Airline fuel cost and hedging
Burn per block hour, hedged share, price paid.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: airline fuel cost and hedging.Updated 22 October 2026
What it does
Usually the largest single cost. Fuel burned is block hours times the burn per block hour of each aircraft type. A hedged share of each year’s fuel is bought forward at the hedged price and the rest at the market price, so the price paid is the blend and the hedge shows as a saving or a cost against the market. Hedges are typically layered over the next year or two and roll off, which is why a rise in the fuel price reaches an airline’s costs late but in full.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 45–49: Narrowbody: fuel burn, Widebody: fuel burn, Jet fuel market price, base case, Hedged share of fuel…
- Costs, rows 6–12: Narrowbody: fuel burned, Widebody: fuel burned, Fuel burned, Market fuel price, selected scenario…
What a reviewer looks for
- All fuel at the market price when most of next year is hedged.
- A hedge carried forward for ever rather than rolling off.
- Fuel driven from ASK or revenue rather than block hours.
Learn it, then build it
Vocabulary: Hedging.