Well-connected airports, bigger business: How air connectivity plays a role in global investments

• Air connectivity drives investment: Cities with strong flight networks attract more multinational subsidiaries.
  
• Singapore leads globally: Its links to major hubs support high foreign investment.
  
• Quality matters: Direct, well-connected routes are crucial for knowledge-intensive sectors.

A new study by the Singapore-MIT Alliance for Research and Technology (SMART), alongside collaborators from the Massachusetts Institute of Technology (MIT) and the National University of Singapore (NUS), has identified a strong statistical association between global air connectivity and patterns of where multinational corporations (MNCs) invest and set up subsidiaries. 

The research was conducted by SMART’s Mens, Manus & Machina (M3S) interdisciplinary research group. It merges 7.5mn firm records with 30 years of international flight data across more than 800 cities in 142 countries. According to the researchers, this is the most comprehensive global study of its kind.

The study goes beyond evaluating the number of direct routes. While previous research often focused on a small group of large cities, specific regions or short time periods, and relied on local measures such as passenger flows or the number of direct flights, this study examines the topological configuration of the global air transportation network and the influence of indirectly connected airport cities.

Fabio Duarte, Principal Investigator at M3S, Associate Director of MIT’s Senseable City Lab and co-corresponding author of the paper said rigorous and data-driven research around connectivity is essential to understanding the forces that shape cities and economies, and to uncovering the infrastructure that enables global business. 

Singapore among highly connected cities

Per the researchers, Singapore hosts roughly 6,000 large- and medium-sized foreign-owned subsidiaries with a minimum annual revenue of US$5mn, the highest number for any city in the study.

In the connectivity metrics analysed, Singapore scores highly on eigenvector centrality, alongside cities such as London, Paris, Hong Kong, Dubai and Tokyo. This reflects its strategic links to other well-connected airports.

These patterns suggest that global connectivity is a contributing factor, among other unobserved factors, that may shape where multinational firms choose to locate.

“By looking beyond simple counts of routes and examining how cities are embedded in the wider air network, our study reveals the deeper structural factors that shape multinational expansion. It demonstrates that firms respond not only to a city’s direct access, but also to the strategic advantages conferred by its position within global connectivity,” Wen-Chi Liao, Associate Professor of Real Estate and Assistant Dean at the NUS Business School, Visiting Associate Professor at the MIT Center for Real Estate (CRE) and one of the authors of the paper.

Fewer layovers meant more subsidiaries

The study provides empirical evidence that air traffic connectivity functions as a coordination infrastructure for multinational corporations. Even one layover is associated with an average of 20% fewer subsidiaries being established. This rises to 34% with two or more layovers.

Quality of flight connections matters most

Eigenvector centrality was found to be the strongest predictor of how many foreign subsidiaries a city attracted. A 10% increase in eigenvector centrality is associated with nearly a 1% increase in the number of foreign subsidiaries. Cities connected to influential global hubs outperform those with more routes to less-connected destinations.

Knowledge-intensive sectors rely on connectivity

The impact of air connectivity is especially pronounced in industries that depend on frequent face-to-face interaction, including finance, consulting, technology and other knowledge-based services. For these sectors, direct flights and strong global connections are especially important in attracting investment. The effect is much weaker for sectors such as manufacturing and retail.

Navigating the path to global competitiveness

The study’s findings have clear implications for policymakers, urban planners and business leaders. The patterns remained consistent over the 30-year period, even as business operations were transformed by the internet, digital tools, teleconferencing and the COVID-19 pandemic. This shows the importance of maintaining strategic air connections to attract multinational firms and investment.

For Singapore, continued innovation and planning in aviation has been key as global competition intensifies.

Ambra Amico, Postdoctoral Researcher at M3S and co-corresponding author of the paper, said air connectivity is not just about adding routes, but sustaining economic vibrancy and attracting MNCs.

Siqi Zheng, Principal Investigator at M3S, Professor and Faculty Director of MIT Center for Real Estate, and one of the authors of the paper, mentioned: “With trade and geopolitical frictions, it’s more and more important to have face-to-face interactions to build trust for global trade and business.”

She further added that cities with strong air connectivity really influences how global business copes with global uncertainties.

Talent mobility in a connected world

As global firms expand and rely on strong networks, enabling talent to move efficiently across markets becomes increasingly important. HRO’s Talent Mobility 2026 on 4 March 2026, Wednesday, will bring together HR leaders to discuss effective mobility strategies.

Find out more and register here.

Methodology

Titled Air Connectivity Boosts Urban Attractiveness for Global Firms and recently published in Nature Cities, the research combines firm-level records from the Orbis database with international flight data from the International Civil Aviation Organisation, covering the period from 1993 to 2023.

The study first evaluated pairwise connectivity, defined as the number of direct and indirect flights between the cities in which parent companies and their subsidiaries are located. The findings show that pairwise connectivity, alongside degree, betweenness and eigenvector centrality, play a significant role in shaping where multinational corporations establish subsidiaries.

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Lead image / SMART M3S