(Reuters) - Bruised by wild swings in oil prices in 2008, global airlines may be less inclined to ramp up hedging for fuel purchases this year despite the risk of facing billions of dollars in additional fuel bills. The International Air Transport Association (IATA), which represents airlines around the globe, said carriers would hedge 30 percent of their fuel purchases in 2011, up from 10-20 percent last year. A lack of protection against price fluctuations would mean higher jet kerosene prices adding more than $20 billion to the industry's fuel bill, according to the IATA . Asia-Pacific airlines, however, are wary of hedging more of their oil needs after getting caught on the wrong side of the oil price bet in 2008, unlike their Europeans peers, which are struggling to pass on fuel costs to customers, analysts said. Qantas Airways, for example, has hedged half of its fuel needs in its next financial year that begins July 1, from 96 percent for the remainder of the current financial year even though its current bets are placed on a higher price. On Feb. 3 Qantas said it had 66 percent of its remaining fuel requirement for fiscal 2011 hedged. It shows that their hedging requirements vary quarter by quarter. "We are very heavily hedged obviously in the next quarter and then it goes down in the next quarter and then goes down again," Qantas CEO Alan Joyce told Reuters. The airline has factored in a worst-case scenario of crude oil prices hitting $113.33 a barrel including option premium in the next financial year. Japan's All Nippon Airways said it has also reduced its hedging in the financial year that began April 1 to 60 percent of its fuel requirement from 85 percent in the last financial year. Singapore Airlines, the world's second-largest by market capitalisation, has hedged 20 percent of its fuel needs, at the lower-end of a 20-60 percent range. Analysts said the fear in the minds of airline executives is how sustainable is the oil price rally from here. Jet kerosene prices rose above $140 a barrel during April, before falling back to levels that are still considered higher than last year and not far below the peak of 2008, IATA said. Jet fuel prices were around $128.55 on Monday. . Global crude oil benchmarks have been stuck in a range over most of the past two weeks, with Brent trading between $114 and $117 a barrel, and has been up 20 percent so far this year. Reflecting the relatively steady market recently, the implied volatility for at-the-money (ATM) crude -- which tracks the expected price movement based on options premiums -- has been rangebound at 28-30 percent since May 27, gradually down from about 41 percent in the first half of May. In December 2008 when oil nosedived from peaks, volatility levels hit their highest-ever at more than 100 percent. "Generally people are hedging less going forward, because people think $120? Can't see it lasting," said Andrew Herdman, director-general of the Association of Asia Pacific Airlines. "The volatility is incredible," he said, referring to the massive swings in oil prices in 2008 that caught many airlines off-guard. "So that's made people somewhat gun-shy," he said. Fuel hedging is a contractual tool and largely involves investment banks, which airlines use to reduce their exposure to volatile and potentially rising fuel costs. EXPENSIVE INSURANCE Cathay Pacific, which suffered heavy hedging losses in 2008 when fuel prices plunged, said it would hedge around 30 percent of its needs over the next 12 to 24 months. "The cost for hedging varies with the volatility of the market so if oil (prices are) moving a lot very quickly then hedging will be more expensive," said CEO John Slosar. "Most airlines I think would like to hedge because it protects you against oil spikes." European airlines tend to hedge more because many of them were not profitable and they were not optimistic about being able to pass on higher oil prices, Herdman of AAPA said. In Asia, airlines managed to pass on about one-third of the inflated fuel cost to passengers through fuel surcharges. Lufthansa, for example, has hedged 90 percent of its fuel needs in the next quarter and covers oil hedges for two years. "We have the basic belief that Lufthansa does not know where the fuel price is going, otherwise we would have closed our airlines and do this business which is much more profitable than our core business," CEO Christoph Franz said. Chicago-based Morningstar equity analyst Basili Alukos said affording the higher cost of hedging is a problem for the industry. "The industry is in such dire financial straits, although their financial health is much better than it was in 2009. Hedging becomes very expensive and airlines would rather deploy their capital elsewhere," he said. (Additional reporting by Harry Suhartono and Kyle Peterson in CHICAGO; Editing by David Fogarty, Matt Driskill and Ramthan Hussain)

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