Secondly airlines are usually locked into contracts a year or two behind this so haven't caught the luxury of the reduced cost of barrels.
They have most certainly caught the big drop in fuel prices. Most are not hedged to fully cover their fuel consumption, but only a percentage, and much of the hedging is fairly straightforward derivatives contract where they lose the premium they paid but more than make up for it in reduced fuel expenses. In the last couple days Delta, Southwest, and United all reported last quarter and full year results and the drop in fuel expenses is staggering.
Delta's fuel consumption in Q4 was basically flat year over year at 945 million gallons vs. 944 million last year. Fuel expense before hedging and refinery operations (yes, they own an oil refinery) was $1.415 billion versus $2.394 billion last year, a 40.9% decrease. Now including hedging and refinery losses they still saw a YOY decrease of $726 million or 30.3%.
Southwest saw fuel consumption rise 8.6% due to growth, but including hedging had a Q4 fuel expense $189 million lower than last year, a 16.2% drop. Unhedged it would have been a 36.7% decrease or $422 million.
United's fuel consumption was up a hair at +.3%, but saw their fuel expense drop $948 million or 35.4%. Unhedged it would have been a $1.002 billion or 41.0% decrease.
In Canada, WestJet hasn't announced Q4 yet, but in Q3 reported a 33% drop in fuel prices and had no fuel derivatives contracts. Air Canada on the other hand was seeing a similar decline in fuel prices, but that was partially offset by having ~40% of their Q4 expected fuel consumption hedged with call options, placing a cap on prices between $US65-70 per barrel of WTI crude oil.
They're all seeing a benefit from the drop in oil, but it will vary from airline to airline based on how much of their fuel consumption is hedged and at what price.