Summary Overview In the airline industry, fuel consumption is one of the most significant challenges companies have to deal with. Therefore, controlling fuel costs can give an airline a relatively high competitive advantage in the market. One such move to counter this problem is the hedging program derived from the implemented financial risk procedures (Liu et al., 2016). As such, they have saved substantially from the earlier anticipated losses through the strategy. It depends on purchasing contracts to acquire oil at a relatively lower price than that in the market when demand goes high. The principal challenge to the agreement is when there is a drastic decrease in oil market prices, such as the one experienced by China Eastern Airlines and Southwest Airlines (Liu et al., 2016). It warranties a response or a different type of agreement to handle such scenarios due to uncertainties. The case study is conducted to analyze the effectiveness and value of fuel hedging by airlines and the potential adjustments that can be made for higher profitability. The Procurement Methods Various airlines have designed a strategy to successfully apply the hedging technique to control their fueling prices, hence staying competitive. Several challenges face the industry, such as its sophistication, excessive government regulation, high capital intensive with fixed revenue requirements, destructive competition, and a volatile working environment. China Eastern Airlines has substantially benefited from the hedging strategy by turning to the financial derivatives market. It has continuously utilized option contracts instead of oil futures contracts (Manuela et al., 2016). Thus, it secures prices at their desired level by buying long-term options while simultaneously selling significant amounts of put options. On the other hand, Southwest Airlines used the futures option and were substantially affected by the fall in fuel prices. Considerations Relevant to the Hedging Strategies Various internal and external factors affect airlines’ decisions to hedge fuel prices. One such consideration is the fluctuation in fuel prices, mostly due to the limited energy source, jet fuel. Every company has to purchase jet fuel regardless of the current market price, which is continually varying. Thus, it makes the industrial complex and unpredictable necessitating counter mechanisms to manage the issues. A company cannot compete with prices since they risk losing clients in ensuring stability and predictability of transport charges (Turner & Lim, 2015). The solution to gaining a competitive advantage over other firms is through cutting jet fuel costs, thereby minimizing expenditure. Airlines also consider the decision because of stiff and uneven competition ground within the industry. The robust global economies have created a great demand for consumer travel; hence, firms invest in more routes and options for travelers. However, competition stiffens, and some companies are forced to choose between flight prices, sacrifices in customer experience, and other cost-saving moves versus losing clients to other companies. Moreover, global carriers are established and hence have an advantage in the market. Similarly, airports are facing congestion as demand rises higher, raising other concerns for carrier companies (Dafir & Gajjala, 2016). The data-driven tech world is equally transforming, potentially undermining the almost outdated in