Analysis: As Iran war drags on, airlines pull back on fuel hedges and warn on fares
- LONDON/HONG KONG: With jet fuel prices at roughly double their levels before the Iran war, airlines are growing increasingly reluctant to lock in future fuel costs through new hedges, warning instead of steep fare increases to offset higher fuel bills.
- Hedging allows airlines to lock in future fuel prices, helping shield them from increases and providing greater certainty over costs.
- But some programmes require premiums, collateral or other costs, while airlines that hedge at current elevated prices risk being locked into expensive fuel if geopolitical tensions ease and prices retreat.
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- LONDON/HONG KONG: With jet fuel prices at roughly double their levels before the Iran war, airlines are growing increasingly reluctant to lock in future fuel costs through new hedges, warning instead of steep fare increases to offset higher fuel bills.
- Hedging allows airlines to lock in future fuel prices, helping shield them from increases and providing greater certainty over costs.
- But some programmes require premiums, collateral or other costs, while airlines that hedge at current elevated prices risk being locked into expensive fuel if geopolitical tensions ease and prices retreat.
Sources: CNA