I agree with what you say. But the current pricing by competitors is a bit of a chicken and egg situation. Because fuel price is low, competitors can afford to drop their fares. CX doesn't have that luxury so dropping their fares with a high fuel cost magnifies the effect of the drop in yield.
I don't fully disagree with your point.
Let me talk only about premium classes.
HKG is a special market for tickets originating there. Fares have been historically extremely high from HKG in premium classes; abnormally so. This is clearly related to the dominant position of CX and slot constraints. Other points of origin in Asia, as well as America and Europe are considerably cheaper. There CX aligns fares with others (possibly with some markup for quality, but the difference in quality has been narrowing coz all airlines introduced flat beds). Competitors exHKG could have lowered their premium fares exHKG long ago, but as long as the market (and CX) allows high fares, they have little incentives to do so. That results in my EU-HKG tickets to be much cheaper from EU than from HKG, even on CX. And I buy all my frequent return tickets from EU. For example,I now pay less than HKD40,000 for a fully flexible CX F ticket.
To return to your point, you should consider the hedge loss as a fixed (exceptional) cost. That is a given fact and no business/pricing policy can change it. CX has the option of keeping very high fares or lowering them. That has no influence on the hedge sunk cost. Given the renewed competition, keeping high fares will mean much lower load factors and bad operating results. Significantly lower fares will mean a good load factor but a drop in yield and bad operating results. lose-lose.