In recent months, Austin, Texas, has become a symbol of what can happen when airlines and homebuilders get too excited about a city’s booming popularity.
Partly due to the city’s booming tech and music industries and low state taxes, Austin has seen an influx of new residents in recent years, a trend that accelerated during the pandemic.
The city’s overall population increased from 1.6 million in 2013 to 2.3 million in 2023, according to The Street.
This prompted developers and homebuilders to invade Austin, and enthusiasm for the city as a tourist destination meant that airlines quickly began launching new flight routes.
But it seems the “boomtown” bubble has burst.
House prices in the city are plummeting as demand fails to meet supply, and several airlines are cutting routes they launched with great fanfare.
In recent months, Austin, Texas, has become a symbol of what can happen when airlines and homebuilders get too excited about a city’s booming popularity.
American Airlines has confirmed it will eliminate four routes to Austin from Boston, Nashville, Raleigh-Durham and Orange County, California.
This adds to other route cuts made by the airline in 2023 and earlier this year.
The American said The boy with the points which will eliminate the first three routes during the first week of November and eliminate the Orange County flight on January 5, 2025.
With these cuts, American has reversed virtually all of its expansion efforts in the Texas capital.
The airline initially increased its routes to Austin during the pandemic, when the city’s popularity was on the rise.
As of March 2021, it has launched 24 domestic and international routes, as well as unveiling plans for a 15,000-square-foot Admirals Club members lounge in AUS.
At its peak, some industry experts even speculated that Austin could become a focus city for Americans, The Points Guy reported.
But in 2023 the airline eliminated 21 routes from the city, including Las Vegas, New Orleans and Orlando, and then eliminated another five in July of this year.
And American is not the only airline pulling out of the Texas capital.
British airline Virgin Atlantic cancelled its London to Austin route, which was due to launch in March 2022, in January this year due to lack of demand.
“We’ve loved bringing our customers to Austin and allowing them to experience this wonderful city of music and culture, but demand in the tech sector is not expected to improve any time soon, with corporate demand at 70 percent of 2019 levels,” Virgin Atlantic chief commercial officer Juha Jarvinen said at the time.
“Therefore, we have regrettably made the difficult decision to withdraw services.”
Spirit Airlines also canceled a nonstop international route between Austin and Monterrey, Mexico, in September 2023, citing low demand.
Meanwhile, Delta Air Lines and Southwest Airlines still offer service on many of the lines that American has eliminated.
American Airlines has confirmed it will eliminate four routes to Austin-Bergstrom International Airport (pictured) from Boston, Nashville, Raleigh-Durham and Orange County, California.
British airline Virgin Atlantic cancelled its London to Austin route, which had been launched in March 2022, in January this year due to lack of demand (pictured: Austin-Bergstrom International Airport)
Austin’s popularity has sparked a surge in home construction, but inventory isn’t being met by strong demand, experts say
Tesla moved its headquarters to Austin, Texas, in 2021 (pictured: CEO Elon Musk)
This comes at a time when housing prices in the city are cooling rapidly as demand declines.
The housing market has boomed during the pandemic, driven by an influx of highly skilled workers seeking to take advantage of the booming tech industry and young professionals priced out of states like California.
That’s sparked a surge in home construction, but high inventory isn’t being met by strong demand, experts say, due to high mortgage rates and weather concerns.
In the year through May, Austin saw a 3.5 percent drop in home values, the largest among the 100 largest U.S. markets.
Several major tech companies have also moved their headquarters to the city, including Oracle in 2020 and Tesla in 2021.
But in April, Oracle CEO Larry Ellison made the surprise announcement that the company would be moving to Nashville, shaking up Austin’s reputation as a tech hub.