Fuel hedging (basic questions)
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Fuel hedging (basic questions)
Questions may sound very basic, but cannot search them on the web. Will much appreciate your advice!
1. Do airlines hedge directly with their suppliers in the airports or through banks / commodity exchanges?
I just cannot understand how hedging works. From one side airline has say future forward contract for crude oil. From another side the jet comes to the physical airport, gets fueled their and airline pays to supplier. How does one reconcile with another?
2. How does hedging work? Do airlines usually use 3rd party software / external consultants / who does the trading of swaps / options?
3. What is the hedging software in the market if any?
Thanks!
1. Do airlines hedge directly with their suppliers in the airports or through banks / commodity exchanges?
I just cannot understand how hedging works. From one side airline has say future forward contract for crude oil. From another side the jet comes to the physical airport, gets fueled their and airline pays to supplier. How does one reconcile with another?
2. How does hedging work? Do airlines usually use 3rd party software / external consultants / who does the trading of swaps / options?
3. What is the hedging software in the market if any?
Thanks!
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