"Surely airlines hedge fuel prices, so the cost of oil today is irrelevant."
they do but the cost of the hedge goes up steeply as the time gets longer as the provider of the hegde is taking greater risk
Most airlines hedge when they think the price is going to rise so there hasn't been much roll-over busienss since about September 14 - the old hedges are unwinding and not many people see a sudden rise
It's a lot more complex than that in reality as you play games with how much cash you're willing to "invest" in a hedge cp your dividends/fares etc