City News, ECONOMY

Salem lands federal grant to help attract commercial air service

Third time’s the charm for Salem’s airport.

The city on Wednesday was awarded a federal grant intended to help lure commercial airlines back to the Salem Municipal Airport after the U.S. Department of Transportation rejected two previous bids for the money.

John Paskell, the airport manager, said the most recent application included two letters of support from interested airlines, which he believes made the difference in being selected.

“This is the one we thought going in had the best chance,” he said.

The $850,000 grant will be used for minimum revenue guarantees, a pot of money airlines could apply for if they fail to meet revenue targets during their first years of operations. A portion of the money would also be used to market flights.

U.S. Senators Ron Wyden and Jeff Merkley, both Democrats, announced the funding Thursday. Wyden had submitted a letter in support of the grant.

“Regional air service through small airports just like this one in Oregon’s capital city are crucial to our state’s economy,” Wyden said in a statement. “I am gratified to see these dollars go toward expanding regional air service in Salem to have a more accessible option for travel in and out of the Mid-Willamette Valley. Investing in smaller airports like the Salem Airport lays the groundwork to continue to support our state’s economic growth and tourism.”

“Commercial air will support and grow the Mid-Willamette Valley economy, increase tourism, reduce traffic and congestion along the I-5 corridor, and create less dependence on the Portland International Airport,” said Salem Mayor Chuck Bennett in a statement.

Avelo Airlines, a budget carrier based in Houston, Texas, was one of the airlines signing in support of the grant. Paskell said they’ve expressed interest in offering two passenger flights weekly to either Burbank, California — in the Los Angeles area —  or Las Vegas, then growing to offer flights to both destinations.

The news was celebrated by Salem’s business community, which has been working to restore commercial air service to the city for years.

“Commercial air service is the jet fuel needed to create a diversified and vibrant regional economy— providing smart and strategic economic development solutions around affordable and accessible travel options, talent and investment recruitment, carbon footprint reduction and so much more,” said Angie Onyewuchi, CEO of Travel Salem, in a statement. “This critical grant funding moves us closer to launching our first flights and provides a direct connection between Oregon’s spectacular wine country and the world.”

Tom Hoffert, CEO of the Salem Area Chamber of Commerce, said the implications of restoring air travel to Salem extend beyond the city, since the airport would be the closest travel option for anyone living south of Wilsonville or north of Corvallis.

“The chance for economic development in the city is just things we can’t pass up,” he said.

But the funds won’t help the city make upgrades to its terminal which the Transportation Security Administration says are necessary to resume commercial flights, or pay for the increased airport staffing needed to sustain those operations.

“It’s one more piece of the bigger puzzle. It certainly makes Salem more attractive to air carriers that may be considering serving Salem,” Paskell said of the grant.

Paskell last week presented city councilors with a report detailing the costs expected to return air service to Salem, which include between $3.9 million and $12 million of terminal renovations, depending on the size of the planes being served.

Other ongoing costs include doubling the number of airport employees and additional police and fire services needed at the airport.

City councilors were generally supportive of returning air service, but said the city doesn’t have extra money available to subsidize airport operations or pay for renovations.

Dissenting from his colleagues, Councilor Tom Andersen questioned the business sense of the effort, and expressed skepticism that the effort would reduce carbon emissions. Supporters have said reducing the number of people driving to Portland for flights will take cars off the road, lowering pollution.

In addition to Avelo, Aha!, another budget airline, has also expressed interest in serving Salem with two weekly flights to Reno. Paskell said the second airline that signed in support of the federal grant asked that their letter remain confidential. Their letter was not included in the application packet publicly posted on the Department of Transportation website. Paskell said the level of interest means there’s a sense of urgency for the airport to figure out funding sources.

“Potentially three airlines sometime next year, which is why we’re trying to stir and scramble and figure out what that means for our terminal,” he said.

City councilors still need to vote on whether to accept the grant. Paskell said he expects to bring it to the council at their Aug. 22 meeting once he’s had a chance to review the details and understand any commitments the city must make to get the money.

He said he’s now working to dial in cost estimates for needed renovations and services, and working with the city’s finance department to identify possible grants, bonds or other funding sources that could help bridge the gap.

“Short of a wealthy benefactor coming in and just dumping cash in the front yard we’re not sure how to get there,” he said.

Other entities who have supported the return of air service, including Travel Salem and the Chamber, are also keeping an eye out for potential sources of funds. Hoffert said he’s been approached about whether the local business community might be willing to contribute money toward the needed airport upgrades, though it’s too early yet to say whether city council would support such an effort or whether members of the Fly Salem group are interested.

Paskell said even with the funding challenges ahead, being selected is exciting.

“These are good problems to have,” he said.

This story was updated to include comments from Tom Hoffert, Sen. Ron Wyden and Mayor Chuck Bennett.

Previous coverage

Salem councilors want commercial air service back, but who pays remains unclear

Salem’s plans for commercial air travel in coming year hinge on federal grant

With interest from low-cost airlines, optimism grows about commercial service at Salem Airport

Contact reporter Rachel Alexander: [email protected] or 503-575-1241.

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