Originally Posted by
kiez
This might have to do with the fact that airlines hjedge fuel well in andvance and so rewcent fuel price drop might only affect us in the far future
This is flawed reasoning. The main reason it makes sense for companies hedge is to stop them from going bankrupt. The price at which they hedged the fuel should not have an impact on their marginal cost, as at any moment they can sell or buy fuel at the market price on the spot market. Therefore, the correct marginal cost which should be taken into account for pricing purposes is the current spot market price. Hedging is just speculation, and results in a windfall profit or windfall loss that is sunk, and should not affect prices. The only other thing it affects is the probability of bankruptcy which decreases if the hedging strategy is good.