FlyerTalk Forums - View Single Post - BA Fare Rise to Cover Fuel Costs
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Old May 11, 2004 | 1:16 pm
  #14  
flyertalker00152
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Join Date: Dec 2002
Posts: 977
I don't think any airline would have any justification in asking for more money because of increased fuel costs after the passenger has paid for the ticket. Fortunately, that doesn't seem to be what's happening here, but some of the above posts raise an interesting question.

As soon as the airline gets the money from the passenger, the airline can use an appropriate percentage of that money to buy fuel for future delivery. Just as the passenger has paid the money for a service on a future date, the airline can pay for fuel for delivery on a future date. In practice, airlines do not need to buy fuel for each individual passenger for a certain flight, but instead the airlines can hedge against rises in fuel prices by trading oil futures. If the airline doesn't bother to hedge against the risk of fuel price rises, then it is the airline's risk, not the passenger's. Just as the passenger has hedged his risk by buying a ticket for a service on a future date, it is the airline's responsibility to do likewise for the fuel or otherwise suffer the price risk.
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