Fuel hedging

[ban2]

Does the fuel hedging make running a few 747s easier and more viable?

[alexgv1]

Depends which generations of 747, which era, which fuel price, between which airports and what the competition is like. Could you be more specific please?

[exchlbg]

Hedging fuel prices is something like a lottery and doesn´t guarantee anything. If you are lucky, you hedge at a relatively low position, but advantage of that (given that fuel price is rising) only lasts a year. So it doesn´t change the overall viability.

[LemonButt]

To answer the question, yes it does make them more viable.  Viable in the sense that you can lock in fuel prices and know what your costs will be.  When you hedge, you are paying a premium over the current market rate, so expect to pay more in the short run.  Most people think the purpose of hedging is to save money and beat the market.  The truth is hedging should be used to take the uncertainty out of fuel prices so you can plan accordingly.  As they say, hope isn't a strategy, so hoping fuel price don't spike isn't much of a strategy if you are flying gas guzzlers.

[ban2]

cool thanks for the replies

[esquireflyer]

To answer the question, yes it does make them more viable.  Viable in the sense that you can lock in fuel prices and know what your costs will be.  When you hedge, you are paying a premium over the current market rate, so expect to pay more in the short run.  Most people think the purpose of hedging is to save money and beat the market.  The truth is hedging should be used to take the uncertainty out of fuel prices so you can plan accordingly.  As they say, hope isn't a strategy, so hoping fuel price don't spike isn't much of a strategy if you are flying gas guzzlers.

This is correct. Hedging is like insurance basically. If you end up getting sick / totalling your car, you can save a lot of money by collecting on your insurance. But it's also quite likely that you will be healthy / drive safely and lose money on your insurance. But that doesn't mean that insurance is not a viable choice!

Hedging fuel will make a 747 less sensitive to short-term fuel spikes, but long term fuel price increase will still hit you hard in DOTM or later universes. In Jet Age you can probably fly 747s and be fine as long as you're not getting frequency bombed by a DC-8 flyer.