Explore BrainMass

Fuel hedging and the airline industry

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

Define fuel hedging. Explain how it is helpful to the airline industry.

© BrainMass Inc. brainmass.com September 25, 2018, 10:54 am ad1c9bdddf - https://brainmass.com/business/financial-distress-and-bankruptcy/fuel-hedging-and-the-airline-industry-402418

Solution Preview

Fuel hedging is the practice, often employed by airline companies, of making advance purchases of fuel at a fixed price for future delivery to protect against the shock of anticipated rises in price.

The study of Carter, et. al (2003) investigated jet fuel hedging behavior of firms in the US airline industry during 1994-2000 to examine whether such hedging is a source ...

Solution Summary

This solution looks at the usefulness of fuel hedging to the airline industry.