How does fueld hedging work?

[qualitycontrol]

Can anyone fully explain the ins and outs of hedging?

Is the price agreed in advance the price paid per tonne or is it an absolute maximum??

Cheers.

[NZScion]

Fuel hedging - Wikipedia, the free encyclopedia

Read all about it

[FlightDetent]

Another view: you bet agains a fully qualified team of banking professionals about the price of fuel to be. There may be some unseen improbabilities, still the better prepared team wins in the long run. The hedging instrument was not created for you to save, it exist simply because there are money to be made. Yours.

FD (the un-real)

[Karl Bamforth]

You put the minimum you dare in the plane then hedge your bets on if you will make it to the next airport.

Well some ppl do.

[Pilot Pete]

Surely one of the biggest advantages is having a known fixed cost for your fuel. It is more than just a 'punt' at trying to beat the bankers.

PP

[pedigree]

Thats true but in fact the hedge is seperate to the actual costs of fuel at a station. This is purely a financial transaction against the spot price at predetermined dates, and doesnt specifically relate to fuel in the tanks. It allows an offset to the cost of fuel using a linked commodity. You could do it with the dollar or oranges its just fuel or oil to keep it in the similiar price bracket.