Originally Posted by
dingo222
the biggest benefit is not having to buy fuel on the spot market and absorbing the spike in fuel costs.
We actually do buy our fuel at spot prices on the open just like all airlines. Our hedges are commodity futures in heating oil. At the end of the quarter, the profits from the heating oil futures trades are deducted from our actual spot fuel purchases. This yields a total fuel cost that can be divided by actual gallons used to show a reduced price per gallon over what was 'paid at the pump'.