Qantas is covered for almost all its fuel needs until 2002. But not so Malaysia Airlines, Philippine Airlines, Garuda Indonesia or Thai Airways, says Morisot, though MAS insiders contend that up to half its oil needs are hedged until April. The silver lining, however, is strong travel demand, which is enabling carriers to pass on fuel cost increases. My guess is the market can easily absorb these fare hikes. Oil really isn't as important as it used to be.
Wood expects prices to fall from here on, and financial markets in Asia and elsewhere to rally.
Once markets start pricing that in, we will see them rally. Well, it may just be what Asia needs now. If its crude awakening leads to drastic spending cuts all around, recovery would stall, whatever the oil price. Even worse, crude worries may distract the region from facing more crucial issues. The problem in the Philippines is political.