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An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs

On July 14, User 226363 wrote: "The government needs to go after the speculators just they would after a hurricane, tornadoe [sic], big fire (like in the West), when some people raise their prices much higher."

1) Welcome to Seeking Alpha, Vice President Quayle.
2) Please offer proof of, or otherwise make a reasonable case for, the speculative element you allege.

An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs

Can anyone point to a reputable economist (other than the Air Transport Association's) who will credit speculation for a substantial share of the current per bbl price of oil?

An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs

Mr. Knight's point (and my understanding of the situation tells me he is largely correct) is that speculation is not driving the price of oil significantly versus other factors - although he does not name those I suspect we can safely infer dollar devaluation and the excess of demand over refining capacity - and that airlines should stop complaining about things they cannot control (barring a completed political Hail Mary) and get their own houses in order. If the best an airline employee has to offer in rebuttal is an ad hominem attack, I think it bolsters his point.

An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs

To Eric WSU - When in bankruptcy, it's too late to hedge. The time to hedge is when you do not need to; when you have the cash or the credit required. For the airlines, the late 90s were such a time. That only SWA both did hedge and did not cash in those positions after 9/11 again speaks to the difference between Southwest's world view and that of most other airlines.

An Open Letter to All Airlines - Quit Whining and Hedge Your Fuel Costs

In reply to John of Delaware - whether or not a hedge is a gamble depends on why you hedge. For an airline, with unavoidable exposure to fuel costs, a hedge is a natural and intellgient instrument; an insurance policy, really, to lock in an average fuel price. It is no more a gamble than for any of us to purchase life or disability insurance. In fact, it is sound, conmservative fiscal policy. Southwest was not lucky - Southwest was fiscally conservative and is benefitting, although at $146 a barrel for its unhedged needs that benefit is diluted substantially.