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THE IMPACT OF OPERATIONAL AND FINANCIAL HEDGING TO THE AIRLINE JET FUEL EXPOSURE AND OPERATING PERFORMANCE

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One of the major expense in airline industry comes from fuel cost. An airline tries to manage the impact of fuel price fluctuation by performing operational and financial hedging. Using the airline data from 2013 to 2017, this study examines the effect of financial and operational hedging in reducing jet fuel exposure and airlines’ operating costs to revenue ratio. To test the hypothesis that airlines use hedging to reduce their exposure to the jet fuel price, the author use a two step procedure. First, estimate the annual jet fuel risk factor for each airline, then regress the absolute value of jet fuel risk factor against the operational hedging, financial hedging and other control variables. While to test the impact of hedging to the airlines’ operating performance, the author regress the operating cost to revenue ratio agains the operational hedging, financial hedging and other control variables. This study shows that here is no variable that give significant impact to reduce the airline’s jet fuel risk factor. But the existence of financial derivative hedging gives significant impact in reducing the airline’s operating cost to revenue ratio.

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Availability

30006883

6883

RLC MM (Rak Tesis)

Available

Detail Information

Series Title

Tesis

Statement of Responsibility

Sitauli Dewikristi Siallagan

Call Number

6883

Publisher

Salemba, Jakarta : Magister Manajemen FEB UI., 2019

Collation

xii, 54 p. : ill. ; 30 cm.

Language

English

ISBN/ISSN

-

Classification

650

Content Type

text

Edition

-

Subject(s)

Tesis
Business Administration
Airline
Airline Performance
Fuel Hedging
Operational Hedging
Financial Hedging

Specific Detail Info

-

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