PORTLAND, Ore. (KOIN) — In the wake of Avelo Airlines’ decision to pull out of Salem, local leaders are discussing its potential financial impacts — and whether another company could take over.

Salem City Council is set to discuss an air service update during a work session scheduled for Aug. 18. But an

information report from Monday’s meeting has revealed the airport fund could see a $238,000 decline in Fiscal Year 2026 due to the change in operations.

Avelo previously announced it will stop flights at the Salem-Willamette Valley Airport on Sunday, Aug. 10, along with several other West Coast destinations later this year. While the low-cost airline attributed the reduction in service to its plans to expand operations along the East Coast, the announcement came after some community members pushed officials in Oregon’s capital city to terminate their contract with the company.

Several residents who testified against the agreement cited the airline’s decision to charter deportation flights for the U.S. Department of Homeland Security. In response, local leaders said abruptly terminating the deal could be “fiscally risky.”

An $850,000 grant from the Federal Aviation Administration and a $350,000 minimum revenue guarantee from business owners funded the Avelo contract.

Although Public Works Director Brian Martin told officials the city isn’t requiring to return anything to the federal government, he noted the airline will be reimbursed after it terminates service.

But according to Martin, the losses could be lower than expected due to staffing changes at the airport.

Records show Airport Manager John Paskell and Airport Operations Program Manager Joey Langenhorst announced their resignation just a few days after Avelo announced it was terminating service. The vacancies will free up about $206,000 in salary savings within the next six months, which is the earliest point at which officials would expect a new airline to launch.

Avelo is currently the only commercial airline serving the Salem airport, and was the first in about 15 years when it started operations in October 2023. From then until March of this year, more than 37,000 visitors flew into the city and spent around $31 million in the local economy, according to a letter Fly Salem Foundation President Tim Hay sent to councilors.

He also noted that departing and returning flights to Burbank and Las Vegas have been full for the last several weeks.

“What this means is Salem has proven itself as a viable market for commercial air service and we should continue to pursue it,” Hay said. “The infrastructure and equipment to begin the previous service has already been paid for and we shouldn’t let that investment go to waste. There are other carriers who have noticed Salem has a viable market because of the Avelo service and Salem should actively pursue them.”

Additionally, more than 600 people responded to a Travel Salem survey focused on air travel. More than 71% of participants said they would fully support new commercial airline service, while nearly 56% said they were very likely to fly from the local airport if there were flights to destinations like Phoenix, San Francisco and San Diego.

Travel Salem President and CEO Angie Villery said there was a “very narrow window to put together a new MRG to take advantage of a carrier interested in the market.”