Direct Flights Drive Multinational Firm Growth in Globally Connected Cities
Waiting around an airport for a connecting flight is something most travelers tolerate rather than enjoy. According to a new study by researchers from MIT, that inconvenience is more than just personal frustration — it has real consequences for how and where global businesses grow. The research shows that direct air connectivity plays a major role in shaping the global expansion of multinational firms, influencing where they choose to set up subsidiaries and invest long-term.
The study takes a deep look at how air travel networks affect business decisions over time. By analyzing data spanning 30 years, from 1993 to 2023, the researchers found a clear and persistent pattern: cities that are easier to reach through direct international flights attract significantly more multinational firm activity than those that require multiple connections.
At its core, the research highlights a simple but powerful idea. The easier it is to physically reach a city, the more attractive it becomes for global business.
How Air Connectivity Shapes Business Growth
The researchers examined the relationship between air travel and the formation of multinational firm subsidiaries across 142 countries. Their findings show that firms strongly prefer cities that are reachable without stopovers. When cities are connected only by flights requiring one stop, they host about 20% fewer multinational subsidiaries compared to cities linked by direct flights. If reaching a city requires two plane changes, the number of subsidiaries drops even further, by 34%.
Translated into yearly growth terms, these differences are substantial. Cities reachable only via one stop experience around 1.8% fewer new multinational firms per year, while those requiring two changes see roughly 3.0% fewer new firms annually. Over decades, these gaps compound into major differences in economic presence and influence.
What stands out is that these patterns are not short-term quirks. They persist across economic cycles, technological shifts, and even major disruptions like the COVID-19 pandemic.
The Importance of Being Embedded in the Global Network
The study goes beyond simply counting flights. One of its key contributions is showing that how a city fits into the wider global air network matters as much as how many direct routes it has.
One commonly used measure of connectivity is degree centrality, which refers to how many other cities a place is connected to through direct flights. The researchers found that over a 10-year period, a 10% increase in degree centrality is associated with a 4.3% increase in the number of multinational subsidiaries located in that city.
However, an even stronger predictor of business growth is a deeper network measure. This measure looks not just at how many cities you can reach directly, but how well-connected those destination cities are themselves. In other words, it’s not only about having many connections, but about being connected to important hubs within the global air transportation system. Cities that are embedded in these high-use, high-influence networks see the strongest growth in multinational firm activity.
Knowledge Industries Feel the Impact Most
One of the most striking findings from the study is the variation across industries. Air connectivity matters far more for knowledge-intensive sectors than for others.
Industries such as finance, professional services, and other knowledge-based businesses show a particularly strong dependence on direct flights. These sectors often rely on frequent face-to-face interactions, whether for audits, negotiations, coordination between headquarters and subsidiaries, or relationship-building with partners and clients. When employees, executives, or consultants can travel easily without the friction of multiple stopovers, costs go down and efficiency improves.
In contrast, the study finds that manufacturing firms are less sensitive to air connectivity. For these companies, infrastructure like roads, ports, and shipping routes often plays a larger role than air travel in determining location decisions.
A Massive Dataset Behind the Findings
The scale of the study is one of its strengths. The researchers analyzed data from 7.5 million firms operating in 800 cities with airports, covering more than 400,000 international flight routes worldwide. Only multinational firms were included, meaning the focus was strictly on international business activity, not domestic operations.
To ensure accuracy, the study considered only firms located within 60 kilometers (37 miles) of an airport. It also controlled for other factors that influence business location decisions, such as city size, to isolate the effect of air connectivity itself.
The research team built a new database by combining flight data from the International Civil Aviation Organization with firm-level data from Orbis, a global corporate database run by Moody’s that includes ownership information for hundreds of millions of companies. This ownership data made it possible to track parent-subsidiary relationships across borders, offering a detailed picture of multinational firm structures.
Why Face-to-Face Still Matters
One of the most interesting aspects of the findings is their consistency over time. Despite the rise of email, video conferencing, cloud collaboration tools, and remote work, the importance of direct air connectivity has not faded.
The researchers argue that face-to-face interaction remains essential for building trust, reducing uncertainty, and sharing complex or sensitive information. In global business, especially across different legal systems and cultures, physical presence still plays a critical role in decision-making and relationship management.
Even in an era marked by geopolitical tensions, trade frictions, and shifting global supply chains, the study suggests that being able to physically reach business partners is more important than ever.
What This Means for Cities and Policymakers
For city planners and policymakers, the findings carry clear implications. Investing in direct international air routes and strengthening connections to globally influential hubs can significantly boost a city’s attractiveness to multinational firms. This is especially relevant for cities aiming to grow their presence in finance, technology, and other knowledge-driven sectors.
The research also suggests that simply increasing the number of flights is not enough. Strategic connectivity — linking cities to the right global nodes — can make a meaningful difference in long-term economic development.
Additional Context: Air Connectivity and Urban Growth
Beyond this specific study, decades of research have linked air connectivity to broader urban outcomes. Well-connected cities often see faster growth in foreign direct investment, higher levels of innovation, and greater integration into global value chains. Airports function not just as transportation hubs, but as economic infrastructure, shaping how cities compete on the world stage.
This MIT-led study adds strong empirical evidence to that body of knowledge, reinforcing the idea that global business still runs on physical networks, even in a digital age.
About the Research
The paper, titled Air Connectivity Boosts Urban Attractiveness for Global Firms, was published in the journal Nature Cities in 2026. The research was conducted by Ambra Amico, Fabio Duarte, Wen-Chi Liao, and Siqi Zheng, with affiliations spanning MIT, the MIT-Singapore Alliance for Research and Technology, and the National University of Singapore. The work received support from Singapore’s National Research Foundation and the MIT Asia Real Estate Initiative.
