Dubai: With fuel accounting for 34.4 per cent of Emirates' operating costs in financial year 2010-11, the airline is planning to focus less on fuel hedging because of volatility in oil prices, according to the airline's president Tim Clark.

Asked if the airline is still hedged, Clark told Gulf News: "I am not saying we are not hedged, but it is not to the levels that we did in the past. Nobody can predict what fuel is going to do. So we are not spending so much time on managing the risk forward as perhaps we did a few years ago, because the volatility is just too much stuff to get our mind around."

Market experts seem to agree. "If oil prices start to ease [as they are already doing], it pays to not be locked into too much going forward," said Addison Schonland, US-based aviation analyst and president of Innovation Analysis Group (IAG).

Added Saj Ahmad, UK-based aerospace and aviation analyst with FBE Aerospace: "Going forward, Emirates' hedging policy will continue to be more of a short-to-medium term assessment. Short-term fuel hedging gives the flexibility to move when oil prices move."

Without divulging clear fuel hedging plans for the carrier, Clark added: "What we are trying to do is manage the business within a band of fuel price between $80 [Dh293] and $130 a barrel, making sure that the airline's operations are smooth."

Profitability

Fuel hedging is a practice often employed by airlines in which they make advance purchases of fuel at a fixed price for future delivery in order to protect against the shock of price rises. Airlines across the globe continue to suffer from high jet fuel prices.

Having written down Dh1.57 billion in hedging losses once already — for its financial year 2008-09 — the volatility in oil prices forced Emirates to pay an extra $250 million (Dh918 million) in the last four months.

This affected the airline's profitability by Dh1 billion (that the airline could have made extra) in the last fiscal, the carrier said earlier this month while announcing record profit of Dh5.4 billion for the 2010-11 fiscal year.

"We have managed the fuel risk as effectively as we always used to and we are continuing to look at the situation as volatility [in oil prices] is very strong. The prices have come down from $127 a barrel to approximately $99 a barrel. And we actually removed the surcharges as we saw the oil prices were coming down. It was a bold move," Clark told Gulf News.

Adding to this, analyst Ahmad said: "We saw oil prices fall by around 10 per cent last week but then started to climb again. In an environment like that, being able to adapt pricing is critical and that's why making more short-term fuel buys mitigates against any big changes in price."

Diogenis Papiomytis, Principal Consultant, Aerospace and Defence Practice, at Frost & Sullivan, meanwhile, said that Emirates is adopting a "wait-and-see" approach. "It is perhaps the best approach at this point in time," he said.

Family Fares launched

Emirates on Monday launched its ‘Family Fares' offer giving families in the UAE a 15 per cent saving on their spouse and children's tickets to a number of Emirates destinations.

With the summer holidays just around the corner this deal is expected to be widely welcomed by local residents planning their annual family vacation.

Valid for tickets purchased in First Class and Business Class, the promotion is available for bookings up to May 31, for travel between June 20 and July 20, 2011.

Excellent saving

"Our new Family Fares offer provides families in the UAE with an excellent saving on their summer holiday tickets. Summer is a notoriously busy time for travel in the UAE as residents take the opportunity to visit friends abroad or explore an exciting new foreign destination during the summer break," said Khalid Bel Jaflah, Emirates Vice-President Commercial Sales UAE.

To qualify for this offer the head of the family must purchase a full fare Emirates ticket to the same destination.

25 destinations

The 15 per cent discount will then be applied to the remaining family members' tickets.

A total of 25 Emirates destinations from the Far East, Indian subcontinent, Africa, Europe and America are covered by the offer.

When travelling with Emirates, families can expect world class inflight services such as special meals suited to young travellers, award-winning in-flight entertainment system and superior service from highly trained team of cabin crew.