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Virgin Atlantic to End Austin-Heathrow Flights Amid Tech Bubble Burst

Virgin Atlantic has announced its decision to end its service connecting Austin-Bergstrom International Airport (AUS) to London Heathrow (LHR). The British airline cites a “persistent softening in corporate demand, specifically within the tech sector,” as the primary reason for this strategic move.

The last Virgin Atlantic flights to Austin are scheduled to operate on January 7, 2024. For those passengers affected by this decision, the airline has promised to provide various options, including the choice of a full refund. For now, Virgin’s UK rival, British Airways, continues to operate their AUS-LHR service, which has been in place since 2014.

Juha Jarvinen, the chief commercial officer for Virgin Atlantic, expressed the airline’s sentiments, saying, “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 only 70% of 2019 levels. Therefore, sadly, we made the tough decision to withdraw services. We’d like to thank everyone in Austin, our customers, teams, partners, and the authorities for their support over the past 18 months.”

Virgin Atlantic had only launched its nonstop flights to Austin in May 2022, directly competing with British Airways on the same route. However, the numbers reveal a stark difference in the passenger counts, with Virgin Atlantic carrying only about a third of the passengers that British Airways was flying to and from Austin. The most recent figures from August, compiled by Bergstrom Airport administration, indicate that Virgin Atlantic transported approximately 4,800 passengers to and from Austin, compared to British Airways’ impressive 16,000 passengers – perhaps owing to the extremely high concentration of Oneworld elites in the Austin area.

Austin-Bergstrom International Airport officials issued a statement expressing their gratitude for Virgin Atlantic’s ambitious route. They added, “We hope to welcome them back one day.”

The suspension of the Austin-London route marks the second international route cancellation at AUS in recent months. Spirit Airlines had previously suspended its nonstop route to Monterrey, Mexico last month, citing low passenger demand (though, in fairness, Spirit has been facing larger financial difficulties). In response, Viva Aerobus has announced plans to launch its AUS-Monterrey route in March 2024.

The tech industry has played a pivotal role in Austin’s rapid growth, with tech workers and companies flocking to the area from Silicon Valley and other parts of California. However, the tech bubble that fueled this expansion is now bursting, resulting in layoffs, hiring freezes, and a glut of applicants for tech-adjacent jobs. Even those with FAANG pedigrees are now scrambling to secure any tech-adjacent role they can get their hands on, including desktop support positions, often offering significantly lower pay, fewer business travel opportunities, and less time off compared to their previous positions.

As Austin’s growth in recent years has been largely tech-driven, the bursting of the tech bubble has a disproportionately large impact on the city’s economy. This development could potentially affect the future of international routes from Austin, as well as domestic activity as that slows down across the board.

Amid Austin’s rapid expansion in recent years, it has evolved into something of a “mini hub” for Southwest Airlines and American Airlines. Plans for a new midfield concourse had recently been announced, and were expedited by the Austin City Council just last month. However, with the uncertainty surrounding the tech bubble, the fate of these plans remains uncertain.

The decision by Virgin Atlantic to suspend its Austin-London route reflects the challenges faced by the tech-driven economy of Austin and the broader impact of the tech bubble’s burst on the city’s small-but-mighty airport. We’ll have to keep a close eye on the developments at Austin-Bergstrom as it navigates through this period of transition.

h/t KXAN

2 thoughts on “Virgin Atlantic to End Austin-Heathrow Flights Amid Tech Bubble Burst

  • The claim about ‘tech bubble burst’ is understandable coming from Virgin, they can’t really just say they made a strategic error in launching the flight. But this is the worst performing transatlantic in Austin and it was obviously going to be so.

    1) Odd to say that recent events have undermined the flight, when it’s been performing better than it has in the past! Until the past few months loads have been in the 20s on this flight.

    2) Austin has another London flight, on BA. BA has the advantage of a connecting route network in London for feed and also the American Airlines customer base in Austin which is bigger than Delta’s.

    3) In fact all of the other transatlantic flights from Austin have connecting feed on at least one end (Lufthansa Frankfurt, KLM Amsterdam)

    4) This was a second flight in the transatlantic joint venture (after KLM) so too much capacity in that group, as well as being too much London capacity (which Norwegian had previously shown).

    Has nothing to do with ‘tech bubble burst’ except in the sense that if premium business travel *to London* had grown sufficiently then maybe the flight could have survived.

    Austin overall has grown tremendously, but flights have outpaced premium air traffic. Part of that is a rush to squat on gates, because there won’t be any more real net capacity growth until there’s a midfield terminal. First they need to complete the West gate expansion (3 gates) which allows them to take 3 gates offline to connect to the midfield concourse that hasn’t been built yet. But in the meantime they will demolish the South Terminal, and have to accommodate Frontier and Allegiant in the main terminal without additional gates.

    Right now Austin is overall a place that yields go to die. And that has nothing to do with tech’s failure to return to office, or Federal Reserve interest rate hikes that ended the free money train.

    Reply
    • All great points, Gary. You being based in AUS, you’d know better than I would! I will say working in the IT business myself, the industry is in very rough shape right now and will be for potentially years to come. I’ve seen applicants with FAANG experience applying for a part-time desktop support role we had open. 16 hours a week, and I’m not sure I’d want to know the hourly wage. Maybe the metrics from ABIA aren’t quite reflective of this just yet, but will certainly be interesting to see how this plays out in the next 6-12 months.

      Reply

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