Air transport network evolution and firm productivity: Evidence from China

Amid the ongoing global restructuring of industrial value chains, air transport networks are no longer merely conduits for mobility. They have become strategic infrastructure that can materially shape firms' total factor productivity (TFP). Using comprehensive panel data linking China's air transport network with firm performance from 2010 to 2023, this study integrates social network analysis with a two-way fixed effects model to examine how network evolution affects enterprise productivity. We find that China's air transport network exhibits a pronounced core-periphery structure and has undergone a significant structural shift. The number of core urban nodes declines from 17 to 6, while semi-peripheral and peripheral cities increase markedly, resulting in a more balanced network overall. Econometric results show that a 1% increase in a city's weighted aviation network degree is associated with a 0.055% increase in firm TFP. Mechanism analysis indicates that air transport networks enhance firms' TFP primarily through improvements in operational efficiency, with market-power enhancement serving as a secondary channel. Heterogeneity analysis further indicates that the productivity effect is more pronounced among state-owned enterprises, firms located in eastern cities, and cities with relatively lower network status. These findings suggest that the economic returns to aviation connectivity vary across firm ownership, regional conditions, and network positions, highlighting the importance of aligning aviation-network development with local industrial foundations and firm-level absorption capacity.