Hayden

This is a good point.

Frontier's most-recent-quarter CASM ex-fuel was 6.29 cents, and F9 is reducing that number. It's CASM incl-fuel was 10 cents.

Southwest's most-recent-quarter CASM ex-fuel was 6.57 cents, and WN stated it expects this number to increase in the current quarter. Southwest's CASM incl-fuel was 9.15 cents. In the most recent quarter, WN realized a gain of $300 million from its fuel hedges in the quarter, as compared to a total profit of $111 million (incl. special items).

So WN's available cash lets it hedge significantly, allowing it to remain profitable (and thus continue hedging), in contrast to pretty much every other airline. Also, it has folks who can do the hedges successfully. In the absence of its hedges, WN would have somewhat higher total costs than F9--but even then, it could absorb losses at Denver through its larger route structure.

Of course, although this has been remarked upon by others elsewhere, it's worth noting that the above suggests that WN is making its profits on its fuel hedges, rather than on its flying, which doesn't say much for current fares across the industry relative to costs. As long as WN can retain this competitive advantage, it would tend to act as a fare ceiling.

-Hayden