Avelo Airlines Exits Deportation Contracts, Closes Bases, and Launches Dallas Hub with Embraer Fleet

TL;DR

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Avelo Airlines Shuts Down DHS Deportation Contracts to Focus on Commercial Growth

Avelo Airlines ended its U.S. Department of Homeland Security charter contracts in January 2025, removing six Boeing 737-800s from its fleet and closing its Mesa Gateway Airport base. The decision followed mounting legal and ethical scrutiny, including a $20 million breach-of-contract lawsuit filed in July 2025 and sustained advocacy pressure from civil rights groups. The move coincided with a broader operational restructuring aimed at eliminating low-margin government charter work.

How has Avelo restructured its network since exiting the deportation market?

Between January 2025 and January 2026, Avelo closed three regional bases—Raleigh-Durham, Wilmington, and Mesa—and eliminated approximately 20 routes. Operations are now concentrated around four core hubs: Dallas-McKinney (launched January 2026), New Haven, Delaware, and a Midwest location. The airline’s FY2025 passenger volume reached 2.6 million, up 11% year-over-year, with load factors improving by 7 percentage points, signaling stronger commercial performance.

What is the strategic role of the new Dallas hub and Embraer fleet?

Avelo announced a new base at McKinney National Airport (TKI) in January 2026 and ordered up to 100 Embraer 195-E2 jets, with first delivery expected mid-2027. The Dallas hub is designed to support high-density domestic routes, while the E2 fleet offers a 15–20% per-seat fuel-burn reduction compared to the 737-800s. The fleet modernization aligns with the airline’s shift toward efficient, point-to-point service.

Has the U.S. government replaced Avelo’s deportation capacity?

Yes. In October 2025, the Department of Homeland Security awarded deportation charter contracts to GlobalX and CSI Aviation, ensuring continuity of government flights. Avelo’s exit did not disrupt operational capacity but redistributed market share among specialized carriers.

What are the implications for Avelo’s reputation and labor relations?

The termination of deportation contracts was praised by labor unions and civil rights organizations, reducing public protest activity and improving employee morale. While the $20 million lawsuit remains pending, the decision has mitigated reputational risk associated with government deportation operations.

What is the outlook for Avelo’s commercial model?

Avelo’s strategic pivot has shifted focus from subsidized government charters to high-volume commercial routes. The combination of network consolidation, fleet modernization, and hub concentration supports a leaner, more profitable low-cost carrier model. Future developments include expansion of the Dallas hub to 15 new routes by 2027 and potential codeshare partnerships by 2029.