Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Direct marketing creative
- Advertising creative
- Abbreviations and terms
- Abbreviations
- Terms
Executive Summary
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- The market
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- Figure 1: Total operating revenue of U.S. airlines, at current prices with best- and worst-case scenarios, 2007-17
- Market drivers
- Consumer sentiment toward air travel increasing
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- Figure 2: Overall Traveler Sentiment Index March 2007-April 2012
- Strategic moves independent of external factors also drive airline revenue
- Leading companies
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- Figure 3: Share of total operating revenue and passenger counts of leading U.S. carriers, 2011
- Perception of top legacy airlines indicates a lack of brand identity
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- Figure 4: Select brand qualities of each major U.S. airline, April 2012
- Innovations
- The consumer
- Four in 10 have flown in the past year; household income is key determinant in use
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- Figure 5: Past 12-month airline use and number of trips, by gender, age, and household income, April 2012
- Price is the most important factor in airline selection
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- Figure 6: Most important factors in airline selection, April 2012
- Safety issues are a top reason to avoid an airline, bad experiences also a deterrent
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- Figure 7: Reasons to avoid an airline when flying for personal reasons, April 2012
- Most flyers are familiar with the airport routine, but many think it’s a hassle
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- Figure 8: Select attitudes toward airline travel, by age, April 2012
- The most frequent flyers welcome automation
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- Figure 9: Select attitudes toward airline employees, by flying frequency, April 2012
- What we think
Issues in the Market
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- How can airlines turn a profit in the face of volatile fuel costs?
- Will demand drive profits, or will airlines be forced to discount?
- Will commercial air travel hassles outweigh the benefits?
- Do ancillary fees really empower consumers to choose their service?
Insights and Opportunities
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- Passengers pay for priority boarding…so why not for early exit?
- Do we have a bidder? Airlines begin auctioning upgraded seats
- Bored (and captive) passengers have a new way to buy while they fly
- Airlines can take advantage of new technologies to improve experience
Trend Application
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- Inspire Trend: Who Needs Humans
- Inspire Trend: The Nouveau Poor
- Inspire 2015 Trend: Brand Intervention
- Brand Intervention
Market Size and Forecast
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- Key points
- 2011 operating revenue exceeds peak, increases expected through 2017
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- Figure 10: Total operating revenue of U.S. airlines, at current prices, 2007-17
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- Figure 11: Total operating revenue of U.S. airlines, at inflation-adjusted prices, 2007-17
- Fan chart forecast
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- Figure 12: Total operating revenue of U.S. airlines, at current prices with best- and worst-case scenarios, 2007-17
Market Drivers
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- Key points
- Performance of U.S. airlines is dependent on the economy
- Real GDP continues to make gains, bodes well for airline industry
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- Figure 13: Real gross domestic product, Q1 2007-Q1 2012
- Airline fortunes are inextricably tied to the economy and business travel
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- Figure 14: Global Business Travel Association Business Travel Index Q1 2007-Q4 2013
- Increased business travel spending drives airline profits…
- …but European fiscal crisis poses a threat to business travel—and to airline profits
- Passenger counts are up, demand appears strong
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- Figure 15: Overall Traveler Sentiment Index, March 2007-April 2012
- Reducing supply to meet increasing demand likely to yield greater profits
- Ancillary fees drive revenue
- Open Skies Air Transport agreements boost international flights
Competitive Context
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- Wheels and rails offer varying levels of competition with airlines
- Car travel is twice as popular as flying
- Bus travel less common, but attracting more customers
- Overall, rail travel poses little competition to airlines…for now
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- Figure 16: Domestic modes of travel in the past 12 months, by age, October 2010-November 2011
- Private jets compete with airlines for premium service class passengers
Segment Performance
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- Ticket sales account for more than 92% of operating revenue
- Baggage revenue relatively flat 2010-12, increases expected as fees rise
- Industry leaders increase checked bag fees…other airlines are likely to follow
- Cancellation fees and miscellaneous fees
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- Figure 17: Total operating revenue of U.S. airlines, by type of revenue, 2010 and 2012
- Figure 18: Total operating revenue of U.S. airlines, by type of revenue, 2007-17
- Globally, ancillary revenue worth $22.6 billion in 2011
- Ancillary revenue metrics of leading U.S. airlines
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- Figure 19: Ancillary revenues compared to total sales, by top 10 airlines by share, Q3 2011
- Figure 20: Ancillary revenues of top 10 airlines by revenue, Q3 2011
Leading Companies
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- Key points
- Top five airlines account for more than eight in 10 passengers
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- Figure 21: Passenger counts of leading U.S. carriers, 2010 and 2011
- Operating revenues up—top five airlines account for about 80%
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- Figure 22: Operating revenues of leading U.S. carriers, 2010 and 2011
- Leading companies’ key issues relate to fuel prices, labor agreements
- Delta Air Lines
- United Airlines
- American Airlines
- US Airways
- Southwest Airlines
- Allegiant Air
Innovations and Innovators
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- In the air
- Airlines offer a range of new service classes for all types of travelers
- Upgrading the passenger experience: living the dream on United Airlines
- Airbus develops a wider-seat concept for overweight passengers
- Virgin, Southwest, and Delta innovate in-flight entertainment
- On the ground
- Airlines upgrade airport lounges to drive loyalty
- Delta experiments with a streamlined boarding process
- Commercial and government programs speed up the security process
- Venturing into the world of virtual customer service representatives
- Behind the scenes
- Airlines seek to slash operating costs
- New navigation technology and aircraft for increased flying efficiency
- Airlines upgrade aging aircraft to boost operating efficiency
- Delta and US Airways take different approaches to managing fuel costs
- Delta buys oil refinery to save costs, earn profits
- US Airways bucks hedging, pays market value, sees benefit in current environment
Marketing Strategies and Brand Positioning
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- Delta Air Lines
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- Figure 23: Delta Air Lines, “Taming Air Travel” TV ad, 2012
- United Airlines
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- Figure 24: United Airlines, “Game is Set” TV ad, 2012
- American Airlines
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- Figure 25: American Airlines, “Saving Your Sanity” TV ad, 2012
- Southwest Airlines
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- Figure 26: Southwest Airlines, “Lowest Fares” TV ad, 2012
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- Figure 27: Southwest Airlines, “Below the Belt” TV ad, 2012
- JetBlue Airways
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- Figure 28: JetBlue Airways, “You Above All” TV ad, 2012
- Alaska Airlines
- Hawaiian Airlines
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- Figure 29: Hawaiian Airlines, “Hawaii Flies With Us” TV ad, 2011
- Frontier Airlines
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- Figure 30: Frontier Airlines, “The Next Animal” TV ad, 2012
- Virgin America
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- Figure 31: Virgin America, “In the Moment” TV ad, 2012
- Spirit Airlines
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- Figure 32: Spirit Airlines, “Low Cost Out” TV ad, 2012
- Allegiant Air
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- Figure 33: Allegiant Air, “Best Deals” TV ad, 2012
- Top carriers most engaged in direct marketing
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- Figure 34: Direct marketing pieces by leading U.S. carriers, by type, July 2011-June 2012
- Figure 35: Leading U.S. carriers’ direct marketing activity, by share of type, July 2011-June 2012
Airline Brand Perception and Differentiation
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- Overview of the brand landscape
- Perception of most airline brands indicates low appeal
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- Figure 36: Select brand qualities of each major U.S. airline, Part 1, April 2012
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- Figure 37: Select brand qualities of each major U.S. airline, Part 2, April 2012
- Brand perception map
- Methodology
- Legacy carriers are lumped together
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- Figure 38: Airline brand perception map, April 2012
- “Big name” airlines preferred, but experience can be a blur
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- Figure 39: Attitudes toward airline brand differentiation, by household income, April 2012
Airline Use in the Past 12 Months
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- Key points
- Personal plane travel more common; business travelers take more trips
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- Figure 40: Past 12-month airline use, personal vs. business travel, April 2012
- Household income is key determinant in airline use
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- Figure 41: Past 12-month airline use and number of trips, by gender, age, and household income, April 2012
Airline Brands Used
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- Key points
- Legacy air carriers are (generally) the most popular
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- Figure 42: Airline brands used and brand familiarity, April 2012
- Flyers look to legacy carriers for personal and business travel
- Southwest offers competition for business travelers
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- Figure 43: Airline brands used most frequently, personal vs. business travel, April 2012
- Most affluent fly legacy; Southwest Airlines is most popular choice
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- Figure 44: Airline brands used most frequently, by household income, April 2012
Factors Impacting Airline Selection
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- Key points
- Price is paramount; scheduling important for business travelers
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- Figure 45: Most important factors in airline selection, personal vs. business travel, April 2012
- Youngest flyers most price sensitive but also consider service quality
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- Figure 46: Most important factors in airline selection, by age, April 2012
- Convenience and comfort more important to affluents
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- Figure 47: Most important factors in airline selection, by household income, April 2012
Reasons to Avoid an Airline
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- Key points
- Safety issues a deterrent, bad experiences also keep passengers away
- Safety first! Recent news reports of safety problems are top reason to avoid an airline
- Experience is everything, so it had better be good
- In need of upgrades—not necessarily “new” aircraft
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- Figure 48: Reasons to avoid an airline when flying for personal reasons, April 2012
- Affluent flyers will take their business elsewhere
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- Figure 49: Reasons to avoid an airline when flying for personal reasons, by household income, April 2012
Airline Reservations
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- Key points
- Self-booking online is the most common method of reserving tickets
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- Figure 50: How reservations for most recent flight were made, personal vs. business travel, April 2012
- Even the oldest flyers are booking online
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- Figure 51: How reservations for most recent flight were made, by age, April 2012
- Flyers’ use of travel agents pales in comparison to online booking
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- Figure 52: Booked travel online/used a travel agent in the last 12 months, by airlines used in the last 12 months, October 2010-November 2011
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- Figure 53: Used a travel agent in the last 12 months, by household income, October 2010-November 2011
Airline Tickets Online Search Methods
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- Key points
- Online travel agencies vie with airline websites as the starting point
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- Figure 54: Initial online airline ticket search method, by age, April 2012
- Online airfare searches often result in visits to multiple sites
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- Figure 55: Other online airline ticket search methods, by age, April 2012
Attitudes Toward Airlines and Airline Travel
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- Key points
- Most flyers are familiar with the airport routine, but think it’s a hassle
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- Figure 56: Attitudes toward airline travel and airline employees, by age, April 2012
- Most affluent flyers least likely to feel airline employees are knowledgeable/helpful
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- Figure 57: Attitudes toward airline travel and airline employees, by household income, April 2012
- In-flight connectivity more important to younger flyers
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- Figure 58: Attitudes toward in-flight internet connectivity, by age, April 2012
Impact of Race and Hispanic Origin
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- Key points
- Airline use in the past 12 months: Asians most likely to fly
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- Figure 59: Past 12-month airline use and number of trips, by race/Hispanic origin, April 2012
- Airline brand perceptions and differentiation: blacks most discerning
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- Figure 60: Attitudes toward airline brand differentiation, by race/Hispanic origin, April 2012
- Blacks and Hispanics should be targeted for frequent flyer programs
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- Figure 61: Frequent flyer program membership, by race/Hispanic origin, October 2010- November 2011
- Airline brands used: use trends similarly overall, Asians most diverse
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- Figure 62: Airline brand usage, by race/Hispanic origin, April 2012
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- Figure 63: Airline brands used most frequently, by race/Hispanic origin, April 2012
- Factors impacting airline selection: price is most important
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- Figure 64: Most important factors in airline selection, by race/Hispanic origin, April 2012
- Reasons to avoid an airline: blacks most sensitive to safety issues
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- Figure 65: Reasons to avoid an airline when flying for personal reasons, by race/Hispanic origin, April 2012
- Attitudes toward airlines and airline travel
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- Figure 66: Attitudes toward airline travel, airline employees, and in-flight internet connectivity, by race/Hispanic origin, April 2012
Custom Consumer Groups: Flying Frequency
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- Key points
- Frequent flyer profile confirms general use trends
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- Figure 67: Key demographics, by flying frequency groups, April 2012
- Heavy and Ultra flyers’ greater frequency of air travel is driven by business needs
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- Figure 68: Personal vs. business air travel in the past 12 months, by flying frequency groups, April 2012
- Airline brand perception and differentiation
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- Figure 69: Attitudes toward airline brand differentiation, by flying frequency, April 2012
- Airline usage
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- Figure 70: Airline brand usage, by flying frequency, April 2012
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- Figure 71: Airline brands used most frequently, by flying frequency, April 2012
- Factors impacting airline selection
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- Figure 72: Most important factors in airline selection by flying frequency, April 2012
- Reasons to avoid an airline
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- Figure 73: Reasons to avoid an airline when flying for personal reasons, by flying frequency, April 2012
- Airline ticket reservations and online search methods
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- Figure 74: How reservations for most recent flight were made, by flying frequency, April 2012
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- Figure 75: Initial online airline ticket search method, by flying frequency, April 2012
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- Figure 76: Other online airline ticket search methods, by flying frequency, April 2012
- Attitudes toward airlines and airline travel
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- Figure 77: Attitudes toward airline travel, airline employees, and in-flight internet connectivity, by flying frequency, April 2012
Appendix: Other Useful Consumer Tables
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- Airline use in the past 12 months
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- Figure 78: Past 12-month airline use and number of trips, by region, April 2012
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- Figure 79: Past 12-month airline use and number of trips, by gender and marital status, April 2012
- Airline usage
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- Figure 80: Airline brand usage, by household income, April 2012
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- Figure 81: Airline brand usage, by presence and number of children in household, April 2012
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- Figure 82: Airline brand usage, by age, April 2012
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- Figure 83: Airline brands used most frequently, by age, April 2012
- Factors impacting airline selection
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- Figure 84: Least important factors in airline selection, personal vs. business, April 2012
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- Figure 85: Most important factors in airline selection, by presence and number of children in household, April 2012
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- Figure 86: Most important factors in airline selection, by airline used most frequently, April 2012
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- Figure 87: Most important factors in airline selection, big four legacy vs. other carriers, April 2012
- Reasons to avoid an airline
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- Figure 88: Reasons to avoid an airline when flying for personal reasons, by age, April 2012
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- Figure 89: Reasons to avoid an airline when flying for personal reasons, by presence and number of children in household, April 2012
- Attitudes toward airlines and airline travel
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- Figure 90: Attitudes toward in-flight internet connectivity, by household income, April 2012
Appendix: Trade Associations
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