Fuel Cost per Gallon
Fuel cost per gallon describes how much an airline pays for each gallon of jet fuel.
Fuel costs represent the largest operating expense for airlines, accounting for 25%-50% of annual operating expenses depending on the airline. It can vary significantly primarily because some airlines buy futures that help them hedge against rises in oil prices. Thus an airline's fuel cost per gallon can dramatically affect its financial performance relative to its peers. In recent years, this has been particularly helpful to Southwest Airlines Company (LUV).