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Author Topic: Fuel Hedge and Supplier Contract - Impact on Price Paid Question  (Read 1123 times)

BD

  • Former member
I executed a supply contract that was to reduce the fuel price by 7.9%.

I then executed a hedge (the same game day, immediately after the supply contract commitment), which locks at the "current fuel price" plus a 7.4% premium.

How is the net fuel price calculated?

The fuel management screen now shows the locked + 7.4% price.  Will I be getting 7.9% taken off of that?

I went in with the expectation that they would come close to balancing each other out saving me the premium on the hedge.  But it is hard to tell from the information I can find / calculate.


Offline Sanabas

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Re: Fuel Hedge and Supplier Contract - Impact on Price Paid Question
« Reply #1 on: July 04, 2013, 04:58:00 PM »
The fuel management screen now shows the locked + 7.4% price.  Will I be getting 7.9% taken off of that?

Yes, but only for fuel you buy at your HQ, not for filling your plane up at destination airports. So if your fuel usage doesn't change, your bill will go up by ~3.2% +the monthly fuel supplier cost.

BD

  • Former member
Re: Fuel Hedge and Supplier Contract - Impact on Price Paid Question
« Reply #2 on: July 04, 2013, 05:15:36 PM »
Yes, but only for fuel you buy at your HQ, not for filling your plane up at destination airports. So if your fuel usage doesn't change, your bill will go up by ~3.2% +the monthly fuel supplier cost.
Crap!  I did not get that nuance.  So the break-even is double my calculation.  Thanks for pointing that out.  Is that true for hedged fuel purchases too (my guess is yes, but checking)?

Just to be clear, I will be getting the benefits of BOTH the hedge and the supplier contract on my home base fuel purchases...one does not override the other, correct?

I ask because the graph shows the market price, and the hedged price (though it somehow reports a "history" of hedged prices overtop - makes it hard to see market price).  It also shows numerically the current market price and the hedge price above the graph.  However, it does not show the supplier price (only the active contract shows elsewhere at the bottom of the web page), so it is not clear what price I am paying.

Offline Sanabas

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Re: Fuel Hedge and Supplier Contract - Impact on Price Paid Question
« Reply #3 on: July 04, 2013, 05:29:18 PM »
Crap!  I did not get that nuance.  So the break-even is double my calculation.  Thanks for pointing that out.  Is that true for hedged fuel purchases too (my guess is yes, but checking)?

No. Hedged price simply replaces the unhedged global price.

Quote
Just to be clear, I will be getting the benefits of BOTH the hedge and the supplier contract on my home base fuel purchases...one does not override the other, correct?

Yes.

Quote
I ask because the graph shows the market price, and the hedged price (though it somehow reports a "history" of hedged prices overtop - makes it hard to see market price).  It also shows numerically the current market price and the hedge price above the graph.  However, it does not show the supplier price (only the active contract shows elsewhere at the bottom of the web page), so it is not clear what price I am paying.

If you haven't hedged at all, the hedged price = the market price, so that history of hedged prices is just a history of the market price. You're paying your hedged price* less discount at HQ, and your hedged price everywhere else.

If you want a rule of thumb to check if a supplier contract is worth it, simply take your weekly fuel bill x 2.15 x % discount/100, and that's the monthly amount you'll save. If that's more than the monthly contract price, you win. If not, you lose.



*Subject to changes depending on which country you're in, in theory some countries are more expensive, but there's no way to see the exact scaling values anywhere in game. Not that you need to, it doesn't make enough difference.

BD

  • Former member
Re: Fuel Hedge and Supplier Contract - Impact on Price Paid Question
« Reply #4 on: July 04, 2013, 05:49:33 PM »
You're paying your hedged price* less discount at HQ, and your hedged price everywhere else.

*Subject to changes depending on which country you're in, in theory some countries are more expensive, but there's no way to see the exact scaling values anywhere in game. Not that you need to, it doesn't make enough difference.
Thanks...this is the key point I was looking to understand.

If you want a rule of thumb to check if a supplier contract is worth it, simply take your weekly fuel bill x 2.15 x % discount/100, and that's the monthly amount you'll save. If that's more than the monthly contract price, you win. If not, you lose.
Yes, I was not as precise as 2.15 (I mistakenly assumed a full month / 4 weeks but on revelation that it applies only to the base it is associated with half that might have been my updated calc).

Offline Sami

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Re: Fuel Hedge and Supplier Contract - Impact on Price Paid Question
« Reply #5 on: July 04, 2013, 08:46:01 PM »
Assuming you read this too? http://www.airwaysim.com/game/Manual/Office/Fuel/

(didn't read the thread fully, just that the manual page explains it all quite well)

BD

  • Former member
Re: Fuel Hedge and Supplier Contract - Impact on Price Paid Question
« Reply #6 on: July 05, 2013, 04:33:07 AM »
Would like to say that I research everything I ask, but somehow I find that some things like the manual fall through "the cracks".  I can only say that I have read the manual, but must have missed these details on first pass - i.e. the last two or three lines of the manual.  And, further searches did not find a satisfactory answer. 

Sorry for a redundant question.  Perhaps it will help on another user's search.

 

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