MIT researchers found that airline connectivity matters more than most people expect for global business growth. In a study spanning 142 countries from 1993 to 2023, the team examined the impact of direct flights between cities on the establishment of multinational firm subsidiaries. They discovered that cities connected by direct flights attract more business activity than those requiring layovers, even when accounting for the rise of teleconferencing and other technological changes that have reshaped how people communicate, tells MIT News.
The data show a clear pattern: cities reachable only with one stop have about 20% fewer multinational subsidiaries than cities linked by direct flights, and cities that need two stops have about 34% fewer. Those differences translate into roughly 1.8% and 3.0% fewer new firm subsidiaries per year, respectively. These gaps matter because they accumulate over time and affect economic development in major regions.
The researchers emphasize that proximity within air travel networks isn’t just about distance or number of connections. Who you can reach directly, and how easy it is to get there, shapes business decisions about where to locate operations. In industries driven by knowledge exchange, being embedded in a network of direct connections appears especially powerful. Cities that are strategically linked to global hubs benefit disproportionately, while peripheral locations suffer from weaker integration.
The pattern has shown consistency across the 30-year study period. Despite major global disruptions such as the Covid-19 pandemic and rapid adoption of remote work tools, the need for face-to-face interaction remains strong in driving multinational firm activity. As one researcher noted, the persistence of this relationship over decades points to the enduring value of physical presence and travel convenience in global business.
The study suggests that investments in better airport links and direct routes could offer cities a tangible advantage in attracting international business and growth.