Salem asked to spend more public funds on airport gamble

Project scope creeps in Salem while Avelo discontinues service in Dayton, OH.

Salem City Council will consider allocating an additional $1.8 million to expand parking at the Salem Municipal Airport in anticipation of commercial flight service launching in early October 2023 with new partner Avelo Airlines - a startup based in Houston, TX.

The $1,839,000 needed to purchase a property at 2790 25th Street SE, adjacent to the Salem Municipal Airport, would come in the form of a loan from Salem’s “Utility Fund.” The funds would be used, according to a proposed resolution, to:

“...purchase the property, pay taxes and closing costs, restripe the lot, add payment kiosks, construct sidewalks, mechanical repairs, and other associated costs.”

The proposal is scheduled to be considered by Salem City Council members at its August 28th meeting, along with a series of supplemental measures that clear the path for transferring the funding internally.

From Avelo’s website.

In addition to additional parking, the purchase would include more than 7,000 square feet of office space. The City would be purchasing the property from West One Automotive Group, Inc., and would include assuming the lease payments for the space.

The premise for acquiring the property is to accommodate increased parking from the launch of commercial air service at the Salem Airport - with Avelo Airlines offering 4 departing flights a week to two locations, Las Vegas and Burbank.

Except Avelo’s success is still hypothetical & expanding parking facilities is an aspirational acquisition

Despite affirmations from Avelo that seat bookings for flights originating in Salem were pacing at a healthy clip, the startup airline has a short history of shuffling its route map with very little tolerance for underperforming locations.

Considering Salem is one of Avelo’s more untested markets (most airports they service have existing commercial airline partners), purchasing additional real estate to accommodate a theoretical future need seems risky for a city already strapped for cash.

Especially considering Avelo Airlines just announced just last week they would discontinue flights from Ohio at the Dayton International Airport - just about 8 months after they began service there.

The reason? Insufficient demand, according to reporting from Dayton Daily News: 

“In an environment of rising fuel costs, we’re navigating the best way to fly our routes while also ensuring there is enough demand,” Courtney Goff, communications manager for Avelo said. “This was not the outcome we envisioned when Avelo took flight in Dayton.”

Discontinuation of service at Dayton International Airport is one of many airport partnerships Avelo has entered, only to back out relatively quickly - almost always due to insufficient demand.

Officials in Dayton seemed surprised at Avelo’s decision to part ways. Linda Hughes, Dayton’s air service manager, told Dayton Daily News that as recently as June 2023 Avelo sold 91% of its Dayton-to-Orlando, FL, seats. 

Similar to Salem, Avelo officials praised early indicators when service in Dayton launched in late 2022. At the time, Avelo indicated a sold out inaugural flight in Dayton was an Avelo first for a new service market. From WYSO in Dayton reported in January 2023:

Courtney Goff, communications manager at Avelo Airlines, said the turnout was promising, and the company is already exploring other destinations from Dayton.

“We're really excited that the community has embraced Avelo on this very first flight and filled it up,” she said. “We’re already looking as we continue to acquire more planes, to see how we can expand in Dayton and how we can just grow our footprint here.”

Compare that with recent comments Goff made to the Salem Reporter, with about a month until Avelo’s inaugural flight from Salem:

“For bookings, everything is strong. October numbers continue to grow, and nearly 4,000 itineraries have been booked, clearing up a nice chunk of inventory,” said Courtney Goff, communications manager at Avelo Airlines in an email to Salem Reporter.

Currently, Avelo’s website is showing the first flight from Salem to Las Vegas on October 5, 2023, as “sold out.” But the 4.000 itineraries booked represent just about a quarter of the airline’s available seat inventory from October through February 2024 - as far out as Avelo is offering flights right now.

Based on the business practices of Avelo as they test new markets, along with the yet-to-be-proven market here in Salem…it seems unnecessarily risky to double down to the tune of a couple million more of public funding into a project that is far from a sure bet.

More airport costs on the way

Members of the Airport Advisory Commission have been discussing additional highly-likely, impending costs related to the Salem Municipal Airport.

The Federal Aviation Administration has informed airport management that runway 16/34 will need to be either improved & maintained,  decommissioned entirely, or some variation of those two options.  Runway 16/34 acts as an ancillary runway at Salem Municipal Airport. From the Airport Manager’s Report – July 19, 2023:

Two cost estimates are under development for future City Council consideration; one for costs associated with keeping RWY 16/34 open during the planning period, and the second for costs associated with closing the runway and building new infrastructure to service the primary runway from existing facilities. The city will likely seek an independent review from another airport planning/engineering firm of the estimates before making a presentation to City Council.

From the same Airport Manager’s Report, Salem will also need to replace a “decades-old beacon light:”

A new beacon location would require additional cost and studies to ensure no impact to air traffic control and the surrounding community. Staff is researching replacement options and hope to have it completed in time for commercial air service and winter weather.

Both projects appear to be in the planning stages and while federal funding is being sought to either cover or offset costs, it’s unclear whether city public funds would be needed to make these improvements.