US airline fuel hedging Part 2: Alaska Air, JetBlue and Southwest try to crack the hedging code

Similar to the the US global network airlines Delta and United, Southwest, Alaska and JetBlue are greatly benefitting from lower oil prices. And like their larger rivals, the smaller airlines are attempting to manage their hedging portfolios effectively in light of lower oil prices.

Southwest, Alaska and JetBlue are each taking a different approach to managing their hedge programmes. Southwest seems to have been in and out of the market in 2015 while Alaska's strategy remains unchanged. It continues using call options, and is willing to pay a bit more for its hedging insurance to protect against downside pricing. JetBlue does not appear to have made dramatic changes to its hedge book, but watches what its competitors do closely.

Those three airlines, and all carriers, are attempting to craft hedging strategies to effectively manage the fuel price volatility that has occurred in the market place during the last year. It is a formidable challenge, but the overall upside is a substantial decrease in one of their largest cost inputs.