How Airlines Actually Hedge Higher Fuel Prices
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How Airlines Actually Hedge Higher Fuel Prices
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Fuel is a huge expense for airlines, and even on a good day, jet fuel prices are pretty volatile. Throw in two major wars now effecting energy infrastructure, and fuel prices across the board are higher and higher. Airlines have long tried to manage this expense through fuel hedging, using things like swaps and options to hedge against future increases in the price of jet fuel. David Kang, former group treasurer at Qatar Airways, has firsthand experience hedging for a large carrier, and he tells us exactly how it all works. He also explains why airlines use heating oil as a proxy for jet fuel, how much they can make by raising ticket prices and fuel surcharges, and why airlines and oil refineries aren't so different.
Read more:
War Exposes the Cost of the West’s Retreat From Oil Refining
JPMorgan and Goldman See Mideast Oil Flows Near Pre-War Levels
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