Of "Fuel" Hedges

Over 2 years ago I wrote What offshore vendors can learn from Southwest Airlines

One of the things I recommend was emulating Southwest use of hedges: "Insulate your clients from the wage inflation and staff turnover – that’s your version of the fuel hedge." I should have also included currency hedges.

Well, with oil over $ 90 a barrel, Southwest hedges at $ 51 are another sign of an extremely well run operation. With the dollar so weak, currency and wage inflation are a double whammy affecting offshore, particularly Indian, vendors.

None of the other airlines appear to have learned from Southwest , as this article points out. Many offshore vendors did not hedge either - can you imagine how much fun they would have with a $ 40 per barrel fuel cost advantage?