"Basically, it's an attempt to achieve a fixed cost in a volatile expense area, and the price of oil [the basis of jet fuel] has certainly been volatile these past three years," Bauer said. "The goal is avoid a financial catastrophe in one cost area and if an airline can achieve that by the end of the year, that's satisfactory." Bauer added that he does not have a rating on nor own shares in any airline.

UAL's shares fell 60 cents to $11.17, while Northwest declined 51 cents to $10.04 and Delta dropped 40 cents to $8.45 in mid-day Wednesday trading.

Of course, Bauer added that hedge and cap downsides exist. The downside of a cap is locking in a price, followed by a large price drop, and overpaying for fuel, he said. The downside of a hedge: hedging under the belief oil prices will rise, and they don't, leading to (at best) a break-even expense, as opposed to lower net costs if the airline had simply purchased the fuel.

Still, Bauer argues that despite the fact that some airlines may lose money this year by trying to factor out fuel price risks, he favors hedges and caps for airline fuel as an operational strategy.

"If you can factor out 60-70% of your fuel price risk, you're doing your company a service, on a risk/return basis, even if you end up paying 10-20% more if the market moves against you," Bauer said. "In my view a 10% annual overpayment beats a 60% or 70% surprise price increase shock."