Air India starts fuel hedging

The carrier chose investment bank Citigroup as the hedging counterparty for its maiden trade.

The price of jet fuel, which averaged $1.14 a gallon in 2003–2004, stood at around $2.01/gallon at the start of March. Since fuel costs constitute almost 30% of Air India’s operating expenses, the carrier says it decided to manage this risk using a combination of contracts such as jet fuel swaps, options and collars.   


The airline’s fuel bill

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