MIT research reveals direct flights significantly boost multinational firm expansion, with 20% fewer subsidiaries in cities requiring one-stop flights and 34% fewer with two stops. Connectivity proves especially critical for knowledge industries where face-to-face interaction drives growth.

Fewer Layovers, Better-Connected Airports, More Firm Growth

New MIT research demonstrates that airport connectivity isn't just a traveler's convenience—it's a powerful economic engine. Analyzing 30 years of global data, researchers found multinational firms consistently favor cities with robust air networks, revealing stark disadvantages for locations requiring layovers.

The High Cost of Stopovers

The study examined 7.5 million firms across 142 countries (1993-2023), discovering:

20% fewer subsidiaries in city pairs requiring one-stop flights
34% fewer subsidiaries when two plane changes were needed
Equivalent to 1.8-3.0% fewer new firms annually per connection hurdle

Plane over globe, showing plane routes from big cities Global air connectivity patterns influence where multinationals establish operations

Knowledge Industries Thrive on Direct Routes

"What we found is how much it matters for a city to be embedded within the global air transportation network," says lead researcher Ambra Amico. The effect proved especially pronounced in knowledge sectors like finance where face-to-face interaction builds trust and reduces information asymmetry.

Key findings include:

10% increase in direct-flight connections yields 4.3% more subsidiaries over a decade
The strongest predictor: Connections to well-connected hubs (not just quantity)
"If you tell me who you're connected to, I tell you how successful your city will be," notes co-author Fabio Duarte

Methodology and Resilience

The team combined:

Flight data from International Civil Aviation Organization
Firm relationships from Moody's Orbis database (469M+ companies)
Geographic parameters: Firms within 37 miles of airports

Remarkably, this connectivity effect persisted through technological disruptions—including teleconferencing advancements and COVID-19—underscoring the enduring need for in-person business interactions. As co-author Siqi Zheng observes: "Air connectivity influences how global business copes with global uncertainties."

Implications for Urban Development

The research provides cities with actionable intelligence: Strategic airport development—prioritizing connections to major global hubs—directly stimulates economic growth. While manufacturing relies on roads and ports, knowledge economies soar when executives can fly direct.