Southwest Airlines' fuel hedges give it edge over rival airlines

hedging contributes to fuel price increase. Not very heroic on Southwest's part

Southwest started buying hedges when oil was down and the risks of it falling further were small- that was the time to buy oil for the long term.

In regard to the comment above by Catherine Bossi-- hedging could drive up energy prices if done by many businesses and speculators but remember Southwest started this when prices were low and if it had any impact at all it probably helped support oil at a time when people were dumping it (remember the Asian crisis) and making bad long term decisions as a result of cheap short term prices (buying gas guzzlers and SUVs). If more people had taken the long view back then the oil crisis would not have hit so hard the past few years. Southwest also is in position to take possession of newer more fuel efficient aircraft over the next few years-- which is also good for the country and for consumers. Hedging is just part of the market and Southwest is helping to keep costs and inflation in check as a result of hedging decisions which- if made by other airlines- means Southwest makes money and consumers do not have to pay extra for checking bags.

Correction-- in the above I meant to say that if good hedging decisions had been made by other airlines as well we would all be better off.