Fuel hedging is a contractual tool used by some airlines
to stabilize jet fuel costs. A fuel hedge contract commits an airline to paying a
pre-determined price for future jet fuel purchases. Airlines enter into such
contracts as a bet that future jet fuel prices will be higher than current
prices or to reduce the turbulence of confronting future expenses of unknown
size. If the price of jet fuel falls and the airline hedged for a higher price,
the airline will be forced to pay an above-market rate for jet fuel.(Wikipedia)
