I don't understand the point on hedging. Both turning an aircraft around faster and a successful hedge on jet fuel result in higher profit. But not sure how the

I don't understand the point on hedging. Both turning an aircraft around faster and a successful hedge on jet fuel result in higher profit. But not sure how the two are related? Regarding hedging, Southwest gets too much publicity for being so slick to hedge fuel before oil prices shot through the roof years ago. Hedging is not part of its core competency, or at least it isn't unless they are pioneering a new business model of providing a service and then leveraging for profit on the futures markets. As in, they could have lost money on the hedge as well. Unless Southwest could use their understanding of the airline industry to predict a huge rise in oil demand, hedges should only be used as a tool to smooth out expense lines. Here's an oversimplified example to illustrate: A gas station owner hedges oil futures. Might be smart because he isn't going to change his prices every day to reflect the spot price and customers appreciate it. He has a better forecast on his profitability because his expenditures are smoother. But it isn't really his core competency to predict oil prices. http://en.wikipedia.org/wiki/Fuel_hedging http://en.wikipedia.org/wiki/Fuel_hedging TL;DR: Hedging can really help your profits but you don't read about the companies that lost money on hedges. Maybe Southwest was able to build a team of brilliant market researchers but I'm not sure it's a good idea for every company to buy futures.