Garuda to hedge against fuel prices

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Indonesian flag carrier Garuda Indonesia may start fuel hedging this year to offset the volatility in oil prices.

"We're thinking about hedging 10% to 15% of our fuel because our strategy now is selling forward, what we call early-bird promotion. So by doing that, it means selling tickets three to six months down the road and that's why we want to lock the fuel prices on those tickets," the carrier's chief executive Emirsyah Satar said at the ISTAT Asia conference in Singapore.

He added that the carrier is already looking into its hedging options and will likely start doing so within the year.

Aside from hedging fuel to operate Haj flights, Garuda has never hedged fuel in the past.

The carrier has so far managed to pass on about 85-90% of the increase in fuel prices directly to passengers, says Satar.

He added that the carrier's fleet renewal efforts have reduced fuel consumption by about 7% and that fuel costs amount to about 35% of Garuda's operating costs.