Cutting Airline Costs There is no single silver bullet that budget airlines use to cut costs. They generally address every possible aspect of their business model, trim where they can and use the gains to offset reduced ticket prices. Not every budget airline uses every cost-cutting method some of them specialize in one area, or use a specific practice set themselves apart from the competition. One of the most important ways for an airline to save money is through fuel hedging. All airlines use fuel hedging, but budget airlines seem to be particularly good at it. For example, between 1991 and 2008, Southwest paid $3.5 billion below the industry average for jet fuel by using aggressive fuel hedging. What is hedging? It's a gamble against the future price of jet fuel. If an airline thinks that the cost of fuel is going to rise in the future they can sign contracts locking current for months or even years. If in the fuel prices double in 12 months, the airline would be buying fuel at last year's cheaper rate. However, if prices drop, the airline is stuck paying their "locked in" higher rate. Another excellent way to cut costs is to use only one kind of piane. Southwest only uses Boeing 737s. This saves money on maintenance and repair, since the company only has to stock parts for the one make and model of plane they use. They also save money on pilot and mechanic training. since they don't need separate training programs for each different type of aircraft