"It is common to assume in business cycle analysis that capital stock is homogenous and constant in aggregate value. We explore the alternative concept that capital is heterogeneous, and whether it exhibits cyclical changes. A multiperiod model of investment implies that acquisition of specific components of capital responds to changes in relative interest rates, and we further show that the structure of rates is cyclical. If cyclical changes in the composition of capital are substantial, that is another mechanism to propagate the business cycle. Detailed data of specific capital types are available for U.S. passenger airlines, a cyclical industry. We find that there are regular patterns by which airlines adjust the mix of capital. Results suggest a capacity constraint influence in determining movements of aggregate income."