HEDGE AGREEMENT IN AVIATION INDUSTRY

Fuel costs constitute the largest cost item among operational costs in airline companies. Depending on the exchange rate changes in the world, fluctuations occur in fuel prices as a result of events beyond the control of the industry. As a result of these fluctuations, airline companies may be exposed to the risk of high fuel prices. In order to avoid this risk, airline companies can eliminate price uncertainty that may arise in the future and keep fuel costs under control by hedging. The purpose of this research is to explain the Hedge agreement, which is used to eliminate the uncertainties in fuel prices in the aviation industry and the potential risks that may arise as a result of these uncertainties and examine the most commonly used hedging methods.