I know - doesn't it drive you crazy when a reporter either doesn't know anything about what he's talking about or just enough to be confused...
Presumably, it's talking about segment fuel burn since that would be less on the shorter route. And presumably the higher per seat-mile fuel cost (as well as other higher costs on a seat-mile basis) would be offset by higher yield.
For example, in 3Q05 the average yield between JFK and OAK was 8 cents while between JFK and PIT was 65 cents. Using those and assuming the same number of passengers, a flight between JFK and either would generate about the same passenger revenue but the flight to PIT would cost less to operate (and burn less total fuel)
Jim