Air Connectivity and Foreign Direct Investments The economic effects of the introduction of new routes

By integrating the theoretical perspective of international business, economic geography and transportation science, we develop a novel framework to investigate the relationship between the localization of foreign direct investments (FDI) and air connectivity. In particular the key research question for this study is whether and in which ways the spatial network structure offered by the global airline system contributes to the development of both outward and inward FDI. Due to the widespread diffusion of multinationals, air travel is often required as a mean to engage face-to-face contacts at various levels within the organization, by the board of directors, managers, entrepreneurs and staff. The introduction of a new route, by reducing transport costs, should increase the likelihood of FDI exchange between the regions newly connected. Several studies have already analyzed the linkage between air traffic and various urban or regional characteristics, among which its degree of internationalization, and have unanimously demonstrated that the geography of FDI is related to the desire of large multinational companies to easily access the main international airports. However, literature traditionally focused on larger multinational companies located in global cities. To the best of our knowledge, no study has yet considered the effect of air travel on FDI by SMEs in secondary regions. We aim to test whether the geography of FDI between Italy and Europe is related to the desire of overseas companies to directly access international airports. This paper employs an event study methodology to determine the impact of new routes on the generation of both inward and outward FDI considering both SMEs and large companies. In particular, we built an original database covering the period 1997-2010 where for each FDI between Italy and Europe we collected information about the locations of both the overseas company and the newly created subsidiaries at a municipality level. That enables us to estimate the impact of a new route to the FDI subsequently generated between the catchment areas of the connected airports. We account for the existence of a possible endogeneity bias by considering several control variables.

Connectivity and Network Robustness of European Integrators

Abstract Although redundancy is often associated with lower efficiency, redundant networks can provide integrators with the flexibility and capacity to respond to issues in the delivery network. This study analyzes the air transportation network strategies and robustness of the four largest European integrators, estimating the loss in connectivity when a node becomes unavailable. Accordingly, we develop a robustness index that accounts for the importance of airports in the network to each of the four main integrators, in terms of connections and freight capacity. The outcomes reveal that integrators operating within a hub-and-spoke type network are less resistant to network disruptions, while robustness is higher in less concentrated networks. The results highlight that integrators develop different network strategies to manage the trade-off between network efficiency and robustness, which may vary depending on the standardized or customized services expected by clients

An Empirical Investigation on the Efficiency, Capacity Ownership of Italian Airports

In this paper we study the efficiency of Italian airports applying a DEA model to 34 airports. We find that large airports are more efficient than domestic and regional ones, i.e. small airports have spare capacity since they are more distant from the frontier than large airports. The Tobit regression on the estimated DEA scores shows that efficiency is positively related with the hub premium and with privatisation. Hence we suggest that privatisation incentives to invest in large airports (close to saturation) and development plans to improve the small airports may form the benchmarks of Italian short-run air transportation policy.

Manage with care: the frailty of self-connections in the European airport network

AbstractThis study evaluates the attractiveness of self-hubbing in terms of the (a) symmetry of itineraries and the consequences for passengers in the case of missed flights. We compute the most attractive European origin-destination (O-D) pairs through self-connection and evaluate their robustness by estimating the expected delays relative to connecting times and the travel options available when a connection is missed.Results show that the potential of self-connecting markets is reduced when accounting for asymmetrical travel options and the consequences for travelers in the case of missed flights. In terms of frequencies, self-connecting passengers are, on average, found to have fewer alternatives to complete a given O-D pair than in the case of alliance-based connections (− 33%). Our findings moderate the confidence of past evidence on self-hubbing in light of the concrete reliability of self-connections for passengers. The itinerary choice made by passengers inevitably depends on the evaluation of travel quality attributes related to the (a) symmetry of the itineraries and the costs incurred through missed connections

Airport classification and functionality within the European network

This paper is meant to provide an insight into the roles and characteristics of the different typologies of airports by detailing a functional framework of European airports through the analysis of their distinctive features and interconnecting network. The first part of the work will focus on the classification of airports and their peculiarities following the most recent developments in this sector. The analysis will then turn to the methodology employed to verify the existence of subsystems (or modules) of high interconnectivity within the European aviation network. The classification hereby provided will therefore define the airports both as separate entities with specific characteristics and as parts of a particular network. The results will lead to the identification of major groups gathering together a number of airports characterized by similar features and goals. This paper will also hint at the existence of a solid parallel network within Europe, consisting of so-called secondary airports interconnected by means of low-cost carriers. It should here be stressed that the late development of the European airport network has been prompted by market-driven pressures rather than by clear-cut domestic or European schemes

Manage with care: the frailty of self-connections in the European airport network

This study evaluates the attractiveness of self-hubbing in terms of the (a) symmetry of itineraries and the consequences for passengers in the case of missed flights. We compute the most attractive European origin-destination (O-D) pairs through self-connection and evaluate their robustness by estimating the expected delays relative to connecting times and the travel options available when a connection is missed. Results show that the potential of self-connecting markets is reduced when accounting for asymmetrical travel options and the consequences for travelers in the case of missed flights. In terms of frequencies, self-connecting passengers are, on average, found to have fewer alternatives to complete a given O-D pair than in the case of alliance-based connections (− 33%). Our findings moderate the confidence of past evidence on self-hubbing in light of the concrete reliability of self-connections for passengers. The itinerary choice made by passengers inevitably depends on the evaluation of travel quality attributes related to the (a) symmetry of the itineraries and the costs incurred through missed connections. Document type: Articl