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How Does Southwest Pull A Profit?  
User currently offlineDeltaASA16 From , joined Dec 1969, posts, RR:
Posted (11 years 4 months 2 days 5 hours ago) and read 4935 times:

This has most definately been disscussed but its a better thread than the "Whats a Ramp" Thread.

Ok, Southwest does not operate on a HUB system. When I was in Nashville, I noticed that they had flights to tons of random cities. Routes that didn't make sense. For example flights to Nashville: Raleigh, Kansas City, Jacksonville, Austin, Las Vegas, Islip, Cleveland, Columbus, San Diego, etc. All of these flights are 2-3 times a day. My point, These flights are 2-3x a day on 150 passenger jets between NON-HUB cities! Whats the deal!? Virginia Beach has flights going to Baltimore, Jacksonville, and Las Vegas.

How can Southwest pull a profit on routes that would seen undesirable. I mean, How can southwest believe that 350 people each day are going to want to fly from Columbus to Nashville cause looking at the frequency of the flights, it looks like what they are counting on!

If they are running like a train with stops in every other airport they come along, how can the passengers from the previous airport sit around waiting for 45 minutes while passengers at the current airport board the plane?

Confused....

DeltaASA16

55 replies: All unread, showing first 25:
 
User currently offlineUN_B732 From United States of America, joined Jul 2001, 4289 posts, RR: 4
Reply 1, posted (11 years 4 months 2 days 5 hours ago) and read 4883 times:

They have a lot of connection people............... And actually, point-to-point passengers from regions find themselves on WN.
Proud to be near (ok, well I'm not too close, but still, 2 hours away ) froman airport with 11 days a service to Baltimore. Manchester NH/Boston Area

With LUV,
-Transaero Boeing 737-200



What now?
User currently offlineScottb From United States of America, joined Jul 2000, 6762 posts, RR: 32
Reply 2, posted (11 years 4 months 2 days 4 hours ago) and read 4818 times:

Some routes rely more on connecting/through traffic than others. A good number of those Nashville routes are pretty thin, but they do make up for it with connecting traffic. The passengers already on the planes (on one-stop itineraries) don't really end up waiting all that long, since the typical turn time is 25-35 minutes. BNA is more of a rolling hub, rather than a traditional hub.

And you'd be surprised, BNA-AUS does have enough traffic to justify a daily 737 (max 137 seats) filled to about 60%, even without connecting passengers.


User currently offlineN907CL From United States of America, joined Feb 2001, 255 posts, RR: 7
Reply 3, posted (11 years 4 months 2 days 1 hour ago) and read 4742 times:

Southwest has passed long time American Airlines for the top carrier spot in Nashville. They must be doing something right. Virginia Beach was added only recently in Southwest history. Actually, a Virginia Beach direct flight to Nashville would be great!


Brian
User currently offlineJhooper From United States of America, joined Dec 2001, 6204 posts, RR: 12
Reply 4, posted (11 years 4 months 2 days ago) and read 4705 times:

There must be a market, otherwise the route could not be operated profitably. Southwest makes money because they have high aircraft utilization, low cost structure (common equipment type), relatively low labor costs, loyal customer, no nonsense business operation, and good leadership (not just management).


Last year 1,944 New Yorkers saw something and said something.
User currently offlineUal777contrail From , joined Dec 1969, posts, RR:
Reply 5, posted (11 years 4 months 1 day 23 hours ago) and read 4669 times:

2 words, no frills

that is why THEY say they have turned a profit.
when you offer nothing but a seat and some carpet then you should be able to turn something.

ual 777 contrail


User currently offlineUAL-Fan From United States of America, joined Dec 1999, 374 posts, RR: 0
Reply 6, posted (11 years 4 months 1 day 22 hours ago) and read 4642 times:

Don't forget along with that seat and carpet you get generally friendly employees that are actually nice to passengers and on time performance to boot. People stay loyal to them for a reason. I know people that will drive 100 miles to get on a Southwest flight when they have a hub airport in their own back yard.

User currently offlineSjc>sfo From , joined Dec 1969, posts, RR:
Reply 7, posted (11 years 4 months 1 day 21 hours ago) and read 4639 times:

ual777contrail-

I don't know about you, but they seem exactly the same as any other carrier to me in terms of "frills" on flights under three hours...


User currently offlineJBirdAV8r From United States of America, joined Jun 2001, 4490 posts, RR: 21
Reply 8, posted (11 years 4 months 1 day 21 hours ago) and read 4615 times:

Actually in most cases I've gotten better service on WN than full-fare carriers.

I mean heck...the last WN flight I was on (FLL-JAX) we got 2 packs of peanuts and soda...with the whole can! Try THAT on American Eagle or Conti Express.

I think that most of the (wise) traveling public does not differentiate WN with any of the big carriers in regards to service and comfort. Sure, there's no F class and you don't get a "meal" to speak of (those little snack packs are sufficient for most), but in a Y class comparison, it's very hard to find the difference. The seats are mighty comfortable and the seat pitch isn't worse than any of the other airlines; in fact, the newer 73G's (and any other a/c they've fitted with the new interiors) seem to have the most comfortable cabins of any US airline I've flown.

I think that the root of SWA's low fares and high profits is their effective aircraft utilization and route planning. There's not a desire to expand out of tried-and-true routes because the risks aren't justifiable. WN knows they've built themselves a great reputation and a huge entourage of WN believers, and they're content with it. Of course, this is all "now"; who knows what's to happen 30 years down the road. I just think that they've been extremely lucky with their upper management over the years. That ALSO probably has something to do with it.



I got my head checked--by a jumbo jet
User currently offlineHighflyer16 From United States of America, joined Apr 2001, 117 posts, RR: 0
Reply 9, posted (11 years 4 months 1 day 20 hours ago) and read 4612 times:

Actually the question is, how do the network carriers pull a profit when they have to take the large majority of their passengers on at least two flights to get them to their destination?

Provided there is sufficient traffic to warrant the non-stop service, an airline can get you from point A to point B most economically by flying you directly there.

The goal of most competitive carriers such as Southwest is to have as many O&D passengers as possible. Sure they do connections as well, but that is not their preferred passenger, and probably one reason why I have found that their rates are not as competitive on routes where they do not provide direct, same plane service.

The modern idea of the "hub" comes from the erroneous idea believed by many airlines that what passengers really want is to have one airline that can fly them anywhere they want to go in the world, and that somehow passengers would rather be herded like cattle through the DFW airport and fly American Airlines than to take a plane directly to their destination if they are flying say, from Phoenix to Miami. That has proven to be a very unwise and unprofitbable strategy. Hubs such as Americans at DFW are very costly operations, and the odds are stacked against them running smoothly. To make all those connections, the airline must bring in between 100-200 planes in an hour from all over the country (and the globe), and send them out again. A few planes delayed anywhere by bad weather or anything other reason can bring the whole system down like a house of cards. Such a system has been proven over and over again to lose money: they barely make money even in the best of economies, and always lose money when the economy is flat at all.

My hunch is that if all the major airlines such as American, United, TWA & Eastern had pursued a route strategy more similar to Southwest, they would all still be around and profitable today, provided they had made other wise decisions along the way.


User currently offlineNorthwestair From Poland, joined Jul 2001, 648 posts, RR: 4
Reply 10, posted (11 years 4 months 1 day 18 hours ago) and read 4581 times:

You can't really say that their labor is cheap cause from what I heard the rampers make about 24.00 per hour top out pay. That's more than what we make. And for their on-time performance they don't have ACARS so WN manually types in their OUT and OFF times plus their ON and IN times and you know how that works 20 mins late will be recorded as an ontime arrv. I been on a couple of WN flts were they said we were ontime but actually we were 30 mins late. I'm not bashing WN, but they do fly under different rules than the Major carriers. I don't think Safety First is their slogan. You better get out of their way when a WN 737 is taxing into the gate cause WN won't stop while you have a DC9 sitting in the alley on the ramp.


I don't care who you fly just as long as you fly
User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 16
Reply 11, posted (11 years 4 months 1 day 15 hours ago) and read 4556 times:

I don't think Safety First is their slogan

With all due respect - bullshit. I guess over 30 years without a fatal accident means that they've got their priorities screwed up.

Here's something else - for many passengers who don't like the 5 mph crawl to the runway over the wavy taxiways...we actually LIKE the faster taxi speeds. We paid to fly in an airplane, not watch as some workman passes the aircraft while walking towards a construction area.


User currently offlineSccutler From United States of America, joined Jan 2000, 5519 posts, RR: 28
Reply 12, posted (11 years 4 months 1 day 14 hours ago) and read 4535 times:

As for mis-reporting their on-time stats, I think you'll find similar shenanigans with "door-close-and-sit" events with other carriers; but, given WN's tight scheduling, fast turns and high utilization, their system will not tolerate much in the way of delays and, in fact, they don't have much in the way of delays.

As for safety, well, you can deride all you want, but Southwest's safety record, the best in the world (yes, including the hopping kangaroo) is no accident; it is the result of a culture built around best-in-industry practices, respect for employees and no-expense-spared maintenance. Remember, the same characteristics that make aircraft safe, make them reliable.



...three miles from BRONS, clear for the ILS one five approach...
User currently offlineSWAbubba From United States of America, joined Mar 2002, 154 posts, RR: 0
Reply 13, posted (11 years 4 months 1 day 12 hours ago) and read 4476 times:

It's funny how folks point to ACARS and say that we make up all our times. All you have to do to fake ACARS is have someone hold the switch in the doorway in; one of my friends at another major carrier was taught to do this on his first flight. That said, I think the majority of folks at all carriers call it like it is. At SWA if we're late enough to make the DOT stats then something has definitely gone wrong somewhere and should be reported.

And as mentioned above; I think our safety record speaks for itself. I wait for other aircraft in the various alleyways in our system all the time; those airports that have lots of ground congestion have that factored into their block times (SNA comes to mind).


User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 14, posted (11 years 4 months 1 day 9 hours ago) and read 4430 times:

Northwestair/Craig,

One of the inescapable problems being one airline employee talking about somebody else's airline is that one's opinion is often based upon misinformation or misconception, or both....

>>>And for their on-time performance they don't have ACARS

Actually, we do. Not on all aircraft yet, but will be (except for the 737-200s, which are on their way out to pasture). That aside, ACARS isn't a panacea, and can be circumvented (as others have mentioned), just as "manual" times can be. Does the fact that SWA has historically eschewed delay-prone places like ORD, LGA, EWR, JFK have anything to do with our on-time performance? (Psst, it's why we dropped DEN Stapleton and SFO). How about the fact that we don't have massive hubs/banks? No, it's easier to blame something else...


>>>but they do fly under different rules than the Major carriers.

Last time I looked, SWA operates under Part 121, just as NWA does. There are some differences, i.e. "Domestic" and "Flag" (for your international ops), but here in the US, we operate under the same regs as you do. Now, if you meant "rules" in another context, like us being a different kind of airline than NWA or anybody else, sure, we're different. Cost structure, work rules, staffing, employee empowerment to do what's best for the Customer. Yep, those are different "rules", and they are some of the things that have (fortunately) kept us profitable for all these years.


>>>I don't think Safety First is their slogan.

A completely subjective assessment and opinion on your part. Safety -is- important, and thus always on the minds of folks here. While we've had a single hull loss (N668SW at BUR) in 30+ years, we've never had a passenger fataility, and I hope we never do. I wish your airline, and all airlines could have that same record.

Crews here are paid by the "trip" and not by the "hour" as they are at most places (where slow taxiing can earn you money), and absent your being out on the ramp with a traffic radar gun, your assessments of taxi speed are also subjective. Your extrapolating that out to insinuate safety isn't in our vocabulary is just flat out wrong. Sorry.

Not trying to flame you with any of this, just trying to communicate the perspective of someone who's been in the business longer than you've been alive. Once you get to a similar point in your own career, you'll find that your perspectives differ from those you had when you first started out, based upon the knowledge that you acquired over the years.

Cheers,





User currently offlineDnl65 From United States of America, joined Jun 2001, 79 posts, RR: 0
Reply 15, posted (11 years 4 months 1 day 9 hours ago) and read 4389 times:

The concept that WN doesn't hub is incorrect. The correct term is distributive hubbing, a modification of the hubbing systems used by other carriers. It is also completely incorrect to assume that the dominant hub system is based on a misconception. Airline management has a history of stupidity but not where there is a buck to be made. The economics of hubbing provide significant return to the carriers over an above what they could earn on a point to point network

User currently offlineAirworthy From , joined Dec 1969, posts, RR:
Reply 16, posted (11 years 4 months 1 day 9 hours ago) and read 4386 times:

I agree, WN sure does hub.

I live in CLE and if I want to go to IND I have to stop over in MDW, along with thousands of over travellers. Same thing if I want to go to ISP, I will have to stop over in BWI.


User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 17, posted (11 years 4 months 1 day 9 hours ago) and read 4378 times:

>>>The concept that WN doesn't hub is incorrect.

If that was directed at my post, I never said SWA didn't hub, I just referred to a "massive" hub, meaning the likes of AA @ DFW, Delta @ ATL, etc.

Perhaps a better choice of terms would have been a "Fortress" hub.


User currently offlineTango-Bravo From United States of America, joined Jun 2001, 3805 posts, RR: 29
Reply 18, posted (11 years 4 months 1 day 8 hours ago) and read 4352 times:

1) They keep it simple: none of the convoluted, high cost nonsense that contributes nothing to the bottom line.

2) None of the amenities (and the costs to provide) that customers are not willing to pay for.

3) Credible leadership that employees are happy to follow.

4) Countless advantages, both tangible and intangible, resulting from the above.


User currently offlineUal777contrail From , joined Dec 1969, posts, RR:
Reply 19, posted (11 years 4 months 1 day 7 hours ago) and read 4325 times:

SWABUBBA,
You don't hold a switch in the door, the brakes of the airplane have to be released. It has been said for YEARS that WN has always fudged their numbers to look better. I have friends who worked at PHX for years and they were always late, but managed to have a GREAT year for ontimes? HMMM Sounds nice doesn't it.

NORTHWESTAIR,
You hit it right on the head, they do pay their rampies much better than most. But as for their pilots? They make crap, only captains get profit sharing and low pay to boot. My brother in law is a 777 F/O with UAL and his buddy from the Air Force academy started working for WN the same time he started with UAL. My B.I.L. is killing him in pay and flies a better plane to boot.

But on these topics you get a lot of the low fare lizards come out to argue why they think WN is better than the majors but they aren't in the same boat as the most, neither are those who like WN to the death. Some of you are so happy flying 737's ONLY? Sad when you cant be excited to see what plane waits for you at your gate.


ual 777 contrail


User currently offlineDrdivo From United States of America, joined Feb 2003, 118 posts, RR: 0
Reply 20, posted (11 years 4 months 1 day 7 hours ago) and read 4307 times:

Everyone overlooks one key element in the profitability of WN - they have a very low debt structure. For years, Herb wouldn't let them borrow anything to expand. A significant portion of their fleet is owned, not leased or financed, and they have a much lower "nut" to cover, since there is so very little interest to pay. At last I remember reading, WN's debt to equity ratio is something like 40%. Continental's was 90% (but has gone down because of the run up in their stock price,) and NWA and AA are above 100%, meaning that they owe more money than their market capitalization.

Another thing that WN grasped early on - frequency, not aircraft gauge, is the primary factor in dominating a market. Throughout these posts, I keep reading how larger aircraft could reduce frequency - that is exactly the wrong way to go. In this thread, the discussion about the number of flights passing through Nashville supports the notion that having a lot of flights is a marketing plus.

In a number of WN's markets, you can pretty much just drive to the airport, knowing that there is a flight within 90 minutes going where you're headed.

As for the flame on CoEx and their in-flight service, I have flown CoEx and WN side by side on short hauls all over the gulf coast region, and the service on each is equally good. One is no more likely to get the coveted full can of soda water (you can tell I'm from Texas now) on WN than one is on CoEx.

Some of the best service I have had in the air has been on CoEx in 45 minutes aloft between Houston and either Dallas or Corpus.




Respectfully - the Divo
User currently offlineGoingboeing From United States of America, joined Dec 1999, 4875 posts, RR: 16
Reply 21, posted (11 years 4 months 1 day 7 hours ago) and read 4306 times:

SWABUBBA,
You don't hold a switch in the door, the brakes of the airplane have to be released. It has been said for YEARS that WN has always fudged their numbers to look better. I have friends who worked at PHX for years and they were always late, but managed to have a GREAT year for ontimes? HMMM Sounds nice doesn't it.


Does being number 6 overall for last year constitute a "great year", or does it mean that those lyin' theivin' bastards they have for pilots have been slipping in the "fudge" department?

NORTHWESTAIR,
You hit it right on the head, they do pay their rampies much better than most. But as for their pilots? They make crap, only captains get profit sharing and low pay to boot. My brother in law is a 777 F/O with UAL and his buddy from the Air Force academy started working for WN the same time he started with UAL. My B.I.L. is killing him in pay and flies a better plane to boot.


How much of pay cut did your BIL have to take during the bankruptcy proceedings? Has his "guaranteed" pension fund remained intact? How much closer to the bottom of the seniority scale is he after the furloughs? How much is HIS stock worth these days? In the airline industry, comparing pay for a 777 captain and a 737 captain is like comparing apples and oranges. And I've noticed on other boards that a lot of 737 pilots are inquiring if LUV is still holding new hire pilot classes. And tell the pilot who lives in my area driving his Lexus that his pay is "crap".

But on these topics you get a lot of the low fare lizards come out to argue why they think WN is better than the majors but they aren't in the same boat as the most, neither are those who like WN to the death. Some of you are so happy flying 737's ONLY? Sad when you cant be excited to see what plane waits for you at your gate.

I really don't care if it's a 737, MD-80 or 747...a plane is a plane. And most of the "non hubbers" are offered a 737, 757, or MD80 on most any other airline. Or will UAL be starting 777 MCI-ORD flights in the near future? As far as being excited about the plane at the gate - it could be Shamu, it could be Lone Star One, it could be California One, it could be New Mexico One, it could be Silver One, it could be Nevada One, it could be Arizona One, or it might have the rear facing seats. Have someone book you a flight and blindfold you as you board. Keep it on until 30 minutes after takeoff, and tell me the kind of plane you're on. Sorry...a planes a plane.


User currently offlineArtsyman From United States of America, joined Feb 2001, 4745 posts, RR: 34
Reply 22, posted (11 years 4 months 1 day 7 hours ago) and read 4284 times:

My brother in law is a 777 F/O with UAL and his buddy from the Air Force academy started working for WN the same time he started with UAL. My B.I.L. is killing him in pay and flies a better plane to boot.
****************

But the one at Southwest has more job security, and Southwest have pay scales in line with what is realistic for the airline to maintain


User currently offlineOPNLguy From , joined Dec 1969, posts, RR:
Reply 23, posted (11 years 4 months 1 day 6 hours ago) and read 4276 times:

Northwestair said:
>>>They make crap, only captains get profit sharing and low pay to boot. My brother inlaw is a 777 F/O with UAL and his buddy from the Air Force academy started working for WN the same time he started with UAL. My B.I.L. is killing him in pay and flies a better plane to boot.

After the Chapter 11 filing and subsequent "give-backs" in pay/benefits, is your BIL 777 F/O -still- "killing him" or are they now more or less "even". With SWA making actual profits (and UAL not), is the SWA guy actually ahead? Who do you think is more likely to make it to a higher-paying left seat quicker?



User currently offlineUal777contrail From , joined Dec 1969, posts, RR:
Reply 24, posted (11 years 4 months 20 hours ago) and read 4180 times:

OPN,
my b.i.l. can hold a A320 captain which is still a better fit than a lousy 737. And to answer the other question he is still making more money than the WN captain and his job security is just fine, United will survive and he will always make more than WN. Sad to say because I am not a pro-pilot guy, DL,AA,UA, all of them will always make more than any pilots at WN. That is why they are majors and WN pilots work for a company that will always be low fare. I didn't write the rules. Another thing is very few pilots ever apply to WN first, they are ALWAYS a backup in case the majors don't hire them. WN Is never a first choice unless your family or friends already work for them. Dont kill the messanger, but not like you didnt already know this.

ual 777 contrail


25 Post contains images RayChuang : I think WN pulls a profit for the following reasons: 1. Simplified training and maintainance. WN only flies 737's, which means flight crews, cabin cre
26 Post contains images OPNLguy : >>>my b.i.l. can hold a A320 captain which is still a better fit than a lousy 737. I'm happy for him (really), but are you trying to start a Airbus vs
27 Goingboeing : Ditto on your post OPNLguy - recent history has included the following lines: The government would never let Braniff fail Eastern is too big to ever f
28 SWAbubba : UAL 777- You are correct about the ACARS, the brakes have to be released and the doorway switch has to be closed. Otherwise you could send your out ti
29 Ual777contrail : OPNLguy, sorry the word always bothers you, I am not set in my ways for I like WN and some of the low fare carriers, they have a niche in our society
30 AWA22 : "but Southwest's safety record, the best in the world" proof please. Where are your stats to back this up? or is this just your opinion.
31 Goingboeing : "but Southwest's safety record, the best in the world" proof please. Where are your stats to back this up? or is this just your opinion. Over 30 years
32 OPNLguy : >>>However I think of WN as a second rate carrier, they to me don't have the excitement that a major has. If you're basing all your opinions about SWA
33 Ual777contrail : OPNLguy, excitement is one way of looking at it, but throughout the years WN has always offered the same product. When major carrier offered all the a
34 Goingboeing : I get the same "excitement" of flying whether it's in a Cessna or a 737. I cannot get excited over reheated chicken or beef for "dinner", I can't get
35 OPNLguy : The point, among others that he's missing, is that airlines are businesses, and their business models are not driven by subjective and emotional facto
36 Brons2 : excitement is one way of looking at it, but throughout the years WN has always offered the same product. Wrong again. WN started in the early 70s with
37 JayDavis : I'd much rather be a stockholder of a blah airline that has been in business for over 30 years now that has turned a profit for most of those 30 years
38 Goingboeing : You've got 100 year old flight attendants working for UA on the Pacific and Atlantic runs..........they were with UA when they had the DC-3's !! Hey,
39 TxAgKuwait : Now, now, now, let's not denigrate the flight attendants for UA who were flying DC-3s. We are stillt alking about some of their junior employees....ma
40 OPNLguy : Tx, Speaking of Boeing 247's, give me an email when you can...
41 737doctor : Man, this board makes me chuckle, watching people without a clue prattle on endlessly. Speaking as a mechanic for Southwest (which I believe gives me
42 Sccutler : I get "excited" by an airline that consistently, and reasonably, gets me where I'm going, on time. I get "excited" by an airline that is so desirable
43 MCOtoATL : There is a recently published book that examines the SW philosophy. It also sheds some light on some factors that we often overlook. For example, with
44 Goingboeing : Southwest's secret of success is something that MBA's seem to overlook, as it isn't some "ten point plan". Here's the secret: Do unto others as you wo
45 Ual777contrail : Man I get more excited when a forum full of low fare lizards slam me. I know what I say is what MOST feel and want out of an airline. Just because you
46 737doctor : I never said that we are always the cheapest. I just simply stated what the average consumer wants...and Southwest's success is an indication of that.
47 Post contains images Cloudy : They are a great airline but they just are a blah airline always supplying the same product year in year out, ---- That may not be what aviation enthu
48 Post contains images SJCguy : ual 777 contrail- You seem to bash SW quite a bit, or at least get wriled-up when anybody brings something up about SW. Unfortunately, United isn't do
49 Post contains links Goingboeing : I know what I say is what MOST feel and want out of an airline. Just because you get a handful of people who only care about 737's then you chose the
50 Flyingbronco05 : You guys are missing the biggest point. They only fly one type of plane, so that cuts down on: Training for maintenance, pilots, flight attendants and
51 Dadoftyler : SJCguy-- You have to learn to ignore ua777contrail. He's so anti-Southwest that it's actually kind of endearing. I pity him for his obvious case of pe
52 Goingboeing : Whew! Just got back from my impromptu survey down at the UAL terminal at MCI. I asked random passengers why they picked this airline over the others.
53 Ual777contrail : SJCGUY, I don't bash Sky West, I was arguing the points of SOUTHWEST by the way it is WN not SW. Young? I am only 9 and I got all of you bent out of s
54 SEA nw DC10 : Did anybody understand what UAL just said there? Some people never get the hint that they are truely disliked by the group! Oh well... :'( SEA nw DC10
55 Post contains images SJCguy : Hey UAL- It's UA, not UAL. Watch out though, pretty soon it's gonna be UAGone! SJCguy
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