How do airlines protect themselves against increases in fuel prices? Do they use commodity futures? Is there much difference in the approaches used by the legacy carriers and the newer carriers, say Delta and Southwest?© BrainMass Inc. brainmass.com October 25, 2018, 5:36 am ad1c9bdddf
Airlines use a strategy of hedging fuel costs through trading fuel derivatives (future and forward contracts), (Southwest, 2011). This hedging process has led to recent losses with oil trading significantly lower than when the forward contracts were purchased. (See Bachmann, 2008).
There isn't much difference in how ...
Explain how southwest airlines uses its fuel hedging. How does fuel hedging impact the airline industry.View Full Posting Details