How does this work for things like air and Oblivion? Do parks/John Wardley approach, for example, B&M and ask them to develop this idea? Do they approach them and ask "what new ideas have you got?", or do B&M approach Merlin and say "we've got this idea, you interested?"
All of the above, to be honest. Typically I would imagine it's mostly the middle one, as it gives the best opportunity for the park to get something unique without B&M charging them a fortune for it.
A) The park approach the manufacturer with a new idea: The manufacturer could agree to go away and do the design work, but it's a lengthy and expensive process. The manufacturer would expect some sort of elevated fee for this work. The challenge always with this option is whether the manufacturer is willing (and able) to pull it off. They may not want to touch launches, or be wary of doing gigas, or something like that. It's unlikely they'll "do anything for the money", there's corporate responsibility, liability and reputation to deal with too. Whether or not there are clauses meaning the ride type can't be used elsewhere within a given time frame, or that there's an understanding the manufacturer will shoulder some of the development costs as they know it could be a new product for them to sell to other parks, would all come down to the business case for that particular 'invention'. Not something likely shared far outside the walls of the main conference rooms...
B) The park approach the manufacturer to hear about their new offerings: This is a win-win for both, really. The manufacturer gets to pitch something new, exciting, and within the realms of their capabilities, the parks get to hear about products that they can actually have installed in practical amount of time. The park can help the manufacturer see a sensible application for their new idea, and the manufacturer can recoup some of their R&D costs. In real terms, the cost of the ride is likely to go up a little, due to the extra time and risk to develop a new ride, but nothing like as much as
A. This is essentially what a park going to Tender is - they ask all the manufacturers to submit bids for the new ride, which can include new ride types, etc, if the manufacturer feels like they can offer something.
C) The manufacturers pitch ideas to the park: I suspect this only happens in a handful of situations - mostly where the park chain already has a well established relationship with the manufacturer. This could take the form a very high level discussion where the park wants to get a feel for the market and where they might go in 5-10 years. A lot of the time, it's what IAPPA is for. In the case where the manufacturer has a fully developed ride type they want to sell, they may offer a discount to get their first one sold.