Travel Salem working with new airline with hopes of resuming commercial air service

Travel Salem told city councilors Monday it is in talks with an unnamed commercial airline that could potentially pick up commercial air service after Avelo Airlines leaves town next month.

Avelo announced on Monday, July 14, that it planned to stop flying out of Salem starting Aug. 10, after less than two years of operation. The news surprised city and business leaders who spent years, and millions of dollars, courting the commercial air service.

Days after the announcement two top airport officials including Airport Manager John Paskell submitted their letters of resignation. Neither gave a reason for their departure.

City councilors only briefly discussed Avelo’s departure toward the end of their meeting. The session gave little indication which direction councilors might lean about approving an agreement with a new airline and spending further city money to subsidize its operations.

Travel Salem CEO Angie Villery estimated it would take between $1 and $3 million to create a revenue guarantee similar to the one that subsidized Avelo. In Avelo’s case, that money came from a federal grant and private donations collected by Travel Salem, not city coffers.

Councilors raised questions for city staff about the financial impacts of Avelo’s sojourn in Salem and the impacts from its abrupt departure. City staff said the matter will be clarified during a work session on Aug. 18.

Any future agreements with a new airline similar to the one the city had with Avelo would require action from the city council.

While Villery said during public comment that she is disheartened by Avelo’s departure, she is also thankful the company brought service to Salem after 15 years without commercial flights. She said in the first 18 months the area benefited from $32 million being spent by visitors in the local community, or about $1.8 million per month.

“We are hard at work recruiting another carrier and we have identified several with one that has immediate potential, and could deliver top routes that our community flies to like Phoenix and San Francisco for example,” Villery said.

Villery said Travel Salem surveyed 600 people in Salem and 85% of them supported having commercial air service and approved of the potential flight destinations.

“Some respondents noted concerns about deportation flights and Salem general fund expenditures for airport operations,” Villery said. “I would like to share that the carrier we are in negotiation with does not do deportation flights.”

Villery said Travel Salem is working on securing a portion of the funds that will be needed to secure a deal with an airline. That money could bring between one and three routes to flying out of the Salem airport, Villery said.

“We want more assurances from the carrier we are talking to. We want to know exactly, essentially what we would be paying for and creating these incentives for,” Villery said. “There is more dialogue that needs to occur, but what is positive about the whole thing is that the carrier is willing to sort of phase in the funding over three years so we wouldn’t have to come up with all of the funding up front.”

Brent DeHart, the CEO of Salem Aviation Fueling and leader of the Fly Salem effort to recruit an airline, also spoke during public testimony on Monday.

He told councilors and the public that having commercial air service brought an excellent return on investment for Salem over time. He urged the council to focus on building an incentive fund to attract a new carrier as soon as possible.

“Time is of the essence when it comes to a new carrier. Breeze (Airways) has already picked up four of the eleven Avelo Burbank routes including two in Oregon. All of these airports had incentive funds at the ready and we believe that is why they were announced so quickly and their service will be resuming in March under Breeze,” DeHart said. “We will need incentive funds to get service back. Airlines are now scheduling their routes for spring and summer of next year, so to be on someone’s schedule for the first half of 2026, we will have to be able to communicate that we have an incentive fund probably within the month…this is urgent.”

DeHart said not acting soon could mean the Transportation Security Administration could remove its equipment from the airport, complicating future plans.

He said the city should work to assure the TSA that it has a plan and is committed to returning commercial air service.

Later during the meeting, Councilor Paul Tigan questioned Salem Public Works Director Brian Martin about the city’s minimum revenue guarantee agreement with Avelo. The agreement ensures that Avelo gets a certain amount of revenue even if ticket sales and revenue for flights are lackluster. The money, a total of $1.2 million, comes from a $850,000 federal grant and $350,000 from private donations raised by Travel Salem.

Through the end of June, Salem spent $854,733 of that total, or 71%, city spokeswoman Erin Neff said. Of that, about $600,000 came from the federal grant. About $250,000 came from private donations.

On Monday, Tigan struggled with the fact that even though his understanding is that Avelo flights were consistently full, the airline still had to dip into the city’s minimum revenue guarantee funds.

“I guess the circle I’m trying to square…we heard from folks, all the flights are full, people are really using the service, and yet we still paid $700 some thousand dollars in the (minimum revenue guarentee),” Tigan said. “Is it because they can fill a flight and still not meet their minimum revenue? I am trying to genuinely understand it.”

Martin explained that the minimum revenue limit is a set number and Avelo seeks minimum revenue guarantee funds based on a calculation including passenger number, ticket revenue, and revenue from other sources like luggage fees. If they make more money or break even, Martin said, the airline does not get reimbursed.

Martin said in May, for example, passenger loading numbers were excellent, however, the revenue was $95,000 short of the guaranteed amount, requiring reimbursement from the city’s fund.

“That’s an excellent question and as we’ve gone through the numbers, we’ve asked ourselves that sometimes. And what it comes down to is they are trying to charge people for tickets. They can adjust how much they charge for that ticket,” Martin said. “You couldn’t base it just on passenger numbers alone. There are other elements that go into the equation.”

Contact reporter Joe Siess: [email protected] or 503-335-7790.

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