Among the greatest expenses associated with airline operations are fuel costs. In past years when fuel prices
were rising rapidly, airlines used hedging methods to reduce the procurement risks for sourcing fuel. The two
articles listed below highlight the experiences of three large airlines using different fuel hedging approaches.
Locate the articles in the Hunt Library and review them.
Liu, Chin-Yen A., & Jones, K.J. (2016). Integrated risk management on fuel hedging program: A case study
on Southwest and China Eastern airlines. Academy of Business Research Journal. 2, 74-85.
Manuela Jr., W.S., Rhoades, D.L., & Curtis, T. (2016, August). An analysis of Delta Air Lines’ oil refinery
acquisition. Research in Transportation Economics 56, 50-63.
Write a case study report to analyze the effectiveness and value of fuel hedging by airlines. In your case study report begin with a summary
overview outlining the main logistics issues facing the companies. Then, add detail and analysis by responding to the following topics and
Describe how each airline used procurement methods to hedge against fuel cost increases. Explain what internal and external
considerations are relevant to the airlines’ decision to hedge fuel prices?
Evaluate the relative effectiveness of each airline’s approach to hedging. Provide an analysis of which method was most successful and
describe what factors made the difference in success or failure of the hedging method.
Discuss the logistics lessons to be learned from the hedging efforts of the airlines. Do you think airlines, in general, will continue to use fuel
hedging in the coming months and years?
relationship. Rutz (2015) also discusses more collective reasons of why an agent may diverge from the principal’s given policy goal; he claims how creating collectives gave inspectors additional skills and knowledge, as well as a broader mandate and repertoire, while permitting responsiveness and consistency. Discretion in organizational structures in used situations of high complexity and ambiguity. SLBs are compelled to interpret and balance rules to take account of the consequences of their actions for the intended policy targets. Hence, discretion should not always be associated to self-serving policy alienation which implies a psychological disconnection of the policy’s professional implementation towards its target. As Tummers and other cited scholars argue, a too-individualistic explanation of discretion as a coping mechanism is not the only explanation to the implementation conflict. Relying too much on the PA Theory in condemning discretion, then, could result in a bureaucratic/coalition shift within the organization that would affect the organization’s administrative process as a whole if no compromise is made upon allowing discretion. As Hupe & Buffat (2013) have also claimed, the way in which discretion is granted influences the way discretion is used. If greater allowance is given towards agency discretion, agents would be able to go forth with imposing their own expertise on the implementation process in achieving policy impacts and outcomes as designed by the principal, and would need to rely on creative compliance less, through having a better causal relationship between the principal and agent, risking less organizational shift, while allowing for both greater policy change and policy legitimacy.>GET ANSWER