UNC Kenan-Flagler Business School

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UNC Kenan-Flagler Business School

ROI: RESEARCH INSIGHTS FROM KENAN-FLAGLER


Look! Up in the Sky!

6/7/2012

Building aviation infrastructure for competitive advantage

For all technology to do business more efficiently – virtual meetings via Skype, marketing via Twitter, sales via website – manufacturers need to receive supplies, and sellers need to deliver their product to the end user.

“The Web can’t move a box,” said John D. Kasarda, author of “Aerotropolis,” a book laying out his years of research into the way aviation networks have shaped the economies of developing nations. Air traffic has become the physical Internet, particularly for emerging markets, and is as important as highways in the 20th century and railroads in the 1800s.

Up in the Sky

In an age where speed trumps size, emerging markets in Asia, Africa and the Middle East can leapfrog Western Europe and the United States by investing heavily in airline networks and airports. China is investing about $250 billion in its airports over the next five years; the United States is investing only $2 billion. Agile, well-connected cities like Dubai, Singapore and Hong Kong have opportunities to develop much faster than cities that don’t have easy access to air travel. Parts and materials for iPads and iPhones, for instance, can be sent from eight or nine countries on demand to China, where they are assembled into finished products and shipped out immediately to meet market demand.

“We are becoming a connected world that is increasingly time competitive,” Kasarda said. “It’s not the big eating the small; it’s the fast eating the slow. You’ve got to move products around the world quickly and efficiently. As much as 90 percent of high-value, high-tech items move by air.”

Efficient aviation infrastructure not only enables emerging markets to transport high-value products – everything from pharmaceuticals and medical instruments to roses and sea bass – to customers around the world but connects business people to new partners and sources of capital.

“Emerging markets, particularly in Asia and the Middle East, view their airports and aviation infrastructure as strategic assets to compete in the globally connected, speed-driven marketplace,” Kasarda said. “We in the United States, unfortunately, too often view our airports and airline networks as nuisances and toxic threats to be controlled.

“By neglecting our aviation networks, we’re neglecting our trade infrastructure.”

John D. Kasarda is the Kenan Distinguished Professor of strategy and entrepreneurship and director of the Frank Hawkins Kenan Institute of Private Enterprise at UNC Kenan-Flagler.

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