Innovation on Wings: Nonstop Flights and Firm Innovation in the Global Context

Do nonstop flights affect firm innovation outcomes across countries? Using unique data on all flights from 5,015 airports globally from 2005-2015 and a regression discontinuity framework exploiting the 6,000-mile threshold for ultra-long-haul flights, this paper provides causal evidence that better air connectivity boosts knowledge diffusion and collaboration at firms.

The effect is driven primarily by firms rather than academic institutions. For firms, a 10% increase in flights increases citations by 3.38% and collaborations by 1.48%; for academic institutions, the same increase yields only 0.99% and 0.40% respectively. Using a modified gravity model, we show the effect is stronger for firms with greater 'innovation mass' (more inventors, higher R&D spending), those located in innovation hubs or technology-leading countries, and those separated by large cultural or temporal distance.

We also explore mechanisms: travel time reduction, rather than ticket price savings, is the primary factor explaining the relationship. A 10% increase in flight duration is associated with an 8.9% decrease in collaborations. These findings have important implications for business travel policies and highlight how airline connectivity helps firms build bridges to distant contexts while overcoming temporal and cultural barriers.