View Single Post
Old Oct 21, 08, 2:22 pm
Join Date: Sep 2005
Location: ORD
Programs: AA; Marriott; SPG; HH
Posts: 3,473
Originally Posted by lurcher View Post
AA's fuel hedging has it likely paying more than the current daily spot price - such is the risk of doing this. It will take them weeks/months to get out from under these to where they are paying sufficiently lower rates again. Only then would it make sense for them to drop the surcharges.

But of course - the "surcharge" is only compensating for the cost of fuel - therefore should not allow them additional margin - yea right...

Either way, don't hate the player - hate the game....

I don't think a lot of people realize that AA does not buy fuel the way we buy fuel for our cars. We buy fuel on an as-needed basis and pay the fee charged at the pump. Airlines do not do this and lock themselves into a rate. If the price of fuel rises much higher than their hedged price, good for them. If the price drops, too bad, so sad. Someone has to pay and now it's the customers.

It's just like the people who purchased their cars with fuel options at 2.99. When the price of fuel was over $4, they were sitting pretty. If the price drops to $2.50, are dealerships supposed to refund the purchasers? I don't think so!
badjuju is offline