Airline Hubs and Local Economic Outcomes in the United States

This chapter considers the effects of airline hub airports on a city’s economy over the 1978–2022 period. Using a panel dataset of yearly outcomes for cities with major commercial airports, combined with data for the time periods when an airport was labeled by an air carrier as a hub, the authors consider the effects of hubs overall, including hub openings and hub closings. To accomplish this in the presence of possible endogeneity of panel regression estimates, the authors turn to a synthetic control event study design which allows for the estimation of causal outcomes. The authors find that airport hubs do lead to increased economic output on an overall and per-capita basis. Hub airports increase personal income by 1.7–2.2% and per-capita personal income by 1.2–1.5%. Evidence on hub openings suggests that air travel–related employment and, to a lesser extent, hotels benefit from the increased air traffic. Evidence on hub closings suggests these airports help support sectors such as wholesale trade and finance/insurance/real estate. These findings support the hypothesis of airline hubs functioning as a productive amenity, providing high-quality infrastructure that supports business activity.