Asia airlines hedging major part of fuel use

[SINGAPORE] Top Asian airlines are hedging a substantial portion of their jet fuel usage this year, a Reuters survey showed, signalling they expect prices of the fuel to be firm and indicating sustained pressure on their profit margins.

Jet fuel makes up at least 30 per cent of most airlines'overall operating costs and an effective hedging strategy is crucial as heightened competition forces carriers to cut fares and operate on thin margins.

While there should be sufficient supply of jet fuel in Asia this year to meet buoyant demand driven by healthy passenger traffic, airlines are unlikely to benefit from lower prices.