Enthusiasm for hedging wanes among US airlines

Airline fuel hedging was once a thriving business for bank commodity desks. But now major US carriers are showing less appetite for hedging, while non-bank dealers such as BP and Shell are also muscling in on the airline fuel hedging business. Alexander Osipovich reports

Bank commodity desks have suffered many blows in the past several years: costly new regulations, an exodus of talent to hedge funds and trading houses, and repeated hammerings from the press and politicians over allegations of market manipulation.

To that list, one can add another challenge. Airlines' fuel hedging activity, which was once a dependable source of revenue for bank commodity trading