Airliner taking off

The addition of non-stop flights between Asia and Phoenix would unlock the door to a lot of Asian investment in Arizona real estate. That was the message from the Greater Phoenix Chapter President of the Asian Real Estate AgentAssociation to its members at a recent meeting. Kurt Nishimura told members that direct flights facilitate investment. A new Harvard study says he is right.

Harvard University’s Kennedy School of Government and the University of Zurich took a detailed look at the effects global airports and their direct flights to other cities have on economic development and performance. Researchers pored over data from 819 cities in more than 200 different countries. The results were interesting, though not all that surprising. Direct flights lead to more investment between linked destinations. Where people move, capital moves with them, regardless of whether a city’s airport is state of the art or aging

The reason is not all that complicated. People with money to invest hate changing planes just like everyone else, so they are more likely to do business in a city they can fly into directly.

If this is the case, why doesn’t Phoenix have more direct international flights  or any direct flights to Asia? The study indicates direct flights create their own demand as ideas, people and ultimately investments cross oceans. Cities with at least one direct flight between each other will generate much higher levels of business connections than cities without that direct link.

The answer goes to the age-old rule of capitalism: supply and demand. A recent Phoenix Business Journal article explained that current projections of people traveling from Phoenix to Asia, don’t justify adding a direct flight from Phoenix. Such flights are expensive for airlines. Because of the length of those trips, airlines must commit two airplanes and two crews, so they want to make sure they can get a return on such a pricey investment. That same article points out however, that analysts may not have an accurate picture of the demand.

Speaking to Phoenix Business Journal, Steve Smith, vice president of global sales for Japanese Airlines, says many travelers to Asia from Phoenix are not counted. He says traveler often don’t buy their tickets at the same time. Instead they fly to hubs and then purchase tickets to Asia. As far as Phoenix aviation analysts can tell, those people just traveled to Los Angeles or San Francisco for a week, not Asia.

The other problem is Phoenix’s proximity to larger hubs such as Los Angeles or Dallas; both of which boast plenty of international routes to Asia and South America. Airlines have bypassed Phoenix in favor of those cities because, it’s a relatively easy hop from Phoenix to Dallas or Phoenix to LA.

AREAA’s Nishimura believes a direct Asian flight is coming soon.  He points to the expansion of international flights by existing airlines such as Condor Airlines, Air Canada and the latest: Condor Airlines.

“Airlines want the business travelers flying here from Asia first, before they provide a direct flight. But the truth is, direct flights bring in those business travelers. AREAA has seen the effect in other cities across North America. Dallas is a great model for the positive impact it (adding direct flights to Asia) had in bringing new jobs and diversity to the city.”

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