City employees are now banned from using public funds to fly on Avelo Airlines for official business.
The city has also barred spending on any promotion, marketing, or partnership with the airline.
Mayor Justin Elicker said the move comes after Avelo signed a contract to work with ICE in the deportation of migrants.
Avelo is the main carrier at Tweed New Haven Airport and offers low-cost flights to 30 destinations out of the city.