

      10.5.4    Negative Discretion.  In determining the size  of
an  individual  Award  to be paid for a Performance  Period,  the
Committee may, through the use of Negative Discretion, reduce  or
eliminate  the  amount of the Award earned under the  Performance
Formula  for  the Performance Period if, in its sole  discretion,
such reduction or elimination is appropriate.

      10.5.5    Timing of Award Payments.  The Performance Awards
granted  by the Committee for a Performance Period shall be  paid
to  Participants on or promptly after the Award Payment Date  for
such Performance Period.

      10.5.6     New  Participants.   Participants  who  commence
employment  by  the  Company after the Committee's  selection  of
Participants for the Performance Period, as well as Key Employees
who  are selected by the Committee to be Participants after  such
date,  shall,  in  the event Awards are paid for the  Performance
Period,  be entitled to a pro rata Award.  The amount of the  pro
rata  Award  shall  be determined by multiplying  the  Award  the
Participant would have otherwise been paid if he or she had  been
a  Participant for the entire Performance Period by  a  fraction,
the numerator of which is the number of full months he or she was
eligible as a Participant to participate in the Performance Award
Program  during  the  Performance Period and the  denominator  of
which  is  the  total  number of full months in  the  Performance
Period.   For  purposes of this calculation, a partial  month  of
participation  shall:   (i)  be  treated  as  a  full  month   of
participation  to  the extent a Participant participates  in  the
Performance Award Program for 15 or more days of such month;  and
(ii)   not  be  taken  into  consideration  to  the  extent   the
Participant  participates in the Performance  Award  Program  for
less than 15 days of such month.

10.6 Termination of Employment During Performance Period.  In the
event  a  Participant's employment terminates because  of  death,
Disability,  Retirement or for an Approved Reason  prior  to  the
Award  Payment  Date  for a Performance Period,  the  Participant
shall  receive,  if Awards are paid for such Performance  Period,
through  the  Award  Payment Date, a pro rata Performance  Award.
The  amount of the pro rata Performance Award shall be determined
by  multiplying the Performance Award the Participant would  have
otherwise  been paid if he or she had been a Participant  through
the  Award Payment Date for the Performance Period by a fraction,
the numerator of which is the number of full months he or she was
a  Participant during such Performance Period and the denominator
of  which  is  the total number of full months in the Performance
Period.   For  purposes of this calculation, a partial  month  of
participation  shall:   (1)  be  treated  as  a  full  month   of
participation  to  the extent a Participant participates  in  the
Performance Award Program for 15 or more days of such month;  and
(2) not be taken into consideration to the extent the Participant
participates  in the Performance Award Program for less  than  15
days  of  such month.  Such pro rata Performance Award  shall  be
paid  in  the  form of cash.  In the event of death,  Disability,
Retirement  or  for an Approved Reason, the pro rata  Performance
Award shall be paid directly to the Participant and, in the event
of  death,  to  the Participant's estate, no more than  120  days
after the Award Payment Date for such Performance Period.  In the
event  a Participant's employment terminates for any reason other
than  death,  Disability, Retirement or an Approved Reason,  such
Participant shall have no right to any Performance Award for  the
Performance  Period  in  which such Participant's  employment  is
terminated.

10.7   Maximum  Award  Payable.   Notwithstanding  any  provision
contained  in  the Plan to the contrary, the maximum  Performance
Award  payable  to  any  one Participant under  the  Plan  for  a
calendar year is $100,000, or, in the event the Performance Award
is  paid  in shares of Common Stock, the equivalent Common  Stock
award  thereof, based on the closing price at which  a  share  of
Common Stock trades on the date of the grant's Effective Date, or
the  next  preceding trading day if such date was not  a  trading
date,  on the primary securities exchange or quotation system  on
which the Common Stock is then traded.

ARTICLE 11 - PERFORMANCE UNITS

11.1  Grants.   Awards may be granted in the form of  performance
units.   Performance units, as that term is used  in  this  Plan,
shall  refer to Units valued by reference to designated  criteria
established by the Committee, but performance units shall not  be
payable in Common Stock.

11.2 Performance Criteria.  Performance units shall be contingent
on   the  attainment  during  a  Performance  Period  of  certain
performance  objectives.  The length of the  Performance  Period,
the  performance objectives to be achieved during the Performance
Period,  and  the  measure of whether and  to  what  degree  such
objectives have been attained shall be conclusively determined by
the  Committee  in  the  exercise  of  its  absolute  discretion.
Performance objectives may be revised by the Committee,  at  such
times  as it deems appropriate during the Performance Period,  in
order to take into consideration any unforeseen events or changes
in circumstances.

11.3 Additional Terms and Conditions.  The Committee may, by  way
of  the  Award  Notice or otherwise, determine such other  terms,
conditions, restrictions, and limitations, if any, of  any  Award
of performance units, provided they are not inconsistent with the
Plan.

ARTICLE 12 - NONEMPLOYEE DIRECTOR OPTIONS

12.1 Eligible Awards.  Only Nonemployee Directors are eligible to
receive  Formula  Options and Deferral Options,  which  shall  be
nonqualified  stock options (i.e. options that are not  incentive
stock options within the meaning of Section 422 of the Code).

12.2 Formula Options.

      12.2.1     Each  Nonemployee Director  shall  automatically
receive,  upon  his or her respective Initial  Election  Date  an
option  to  purchase  1,000  shares  of  Common  Stock  ("Formula
Options").

     12.2.2    Terms and Conditions of Formula Options

           12.2.2.1   Exercise Price.  The price at which  Common
Stock may be purchased upon exercise of a Formula Option shall be
not  less  than  100% of the closing price at which  a  share  of
Common  Stock  traded  on the date of the grant  of  the  Formula
Option,  or the next preceding date if such date is not a trading
date,  on the primary securities exchange or quotation system  on
which  the  Common stock is then traded on the date of  grant  of
such Formula Options.

           12.2.2.2   Vesting.   Subject  to  the  provisions  of
Sections  10.3.4.3  and 10.3.4.4, after one  (1)  year  from  the
Effective date of such Formula Option, such Formula Option  shall
become  exercisable  for  all  shares  of  Common  Stock  covered
thereby;  provided  that in the event the  Service  of  the  Non-
employee Director holding such option terminates prior to the end
of such vesting period for reason other than death, Disability or
Retirement,  such  option  shall be  forfeited  and  shall  lapse
immediately.

          12.2.2.3  Term of Exercisability.  Upon the termination
of  the  Service  of  a Nonemployee Director  because  of  death,
Disability  or Retirement, the nonexercised Formula Options  held
by such Nonemployee Director shall become immediately exercisable
as  to  100%  of  the  Shares of Common  Stock  covered  thereby;
provided  that  in  the  event the Service  of  the  Non-employee
Director holding such option terminates prior to the end of  such
vesting  period  for  reason  other  than  death,  Disability  or
Retirement,  such  option  shall be  forfeited  and  shall  lapse
immediately.   Once  any  portion of  a  Formula  Option  becomes
exercisable, it shall remain exercisable for the lesser  of  (10)
ten  years after the date of grant,  (1) one year from  the  date
the  Participant  shall  cease, by reason  of  the  Participant's
death, Disability or Retirement, to be a Nonemployee Director, or
(3)  three months from the date the Participant shall cease,  for
any reason other than such Participant's death or Disability,  to
be  a  Nonemployee  Director;  provided,  however,  that  if  the
Participant shall cease to be a Nonemployee Director and then die
or  become  Disabled within three months thereafter, the  Formula
Option  shall remain exercisable for one year after the  date  of
the  Participant's death.  Notwithstanding any contrary provision
in  the  Plan,  upon  a Change in Control, no  additional  terms,
conditions, restrictions, or limitations shall be placed upon any
Formula  Option  granted under this Article 12 and  each  Formula
Option outstanding shall become immediately exercisable as to all
of the shares of Common Stock covered thereby and shall be valued
and cashed out on the basis of the Change in Control Price within
90  days of the Change in Control; provided that any such options
having  an exercise price equal to or greater than the Change  in
Control Price shall have a value of zero, shall be cancelled, and
the owner thereof shall not be entitled to any payment.

           12.2.2.4   Exercise and Payment.  Upon  exercise,  the
option  price of a Formula Option may be paid in cash, shares  of
Common  Stock,  a  combination of the foregoing,  or  such  other
consideration  as  the  Committee  may  deem  appropriate.    The
Committee  shall  establish  appropriate  methods  for  accepting
Common  Stock, whether restricted or unrestricted, and may impose
such conditions as it deems appropriate on the use of such Common
Stock to exercise a stock option.  Subject to Section 18.9, stock
options  awarded  under the Plan may be exercised  by  way  of  a
broker-assisted  exercise  program,  provided  such  program   is
available  at  the time of the option's exercise.  The  Committee
may  permit a Participant to satisfy any amounts required  to  be
withheld  under the applicable federal, state and local tax  laws
in  effect  from  time to time, by electing to have  the  Company
withhold  a portion of the shares of Common Stock to be delivered
for the payment of such taxes.

           12.2.2.5  Option Agreements.  Each Award of a  Formula
Option  under this Plan shall be evidenced by a written agreement
signed by the Participant.

      12.2.3     The  provisions  of  the  formula  contained  in
Subsections 12.2.1 and 12.2.2 of this Plan shall not  be  altered
or  amended  more  often  than every six  (6)  months  except  as
necessary  to comply with the Code and the rules and  regulations
thereunder.

      12.2.4     Rule  16b-3 Compliance.  The  grant  of  Formula
Options is intended to comply in all respects with Rule 16b-3  of
the  Exchange  Act  such that the grant of  all  Formula  Options
issued  under the Plan shall be exempt from Section 16(b) of  the
Exchange Act.

12.3 Deferral Options.

      12.3.1     Election.  Each year, each Nonemployee  Director
may,  on or before the date of the scheduled annual shareholders'
meeting  of  AirT for such year, make an irrevocable election  to
receive  Deferral Options in lieu of all or any part of the  cash
compensation to which such member would otherwise be entitled  as
a  member  of  the  Board and any committee thereof  (other  than
reimbursement  of  expenses) for the period from  such  scheduled
annual  shareholders' meeting to the day prior to  the  following
annual  meeting.  The Effective Date of any such Deferral  Option
shall   be  the  date  of  AirT's  annual  shareholders'  meeting
beginning  the compensation period to which such Deferral  Option
relates,  provided that the effectiveness of any Deferral  Option
granted  hereunder is conditioned on the prior approval  of  such
Deferral Option by the Committee or the Board.   An election made
hereunder  shall  be effective for the grant of  such  number  of
Deferral  Options as is determined by the Committee to constitute
an amount of Deferral Options equivalent on the Effective Date to
the  cash  compensation elected to be foregone.  In  making  such
determination of equivalency, the Committee shall rely  upon  the
Black-Scholes  option pricing model or other  generally  accepted
method of pricing options.

     12.3.2    Terms and Conditions of Deferral Options.

           12.3.2.1   Exercise Price.  The price at which  Common
Stock  may be purchased upon exercise of a Deferral Option  shall
be  not  less than 100% of the closing price at which a share  of
Common  Stock  trades on the date of the grant  of  the  Deferral
Option,  or the next preceding date if such date is not a trading
date,  on the primary securities exchange or quotation system  on
which the Common Stock is then traded.

           12.3.2.2   Vesting.   Subject  to  the  provisions  of
Sections  12.3.2.3  and 10.3.4.4, after one  (1)  year,  or  such
longer  time as the Committee shall determine, from the Effective
date  of such Deferral Option, such Deferral Option shall  become
exercisable for all shares of Common Stock covered thereby.

           12.3.2.3  Acceleration due to Termination of  Service,
Change in Control.  If the Service of any Participant ends during
the  1-year  period for which cash compensation has been  waived,
such  Participant's rights in such Deferral Option  shall  be  as
follows:

                 12.3.2.3.1      Upon  the  termination  of  such
Nonemployee  Director's Service because of death,  Disability  or
Retirement  during such 1-year period, each unexercised  Deferral
Option held by that Nonemployee Director shall become immediately
exercisable  as  to  100% of the shares of Common  Stock  covered
thereby;

                 12.3.2.3.2      Upon  the  termination  of  such
Nonemployee Director's Service during such 1-year period for  any
reason  other than death, Disability or Retirement, a portion  of
the shares of Common Stock covered by the Deferral Option thereby
shall become immediately exercisable as follows:

                     12.3.2.3.2.1    The shares of  Common  Stock
covered  by  a  Deferral Option attributable to the  election  to
forgo  cash  compensation for the 1-year  period  in  which  such
Participant's  Service  terminates shall  be  prorated  and  such
Option shall become immediately exercisable to the extent of that
portion of the shares of Common Stock attributable to the time of
Service during that 1-year period; and

                     12.3.2.3.2.2     As to the  balance  of  the
shares of Common Stock covered by such Deferral Option for such 1-
year period, such Deferral Option shall lapse immediately.

                Notwithstanding  any contrary  provision  in  the
Plan,  upon a Change in Control, no additional terms, conditions,
restrictions,  or limitations shall be placed upon  any  Deferral
Option  granted  under this Article 12, and each Deferral  Option
outstanding shall become immediately exercisable as to all of the
shares  of  Common Stock covered thereby and shall be valued  and
cashed out on the basis of the Change in Control Price within  90
days  of  the  Change in Control; provided that any such  options
having  an exercise price equal to or greater than the Change  in
Control Price shall have a value of zero, shall be cancelled, and
the owner thereof shall not be entitled to any payment.

           12.3.2.4  Term of Exercisability.  Once any portion of
a   Deferral   Option  becomes  exercisable,  it   shall   remain
exercisable only for the lesser of

                     12.3.2.4.0.1   10 years after  the  date  of
grant  (or  such  lesser number of years as the  Committee  shall
determine) or

                    12.3.2.4.0.2   1-year (or such greater number
of years as the Committee shall determine) after the Service of a
Participant terminates for any reason.  Subject to the provisions
of Section 12.3.2.3.1, if applicable, each such Deferral Director
Option  may be exercised in whole or in part not earlier  than  6
months (or such longer time as the Committee shall provide in the
written agreement referred to in Section 12.3.2.6) after the date
of grant and shall expire on the date ten years after the date of
grant, or such earlier date as determined by the Committee.

           12.3.2.5   Exercise and Payment.  Upon  exercise,  the
option price of a Deferral Option may be paid in cash, shares  of
Common  Stock,  a  combination of the foregoing,  or  such  other
consideration  as  the  Committee  may  deem  appropriate.    The
Committee  shall  establish  appropriate  methods  for  accepting
Common  Stock, whether restricted or unrestricted, and may impose
such conditions as it deems appropriate on the use of such Common
Stock to exercise a stock option.  Subject to Section 18.9, stock
options  awarded  under the Plan may be exercised  by  way  of  a
broker-assisted  exercise  program,  provided  such  program   is
available  at  the time of the option's exercise.  The  Committee
may  permit a Participant to satisfy any amounts required  to  be
withheld  under the applicable federal, state and local tax  laws
in  effect  from  time to time, by electing to have  the  Company
withhold  a portion of the shares of Common Stock to be delivered
for the payment of such taxes.

           12.3.2.6  Option Agreements.  Each Award of a Deferral
Option  under this Plan shall be evidenced by a written agreement
signed by the Nonemployee Director.

      12.3.3     Rule  16b-3 Compliance.  The grant  of  Deferral
Options is intended to comply in all respects with Rule 16b-3  of
the  Exchange  Act  such that the grant of all  Deferral  Options
issued  under the Plan shall be exempt from Section 16(b) of  the
Exchange Act.

12.4  Nontransferability  of Formula and  Deferral  Options.   No
Formula or Deferral Option granted pursuant to the Plan shall  be
transferable otherwise than by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations  order
as  defined by the Code.  During the lifetime of an optionee, the
Formula  Option and Deferral Option shall be exercisable only  by
the    optionee   personally   or   by   the   optionee's   legal
representative.

ARTICLE 13 - PAYMENT OF AWARDS

13.1  In  General.   In the absence of a Plan  provision  to  the
contrary,  payment  of  Awards may,  at  the  discretion  of  the
Committee, be made in cash, Common Stock, a combination  of  cash
and  Common Stock, or any other form of property as the Committee
shall determine.  In addition, payment of Awards may include such
terms, conditions, restrictions, and limitations, if any, as  the
Committee  deems appropriate, including, in the  case  of  Awards
paid  in  the form of Common Stock, restrictions on transfer  and
forfeiture provisions; provided, however, such terms, conditions,
restrictions, and limitations are not inconsistent with the Plan.
Further, payment of Awards may be made in the form of a lump  sum
or installments, as determined by the Committee.

13.2  Termination of Employment.  If employment with the  Company
of  a  Key Employee who is a Participant terminates for a  reason
other than death, Disability, Retirement, or any Approved Reason,
unpaid  Awards  granted  under Articles  7,  8,  9,  10  and  11,
including,  but  not  by  way  of limitation,  Awards  earned  or
exercised  but  not yet paid, all unpaid dividends  and  dividend
equivalents, and all interest accrued on the foregoing  shall  be
cancelled   or  forfeited,  as  the  case  may  be,  unless   the
Participant's  Award  Notice provides otherwise.   The  Committee
shall,  notwithstanding Sections 4.4 and 18.11 to  the  contrary,
have  the  authority  to  promulgate  rules  and  regulations  to
determine  the treatment of an Award under the Plan in the  event
of  the  Key Employee Participant's death, Disability, Retirement
or  termination for an Approved Reason; provided, however, in the
case  of  Awards  issued under the Performance  Restricted  Stock
Program,  such rules and regulations are consistent with  Section
9.8,  and  in  the  case  of Awards under the  Performance  Award
Program,  such rules and regulations are consistent with  Section
10.6.

13.3  Noncompetition.  As to all Awards made pursuant to Articles
7,  8, 9, 10 and 11, unless the Award Notice specifies otherwise,
a Participant shall forfeit all unpaid Awards, including, but not
by  way  of  limitation, Awards earned or exercised but  not  yet
paid,  all  unpaid  dividends and dividend  equivalents  and  all
interest, if any, accrued on the foregoing if, (i) in the opinion
of  the  Committee,  the Participant, without the  prior  written
consent  of  the Company, engages directly or indirectly  in  any
manner   or  capacity  as  principal,  agent,  partner,  officer,
director, stockholder, employee, or otherwise, in any business or
activity competitive with the business conducted by AirT  or  any
Subsidiary; (ii) at any time divulges to any person or any entity
other  than the Company any trade secrets, methods, processes  or
the  proprietary or confidential information of the  Company;  or
(iii) the Participant performs any act or engages in any activity
that  the  Committee determines is inimical to the best interests
of the Company.  For purposes of this Section 13.3, a Participant
shall not be deemed a stockholder if the Participant's record and
beneficial  ownership  amount  to  not  more  than  5%   of   the
outstanding capital stock of any company subject to the  periodic
and other reporting requirements of the Exchange Act.

ARTICLE 14 - DIVIDEND AND DIVIDEND EQUIVALENT

      If  an  Award is granted in the form of a Restricted  Stock
Award, stock option, or Common Stock share, or in the form of any
other stock-based grant, the Committee may choose, at the time of
the  grant of the Award or any time thereafter up to the time  of
the  Award's  payment,  to  include as  part  of  such  Award  an
entitlement to receive dividends or dividend equivalents, subject
to such terms, conditions, restrictions, and limitations, if any,
as   the   Committee  may  establish.   Dividends  and   dividend
equivalents shall be paid in such form and manner (i.e., lump sum
or  installments)  and  at such time(s) as  the  Committee  shall
determine.   All dividends or dividend equivalents that  are  not
paid   currently  may,  at  the  Committee's  discretion,  accrue
interest,  be  reinvested into additional shares of Common  Stock
or, in the case of dividends or dividend equivalents credited  in
connection  with  performance shares, be credited  as  additional
performance shares and paid to the Participant if and  when,  and
to  the extent that, payment is made pursuant to such Award.  The
total  number  of  shares available for grant under  Section  6.1
shall  not  be  reduced  to  reflect any  dividends  or  dividend
equivalents that are reinvested into additional shares of  Common
Stock or credited as additional performance shares.

ARTICLE 15 - DEFERRAL OF AWARDS

      At  the discretion of the Committee, payment of any  Award,
dividend, or dividend equivalent, or any portion thereof, may  be
deferred  by  a Participant until such time as the Committee  may
establish.   All  such  deferrals shall be  accomplished  by  the
delivery  of  a written, irrevocable election by the  Participant
prior  to the time established by the Committee for such purpose,
on  a form provided by the Company.  Further, all deferrals shall
be  made in accordance with administrative guidelines established
by  the  Committee to ensure that such deferrals comply with  all
applicable requirements of the Code.  Deferred payments shall  be
paid  in  a  lump  sum  or installments,  as  determined  by  the
Committee.   Deferred Awards may also be credited with  interest,
at such rates to be determined by the Committee and, with respect
to those deferred Awards denominated in the form of Common Stock,
with dividends or dividend equivalents.

ARTICLE 16 - CHANGE IN OWNERSHIP

16.1  Background.  The provisions of this Article 16 shall  apply
only  to Awards made pursuant to Articles 7, 8, 9, 10 and 11  and
shall   not  apply  to  Awards  made  pursuant  to  Article   12.
Notwithstanding  any provision contained in the Plan,  including,
but  not  limited to, Sections 4.4 and 18.11, the  provisions  of
this  Article 16 shall control over any contrary provision.  Upon
a  Change  In Ownership:  (i) the terms of this Article 16  shall
immediately become operative, without further action  or  consent
by any person or entity; (ii) all terms, conditions, restrictions
and  limitations  in effect on any unexercised, unearned,  unpaid
and/or  deferred  Award,  or any other outstanding  Award,  shall
immediately  lapse as of the date of such event; (iii)  no  other
terms,  conditions,  restrictions  and/or  limitations  shall  be
imposed  upon  any  Awards  on or after  such  date,  and  in  no
circumstance shall an Award be forfeited on or after  such  date;
and  (iv)  except  in those instances where a prorated  Award  is
required  to  be  paid  under this Article 16,  all  unexercised,
unvested,  unearned and/or unpaid Awards or any other outstanding
Awards  shall  automatically become one  hundred  percent  (100%)
vested immediately.

16.2  Dividends  and  Dividend Equivalents.   Upon  a  Change  In
Ownership, all unpaid dividends and dividend equivalents and  all
interest accrued thereon, if any, shall be treated and paid under
this  Article  16 in the identical manner and time as  the  Award
under  which  such  dividends or dividend equivalents  have  been
credited.  For example, if upon a Change In Ownership,  an  Award
under  this  Article 16 is to be paid in a prorated fashion,  all
unpaid  dividends and dividend equivalents with respect  to  such
Award  shall  be  paid  according to the  same  formula  used  to
determine the amount of such prorated Award.

16.3 Treatment of Performance Units and Performance Awards.  Upon
a  Change In Ownership, any Participant in the Performance  Award
Program or Performance Unit Program, whether or not he or she  is
still  employed  by  the  Company, shall  be  paid,  as  soon  as
practicable but in no event later than 90 days after  the  Change
In  Ownership,  a pro rata Award for each Performance  Period  in
which  the  Participant  was selected to participate  and  during
which  the  Change  In  Ownership  occurs  ("Current  Performance
Period").   The amount of such pro rata Award shall be determined
by annualizing (over the current Performance Period) the level of
the  applicable Performance Criteria for the Performance Goal for
such  Current  Performance Period up to  the  end  of  the  month
preceding  the  Change In Ownership, determining the  Performance
Award  that  would have been payable for such Performance  Period
had such annualized level been the actual level of the applicable
Performance  Criteria for the Performance Goal for  such  Current
Performance  Period,  and multiplying such Performance  Award  so
determined  by a fraction, the numerator of which  shall  be  the
number of full months in the Current Performance Period prior  to
the  date of the Change In Ownership and the denominator of which
shall  be  the  total  number of full months in  the  Performance
Period.  For purposes of this calculation, a partial month  shall
be  treated as a full month to the extent 15 or more days in such
month have elapsed.

16.4  Treatment  of  Awards  under Performance  Restricted  Stock
Program.   Upon  a  Change In Ownership, any Participant  of  the
Performance Restricted Stock Program, whether or not he or she is
still  employed  by  the  Company, shall  be  paid,  as  soon  as
practicable but in no event later than 90 days after  the  Change
In  Ownership,  a  pro rata Award for each Performance  Cycle  in
which  the  Participant  was selected to participate  and  during
which the Change In Ownership occurs.  The amount of the pro rata
Award  shall  be determined by multiplying the Target  Award  for
such  Performance  Cycle  for Participants  by  a  fraction,  the
numerator  of  which shall be the number of full  months  in  the
Performance  Cycle prior to the date of the Change  In  Ownership
and  the  denominator of which shall be the total number of  full
months   in  the  Performance  Cycle.   For  purposes   of   this
calculation, a partial month shall be treated as a full month  to
the extent 15 or more days in such month have elapsed.

16.5  Valuation  of  Awards.  Upon a  Change  In  Ownership,  all
outstanding  shares  of  Common Stock, Freestanding  SARs,  stock
options  (including  incentive stock options),  Restricted  Stock
Awards,  performance units and all other outstanding  stock-based
Awards (including those earned as a result of the application  of
Section 16.4 above and those granted by the Committee pursuant to
its  authority under Subsection 4.2(m) hereof), shall  be  valued
and  cashed out on the basis of the Change In Control  Price  and
shall be cancelled; provided that any Options granted under  this
Plan having an exercise price equal to or greater than the Change
in  Control Price shall have a value of zero, shall be cancelled,
and the owner thereof shall not be entitled to any payment.

16.6  Payment  of  Awards.   Upon  a  Change  In  Ownership,  any
Participant,  whether or not he or she is still employed  by  the
Company,  shall  be paid, in a single lump sum cash  payment,  as
soon as practicable but in no event later than 90 days after  the
Change  In  Ownership, all of his or her shares of Common  Stock,
Freestanding  SARs,  stock  options  (including  incentive  stock
options),   Restricted  Stock  Awards,  Performance  Awards   and
(including  those  earned  as a result  of   the  application  of
Section  16.3 above) performance units, and all other outstanding
stock-based  Awards (including those earned as a  result  of  the
application  of  Section  16.4 above and  those  granted  by  the
Committee  pursuant  to  its authority  under  Subsection  4.2(m)
hereof) and all other outstanding Awards.

16.7  Deferred  Awards.  Upon a Change In Ownership,  all  Awards
deferred by a Participant under Article 15 hereof, but for  which
he or she has not received payment as of such date, shall be paid
in  a single lump sum cash payment as soon as practicable, but in
no  event later than 90 days after the Change In Ownership.   For
purposes  of  making such payment, the value of all Awards  which
are  stock  based  shall be determined by the Change  In  Control
Price.

16.8  Section  16 of the Exchange Act.  Notwithstanding  anything
contained  in  this Article 16 to the contrary,  any  Participant
who,  on  the  date of the Change In Ownership, holds  any  stock
options or Freestanding SARs that have not been outstanding for a
period of at least six months from their date of grant and who on
such  date is required to report under Section 16 of the Exchange
Act  shall  not  be paid such an Award until the first  day  next
following the end of such six-month period.

16.9  Miscellaneous.   Upon  a  Change  In  Ownership,  (i)   the
provisions  of Sections 13.2, 13.3 and 18.3 hereof  shall  become
null  and  void and of no further force and effect; and  (ii)  no
action,  including, but not by way of limitation, the  amendment,
suspension,  or  termination of the Plan, shall  be  taken  which
would  affect  the rights of any Participant or the operation  of
the  Plan with respect to any Award to which the Participant  may
have  become entitled hereunder on or prior to the date  of  such
action or as a result of such Change In Ownership.

ARTICLE 17 - CHANGE IN CONTROL

17.1 Background.  Notwithstanding any provision contained in  the
Plan, including, but not limited to, Sections 4.4 and 18.11,  the
provisions  of  this Article 17 shall control over  any  contrary
provision except with respect to Awards made pursuant to  Article
12 (as to which Article 12 this Article 17 shall not apply).  All
Participants shall be eligible for the treatment afforded by this
Article  17  if  their  employment terminates  within  two  years
following a Change in Control, unless the termination is  due  to
(i)  death, (ii) Disability, (iii) Cause, (iv) termination by the
Participant other than for Good Reason, or (v) Retirement.

17.2  Vesting  and  Lapse of Restrictions.  If a  Participant  is
eligible  for  treatment under this Article 17, (i)  all  of  the
terms, conditions, restrictions and limitations in effect on  any
of  his  or  her  unexercised, unearned, unpaid  and/or  deferred
Awards  shall  immediately lapse as of the date  of  his  or  her
termination  of  employment,  (ii) no  other  terms,  conditions,
restrictions and/or limitations shall be imposed upon any of  his
or her Awards on or after such date, and in no event shall any of
his  or her Awards be forfeited on or after such date; and  (iii)
except  in those instances where a prorated Award is required  to
be  paid  under  this Article 17, all of his or her  unexercised,
unvested,  unearned  and/or  unpaid  Awards  shall  automatically
become one hundred percent (100%) vested immediately upon his  or
her termination of employment.

17.3  Dividends  and Dividend Equivalents.  If a  Participant  is
eligible for treatment under this Article 17, all of his  or  her
unpaid  dividends  and  dividend  equivalents  and  all  interest
accrued  thereon, if any, shall be treated and  paid  under  this
Article  17  in the identical manner and time as the Award  under
which such dividends or dividend equivalents have been credited.

17.4 Treatment of Awards under the Performance Award Program  and
Performance  Unit  Program.   If a Participant  is  eligible  for
treatment  under this Article 17, for each Performance Period  in
which  the  Participant  was selected to participate  and  during
which  his  or her termination of employment occurs ("Termination
Current  Performance Period"), he or she shall be  considered  to
have  earned and, therefore, be entitled to receive that prorated
portion  of  the  Award for such Termination Current  Performance
Period.  The amount of such pro rata Award shall be determined by
assuming  that the Performance Goal for such Termination  Current
Performance  Period  was  attained at a  level  of  100%  or  the
equivalent thereof, determining the Performance Award that  would
have been payable for such Performance Period had the Performance
Goal  been attained at a level of 100% or the equivalent thereof,
and  multiplying  such  Performance  Award  so  determined  by  a
fraction,  the  numerator of which shall be the  number  of  full
months in the Termination Current Performance Period prior to the
date  of  the  Change In Ownership and the denominator  of  which
shall  be  the  total  number of full months in  the  Performance
Period.

     The Participant shall be paid, as soon as practicable but in
no  event  later  than  90 days after the  date  of  his  or  her
termination  of  employment, a pro rata Award so  determined,  in
cash.

17.5  Treatment  of  Awards  under Performance  Restricted  Stock
Program.   If  a Participant of the Performance Restricted  Stock
Program  is eligible for treatment under this Article 17,  he  or
she  shall be paid, as soon as practicable but in no event  later
than  90  days  after  the  date of his  or  her  termination  of
employment, a pro rata Award for each Performance Cycle in  which
the  Participant was selected to participate and during which the
Change  In  Ownership occurs.  The amount of the pro  rata  Award
shall  be  determined by multiplying the Target  Award  for  such
Performance  Cycle  for  such Participants  by  a  fraction,  the
numerator  of  which shall be the number of full  months  in  the
Performance Cycle prior to the date of his or her termination  of
employment and the denominator of which shall be the total number
of  full  months in the Performance Cycle.  For purposes of  this
calculation, a partial month shall be treated as a full month  to
the  extent 15 or more days in such month have elapsed.   To  the
extent  Target  Awards  have not yet  been  established  for  the
Performance Cycle, the Target Award for the immediately preceding
Performance Cycle shall be used.

17.6  Valuation  of  Awards.  If a Participant  is  eligible  for
treatment under this Article 17, his or her Award shall be valued
and cashed out in accordance with the provisions of Section 16.5.

17.7  Payment  of  Awards.   If  a Participant  is  eligible  for
treatment  under this Article 17, he or she shall be paid,  in  a
single  lump sum cash payment, as soon as practicable but  in  no
event later than 90 days after the date of his or her termination
of  employment,  all  of  his  or her  shares  of  Common  Stock,
Freestanding  SARs,  stock  options  (including  incentive  stock
options),   Restricted  Stock  Awards,  Performance  Awards   and
performance units and shares (including those earned as a  result
of  the application of Section 17.4 above), all other outstanding
stock-based  Awards (including those earned as a  result  of  the
application  of  Section  17.5 above and  those  granted  by  the
Committee  pursuant  to  its authority  under  Subsection  4.2(m)
hereof) and all other outstanding Awards.

17.8 Deferred Awards.  If a Participant is eligible for treatment
under  this  Article  17, all of his or her deferred  Awards  for
which payment has not been received as of the date of his or  her
termination of employment shall be paid to the Participant  in  a
single  lump sum cash payment as soon as practicable, but  in  no
event  later  than  90 days after the date of  the  Participant's
termination.  For purposes of making such payment, the  value  of
all  Awards  which  are stock based shall be  determined  by  the
Change In Control Price.

17.9  Section  16 of the Exchange Act.  Notwithstanding  anything
contained  in  this Article 17 to the contrary,  any  Participant
who,  on  the date of his or her termination of employment  under
the conditions described in Section 17.1, holds any stock options
or  Freestanding SARs that have not been outstanding for a period
of  at  least six months from their date of grant and who on  the
date  of such termination is required to report under Section  16
of  the Exchange Act shall not be paid such Award until the first
business day next following the end of such six-month period.

17.10      Miscellaneous.   Upon a Change  In  Control,  (i)  the
provisions  of Sections 13.2, 13.3 and 18.3 hereof  shall  become
null and void and of no force and effect insofar as they apply to
a  Participant  who  has  been terminated  under  the  conditions
described  in Section 17.1 above, and (ii) no action,  including,
but  not  by  way  of  limitation, the amendment,  suspension  or
termination  of the Plan, shall be taken which would  affect  the
rights  of  any  Participant or the operation of  the  Plan  with
respect  to  any Award to which the Participant may  have  become
entitled  hereunder  on or prior to the date  of  the  Change  In
Control or to which he or she may become entitled as a result  of
such Change In Control.

17.11      Legal Fees.  AirT shall pay all legal fees and related
expenses  incurred  by  a Participant in  seeking  to  obtain  or
enforce  any payment, benefit or right he or she may be  entitled
to  under  the Plan after a Change In Control; provided, however,
the  Participant shall be required to repay any such  amounts  to
AirT  to  the extent a court of competent jurisdiction  issues  a
final  and  non-appealable order setting forth the  determination
that  the  position  taken by the Participant  was  frivolous  or
advanced in bad faith.

ARTICLE 18 - MISCELLANEOUS

18.1 Nonassignability.  No Awards rights shall be subject in  any
manner  to  alienation, anticipation, sale, transfer  (except  by
will  or  the  laws  of  descent and  distribution),  assignment,
pledge, or encumbrance prior to payment pursuant to the Plan.

18.2  Withholding Taxes.  The Company shall be entitled to deduct
from  any payment under the Plan, regardless of the form of  such
payment, the amount of all applicable income and employment taxes
required  by law to be withheld with respect to such  payment  or
may require the Participant to pay to it such tax prior to and as
a  condition  of the making of such payment.  In accordance  with
any  applicable  administrative guidelines  it  establishes,  the
Committee  may  allow a Participant to pay the  amount  of  taxes
required by law to be withheld from an Award by withholding  from
any payment of Common Stock due as a result of such Award, or  by
permitting the Participant to deliver to the Company,  shares  of
Common  Stock  having a fair-market value, as determined  by  the
Committee,  equal  to  the  amount of such  required  withholding
taxes.

18.3  Amendments  to  Awards.  The  Committee  may  at  any  time
unilaterally  amend any unexercised, unearned, or  unpaid  Award,
including,  but not by way of limitation, Awards earned  but  not
yet  paid, to the extent it deems appropriate; provided, however,
that  any  such amendment which, in the opinion of the Committee,
is  adverse  to  the Participant shall require the  Participant's
consent.

18.4 Regulatory Approvals and Listings.  Notwithstanding anything
contained in this Plan to the contrary, the Company shall have no
obligation  to  issue  or deliver certificates  of  Common  Stock
evidencing  Stock  Awards or any other  Award  resulting  in  the
payment  of  Common  Stock  prior to (i)  the  obtaining  of  any
approval from any governmental agent which the Company shall,  in
its sole discretion, determine to be necessary or advisable, (ii)
the admission of such shares to listing on the stock exchange  on
which the Common Stock may be listed and (iii) the completion  of
any  registration or other qualification of said shares under any
state or Federal law or ruling of any governmental body that  the
Company  shall, in its sole discretion, determine to be necessary
or advisable.

18.5  No  Right to Continued Employment or Grants.  Participation
in  the  Plan shall not give any Employee any right to remain  in
the  employ of AirT or any Subsidiary.  AirT, or, in the case  of
employment with a Subsidiary, the Subsidiary, reserves the  right
to  terminate any Employee at any time.  Further, the adoption of
this  Plan shall not be deemed to give any Employee or any  other
individual  any right to be selected as a Participant  or  to  be
granted an Award.

18.6   Amendment/Termination.   The  Committee  may  suspend   or
terminate the Plan at any time with or without prior notice.   In
addition,  the  Committee may, from time  to  time  and  with  or
without  prior notice, amend the Plan in any manner, but may  not
without  shareholder  approval adopt  any  amendment  that  would
require  the vote of the shareholders of AirT pursuant to Section
16  of  the Exchange Act or Section 162(m) of the Code, but  only
insofar as such amendment affects Covered Employees.

18.7  Governing Law.  The Plan shall be governed by and construed
in  accordance  with  the laws of the State  of  North  Carolina,
except as superseded by applicable Federal Law.

18.8  No  Right,  Title,  or  Interest  in  Company  Assets.   No
Participant shall have any rights as a shareholder as a result of
participation in the Plan until the date of issuance of  a  stock
certificate  in  his or her name and, in the case  of  restricted
shares   of  Common  Stock,  such  rights  are  granted  to   the
Participant under the Plan.  To the extent any person acquires  a
right  to receive payments from the Company under the Plan,  such
rights  shall  be  no  greater than the rights  of  an  unsecured
creditor  of the Company and the Participant shall not  have  any
rights in or against any specific assets of the Company.  All  of
the Awards granted under the Plan shall be unfunded.

18.9  Section  16  of the Exchange Act.  In order  to  avoid  any
Exchange  Act violations, the Committee may, from time  to  time,
impose  additional restrictions upon an Award, including but  not
limited   to,   restrictions  regarding  tax   withholdings   and
restrictions  regarding  the Participant's  ability  to  exercise
Awards under any broker-assisted exercise program.

18.10      No Guarantee of Tax Consequences.  No person connected
with  the  Plan in any capacity, including, but not  limited  to,
AirT  and its Subsidiaries and their directors, officers,  agents
and  employees makes any representation, commitment, or guarantee
that  any  tax treatment, including, but not limited to, Federal,
state  and local income, estate and gift tax treatment,  will  be
applicable  with respect to amounts deferred under the  Plan,  or
paid  to  or for the benefit of a Participant under the Plan,  or
that  such  tax  treatment will apply to or  be  available  to  a
Participant on account of participation in the Plan.

18.11      Compliance with Section 162(m).  If any  provision  of
the  Plan,  other  than  the application of  those  contained  in
Articles  17  or 18 hereof, would cause the Awards granted  to  a
Covered Person not to qualify as "performance-based compensation"
under  Section 162(m) of the Code, that provision, insofar as  it
pertains to the Covered Person, shall be severed from, and  shall
be deemed not to be a part of this Plan, but the other provisions
hereof shall remain in full force and effect.

18.12      Other Benefits.  No Award granted under the Plan shall
be  considered  compensation for purposes of  computing  benefits
under  any retirement plan of the Company nor affect any benefits
or  compensation under any other benefit or compensation plan  of
the Company now or subsequently in effect.


