JET fuel hedging is making a sustained comeback since the second quarter of 2020, reports London's S&P Global Platts.
But Asia's jet fuel market is still far from normal, due to uncertainties, complexities, and volatilities.
Aviation fuel is one of the largest expenses for an airline, accounting for 30 to 35 per cent of total operating costs.
'Airlines are in a unique position where they have roughly nine months of visibility over their revenue and therefore do not hedge their fuel before generating the associated revenue,' said an industry participant.
One airline told experts they typically hedge up to 12 months ahead pre-Covid crisis and build their hedging position ahead of the next quarter around 60 to 70 per cent of their fuel requirements.
However, since March 2020 many airlines have stopped all hedging activities due to the Covid crisis.
Another airline declared they actively hedge against their fuel purchasing, usually no more than 50 per cent of their jet demand.
With international travel restrictions hurting demand, they now procure only a fraction of their pre-Covid crisis fuel consumption of two billion gallons per year of jet fuel.
SeaNews Turkey
But Asia's jet fuel market is still far from normal, due to uncertainties, complexities, and volatilities.
Aviation fuel is one of the largest expenses for an airline, accounting for 30 to 35 per cent of total operating costs.
'Airlines are in a unique position where they have roughly nine months of visibility over their revenue and therefore do not hedge their fuel before generating the associated revenue,' said an industry participant.
One airline told experts they typically hedge up to 12 months ahead pre-Covid crisis and build their hedging position ahead of the next quarter around 60 to 70 per cent of their fuel requirements.
However, since March 2020 many airlines have stopped all hedging activities due to the Covid crisis.
Another airline declared they actively hedge against their fuel purchasing, usually no more than 50 per cent of their jet demand.
With international travel restrictions hurting demand, they now procure only a fraction of their pre-Covid crisis fuel consumption of two billion gallons per year of jet fuel.
SeaNews Turkey