Exactly, but the point is: you win some, you lose some.
- actually they get it wrong alot of the time! That is why the banking system almost failed.
That's the whole point. It's extremely hard to predict prices. As long as, overall, you win more than you lose, then the game is well (enough) played. Even if losses = gains, then at least you dampen the price volatility effects. That's all hedging is: it hedges against (extreme) price fluctuations, and in going from $147 to $33, and back to $75 is definitely extremely volatile!
If an airline is consistently good in betting on oil/fuel prices, then perhaps they should be in the hedge fund business instead of the airline business! I suppose it's much easier than running an airline, just set up an account and make money! No unions or nasty employees to deal with, and IF (heaven forbid) you lose money, then just pass the bill to the taxpayers!!
