Ever since Leonardo Da Vinci started scribbling designs for flying machines in his notebook, aviation has attracted bold, blue-sky thinking. Aviators continue to dream big: see Airbus’ sublimely odd design for a jumbo jet that mimics animal skeletons as a recent example. But since deregulation in 1978, airlines in the U.S. have done everything Da Vinci could have asked of them—except make money. Between 2001 and the end of 2008, for example, no less than 15 U.S. airlines filed for bankruptcy. Around 2008, however, something unexpected occurred. Airlines suddenly leveled off. In the past few years, profits have become positive across the industry, and market caps are soaring from prior lows. So what happened? The turnaround can’t be attributed to a bold, Da Vinci-esque initiative such as new carbon fiber aircraft, the pioneering of new markets or even low-cost innovation. Rather, it was the result of something far more modest: the slicing of airlines’ base offerings into customizable “options and extras.” The most famous of these options was checked-bag fees, but most of the recent innovations have focused on “upselling” passengers into an improved experience (e.g., selling fast-track boarding, lounge-access, extra leg room and others). In 2012, the major U.S. airlines earned an estimated $12.4 billion from such “ancillary revenue” alone, grown from a negligible base six years ago. For many airlines, this simple innovation was the difference between survival and insolvency. We term the steps that the airlines took to save themselves “edge strategy” — the strategic monetization of the huge value that often lies untapped on the edge of a core business, but which many businesses miss because they are focused on nurturing their core. In the case of airlines, many carriers had become trapped by thinking of themselves only in terms of their company’s core offering: transporting passengers by air from Point A to Point B. The breakthrough came when the airlines collectively realized that they should think of themselves not as pure transportation providers but as providers of travel solutions. They recognized that they had many different types of customers, all with different needs (beyond needing to get somewhere), and all with differing willingness to pay for goods and services. Get the full story at Harvard Business Review