ABSTRACT
Unlike neoclassical theory, evolutionary economics considers competition as a dynamic process where the so-called unique steady state equilibrium does not exist. On the contrary, the economy is understood to be in a constant state of flux as multiple equilibria are reached temporarily, only to be subsequently disturbed by a combination of exogenous and endogenous factors in the macro- and microeconomic system (Papatheodorou, 2004). Over the last 70 years since the end of the Second World War, business dynamics in the air transport sector are notably characterised by this evolutionary process. First, creative destruction à la Schumpeter (1996) is apparent as advancements in engineering and technology result in new generations of aircraft and passenger service systems, which drastically reduce the economic value and functional use of their predecessors. Moreover, the evolving business models in the air transport sectors are structurally intertwined, with both exogenous and endogenous systemic changes. The former are largely related to the gradual development of international tourism since the early 1960s and the opening of the airline, and subsequently the airport market a few decades later; the latter concern competition dynamics within a liberal environment (see Chapters 6 and 7) and the emergence of business model differentiation and specialisation, followed by a gradual blurring to maximise market share.
