In recent months, Austin, Texas, has become a symbol of what can happen when airlines and homebuilders get too excited about a city’s boom in popularity.
In part due to thriving tech and music industries in the city and low state taxes, Austin has seen an influx of new residents in recent years – a trend which accelerated during the pandemic.
The population of the wider city soared from 1.6 million in 2013 to 2.3 million in 2023, according to TheStreet.
This prompted developers and homebuilders to swarm Austin, and buzz around the city as a tourist destination meant airlines quickly began launching new flight routes.
But it appears as though the ‘boomtown’ bubble has burst.
House prices in the city are plummeting as demand is not measuring up to supply, and multiple airlines are now slashing routes they launched to 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 boom in popularity
American Airlines has confirmed that it is axing four routes to Austin from Boston, Nashville, Raleigh-Durham and Orange County, California.
This is on top of further route cuts made by the carrier in 2023 and earlier this year.
American told The Points Guy that it will scrap the first three routes during the first week of November and will scrap the Orange County flight on January 5, 2025.
With these cuts, American has effectively reversed almost all of its expansion efforts in the Texas capital.
The airline initially grew its routes to Austin during the pandemic, when the city’s popularity was firmly on the up.
Beginning in March 2021, it launched 24 domestic and international routes, as well as putting forward plans for a 15,000-square-foot Admirals Club members lounge at AUS.
At its peak, some industry experts even speculated that Austin might become a focus city for American, The Points Guy reported.
But in 2023 the airline slashed 21 routes from the city, including Las Vegas, New Orleans and Orlando, and then cut another five in July this year.
And American is not the only carrier which is backing out of the Texan capital.
British airline Virgin Atlantic canceled its London to Austin route, which launched in March 2022, in January this year due to a lack of demand.
‘We’ve adored flying our customers to Austin and experiencing this wonderful city of music and culture, but demand in the Tech sector is not set to improve in the near term, with corporate demand at 70 percent of 2019 levels,’ Virgin Atlantic’s chief commercial officer Juha Jarvinen said at the time.
‘Therefore, sadly we made the tough decision to withdraw services.’
Spirit Airlines also canceled a nonstop international route between Austin and Monterrey, Mexico, in September 2023, citing low demand.
Delta Air Lines and Southwest Airlines, meanwhile, still offer service on many of the lines American has now axed.
American Airlines has confirmed that it is axing four routes to Austin-Bergstrom International Airport (pictured) from Boston, Nashville, Raleigh-Durham and Orange County, California
British airline Virgin Atlantic canceled its London to Austin route, which launched in March 2022, in January this year due to a lack of demand (Pictured: Austin-Bergstrom International Airport)
Austin’s popularity sparked a surge in homebuilding, but the inventory is not being met by strong demand, experts say
Tesla moved its headquarters to Austin, Texas, in 2021 (Pictured: CEO Elon Musk)
It comes as house prices in the city are rapidly cooling, as demand dwindles.
The real estate market spiked during the pandemic from a rush of highly skilled workers looking to take advantage of the flourishing tech industry, and young professionals priced out of states such as California.
This sparked a surge in homebuilding, but high inventory is not being met by strong demand, experts say, due to elevated mortgage rates and climate concerns.
In the year to May, Austin saw a 3.5 percent decline in home values – the most of the top 100 markets in the US.
Several major tech companies 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 was moving to Nashville – rocking Austin’s reputation as a tech hub.