Question

how do i make a Porter's five force analysis on United Airlines' change in its Frequent Flyer Program. :

From 1980 to 2010, frequent flyer programs (FFPs) had evolved from simple customer reward programs to independent profit-generation business models. The airline industry had seen enormous success with FFPs, which had become businesses of their own. In June 2014, however, United Airlines announced that as of March 1, 2015, it would move from awarding miles based on distance flown to awarding miles for dollars spent per ticket, following in the footsteps of Delta Air Lines. According to the new mileage accrual plan, most United Airlines passengers would earn fewer reward miles. Many customers saw this change as a significant devaluation of award miles and complained about United Airlines’ new policy. Who benefited from the revenue-based FFPs and how would the new program affect the behaviour of United Airlines’ customers? Should American Airlines also adopt the revenue-based FFP?

Answer 1

Porter's five force analysis on United Airlines' change in its Frequent Flyer Program=

Bargaining power of supplier= As there are only a limited number of airlines serving the air passengers, thus they have a greater bargaining power to change the Frequent Flyer Program

Bargaining power of customers= As the number of passengers flying is quite good and the airlines are limited in number, thus the bargaining power of customers is relatively low

Industrial Rivalry= As most of the airlines are trying to attract a greater number of customers, this it is quite high and the different airlines can bring their own loyalty program

The threat of new entrant= Some new airlines may come up but due to heavy investment and laws and regulation, it is quite low

The threat of substitutes= = In order to attract the customers who are not satisfied with the proposed loyalty program, the airline can come up with more innovative and customer-centric loyalty program