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Airline Digital Strategy: From Vision to Execution [EL AL Israel Airline Case Study]

Iztok Franko

Episode 03 of the Diggintravel Podcast - talk about airline digital strategy with EL AL Israel Airlines

If you want to learn about airline digital strategy, then you are at the right place! Here at Diggintravel, we’ve provided you with many airline digital case studies over the past two years.

Eurowings Digital, Turkish Airlines, and AirAsia are just some of the airline digital strategy cases we’ve covered for you recently.

But as you know, the digital space is evolving so fast that you can never just be happy and stay idle. You need to stay on top of what’s going on and adapt your digital strategy almost every day. This is why we’re always looking to bring you new cases and interesting new airline digital strategies.

And I promise you this one will be different!

Now, you’re probably asking, how different?

Well, for one, we won’t talk about “high-level” airline digital strategy only. With this case, I want to provide you two different angles: a strategic angle and an inside look at how strategy is then executed.

EL AL – An Israeli airline with a legacy, but a fresh digital mindset

First, I need to tell you I’ve known Shahar Markovitch and Amit Sagi for a while now, and they are two of the smartest people in the airline digital community. So, when the idea to have a podcast chat with both of them was born, I was really excited.

CDO and Digital Director of EL AL talked about their airline digital strategy

Shahar Markovitch and Amit Sagi from EL AL – having fun on the Diggintravel Podcast

I’ve followed Shahar Markovitch’s (EL AL’s Chief Digital & Information Officer) work for a while and really like the concept behind his airline digital strategy. I’ve also met and talked with Amit Sagi (Digital Director at EL AL) several times, and he is a very pragmatic guy. What intrigued me about their work was how they execute an ambitious airline digital strategy in practice – especially in an airline with such a long history and a complex legacy technology setup like EL AL has.

This is why I thought talking to both Shahar and Amit could give you an interesting combination of looking not only at airline digital strategy, but also at the challenges and some ideas for its execution.

[NEW] The Diggintravel Podcast Brings You Insights into EL AL Airlines’ Digital Strategy

Listen to the new episode of the Diggintravel Podcast via the audio player below, or read on for the interview recap and the full interview transcript below.

What Can You Learn From This Podcast Interview?

  • What are the two big digital trends EL AL sees which were the key to their airline digital strategy?
  • Why EL AL joined Digital, IT and Data into one big unit to support their execution?
  • What are the key challenges of doing ecommerce and digital marketing in a legacy airline environment?
  • Why changing the mindset from “project” to “product” view is a must if you want to develop digital solutions?
  • Can cooperation with the startup community help you be more agile and digital?
  • How data and agile BI fit into their airline digital strategy and help EL AL make faster decisions?
  • Listen to examples of some of EL AL’s new digital products that help solve their customers’ problems.
  • Why food Instagrammability might be even more important than its taste to the digital generation?
EL AL - Digital strategy and innovation in action

Source: EL AL

Full Interview Transcript  [Shahar Markovitch and Amit Sagi, EL AL Israel Airlines]

Iztok Franko: Hello. We are sitting today and talking to Shahar, Chief Digital Innovation Officer of El Al, and his colleague Amit, who is the Chief Digital Director at El Al. Before we start, because this is a new setup for the Diggintravel podcast, there will be a three-way interview, maybe both Shahar and Amit, if you just tell me a little bit what is your role, and most of all, how do you work together at El Al? Shahar, if you can start, maybe?

Shahar Markovitch: Perfect. First, thank you for hosting us. We are big fans of Diggintravel and your work, so we’re very happy to be on this podcast.

Iztok: Welcome.

Shahar: I’m the Chief Digital Information Officer. The title is actually VP of Digital and IT in El Al. I joined El Al two years ago to start a new division which combines both the digital business unit with the IT. The idea is to bring digital and IT together to create faster time to market, more synchronization, and better delivery to propel faster growth. On the other hand, give technology a more prominent seat at the (decision making) table.

Amit reports to me. He’s the Chief Digital Officer or the Head of Digital. In addition to Amit, I have two other elements of the division. One is the IT, who is responsible for the delivery of the product and the stability of support, and the other element of the organization is data analytics, who is responsible for creating value out of data and improving the decision-making in the organization.

So the organization has three legs, and Amit leads the main one. Amit, do you want to expand a little bit?

Amit Sagi: Yeah, sure. Hi.

Iztok: Hi, Amit.

Amit: I’m responsible for all digital journeys of customers, I’m also responsible for direct sales via our digital assets, and of course, all the marketing activity. I’m doing this for all our agents worldwide. On the other hand, I’m responsible for the customer experience of the users on our digital platform, including the website, the check-in system, applications, and also the CRM system and providing service to our customers.

Iztok: Good. Thank you for this explanation. Shahar, just a quick question. You said part of your bigger digital organization is also the IT. This also means internal development, right?

Shahar: Absolutely.

Iztok: The other thing that you mentioned is the data part. I watched some of your past speeches and they are very interesting, and I encourage all Diggintravel listeners to google Shahar and find his speeches on the internet. In the past speeches, you’ve talked about these two S curves that are happening and that you see as important. One of these is also the data. Is this why you have such organization now?

Shahar: Yes. If I can expand on that a little bit?

Iztok: Yeah, please.

Shahar: I joined El Al to lead digital and technology transformation because the two are interlinked. When we started transformation (new airline digital strategy), we looked at the company and we wanted to identify, what is the technology vision for the division? Where can we take El Al? That itself is a transformation journey. We are buying new planes. We are introducing Wi-Fi to all our planes. We’ve upgraded the service, we’ve upgraded the routes we take, we’ve upgraded the food, everything.

As part of that, we are taking a digital and technology transformation. We identified, working together with the whole organization and looking outside at external benchmarks, that there is a lot of value to be had from what we call the AI, machine learning, smart usage of data in airline.

If you think about the airline operation, how do you sell better to the customer, offer them more proactive, specific, targeted offers? How do you do revenue management and pricing in a better, smarter way? How do you manage your operations in a smarter way and predict delays before they happen, manage the flow of airplanes in a smarter way? How do you run your operations using insights and automated processes? How do you manage disruptions for the customer in an automated way? How do you provide service better through smart tools? And so on and so forth.

That insight came to us – you mentioned it – we called it an S curve for the next big change, which is the smart airline. That’s why the vision that we defined, we call that vision our goal, so the goal of the division is to turn El Al into the smart airline of the startup nation. A smart airline is using technology in a smarter way to deliver better customer experience and employee engagement, to create better sales and more revenue, and to improve our operations. That’s the smart airline.

The smart airline of the startup nation is also trying to leverage the fact that Israel is a hotbed of innovation and there’s a very, very strong ecosystem of startups, by bringing startups inside the company to help us accelerate the journey.

Iztok: I understand. We’ll definitely get back to the startup cooperation, because I’m very curious about it. But before we touch that, Amit, maybe one question to you. I understand and I really like the clear vision that Shahar has explained in terms of the different pillars of being agile, leveraging innovation and the startup community, being data-driven with the data part and leveraging technology like machine learning and artificial intelligence.

But on the other hand, El Al is also a legacy carrier, a flag carrier, a national carrier with quite complex IT legacy systems, complex revenue management, complex pricing rules. How do you build new, fancy, innovative stuff while on the other hand you cope also with this legacy part of the technology? What are the challenges you face when you try to do real digital marketing and ecommerce work?

Amit: I think the four pillars that I’m looking at, some of them are easier for me to reach, even though there are legacy systems, and some are less easy or harder for me to reach.

In terms of the marketing channels, this is not related to El Al and the people who deal with the systems or the backend systems. We’ll talk about it maybe later.

When I talk about optimization in the funnel and adding new products and services online, here is a big challenge. I think we’re also doing a few things in order to overcome this challenge. One is we are building layers of data, for example, and capabilities. We do not build directly with the legacy systems, but we work with the layers that help us do better and faster implementation.

Iztok: Sorry to interrupt you. With these data layers, you’re exposing or taking the data out of the legacy background and creating a middle layer that can be reused for different digital products?

Amit: Exactly. We are having ODS now, so we’re taking all the operational information and processes and we’re putting in different layers so that the applications, the website, the app, whatever, can go to the ODS and not to the systems themselves. They have better service and availability for us.

Another example is that a change that we are working now is on development in much faster cycles. Again, it’s a new mindset of how you’re working in faster cycles when you have legacy systems. But here also we’re doing a team. We have a notion of doing a two in a box with IT and PO, product owner, working together in order to provide better and faster launch of service.

Iztok: I understood. You said that you try to work in faster cycles, and I saw that your internal development teams are working 2 week scrums, and then you also try to leverage your partners and suppliers to use the same methodology.

Another thing that I saw – and Shahar, maybe for you – is that you’re now talking about the product view of building digital products versus the project view, versus more legacy, waterfall type of typical airline, big data project thinking. Can you maybe talk a little bit about this mindset change? It’s not just technology and legacy technology. It’s mostly cultural and the way of working and thinking, right?

Shahar: Absolutely. We talked a little bit about the strategy, and Amit talked a little bit about the execution, but somewhere in the middle we have three what we call strategic missions for us to deliver to the organization.

The first one is, how do we deliver the impact to El Al, the entire company? How do we deliver all the projects that we need to do and so on and so forth? But the second and third ones are the more interesting ones.

We believe if you want to become a digital organization and you want to compete with more digital native OTAs or with leaner and meaner low-cost carriers, we have to turn our IT into a competitive advantage, and we have to build digital platforms, and we have to think in digital platforms – think about customer experience, think about digital product, and so on and so forth.

We have to change the mindset of the organization from “Here’s a project. Let me give you a project, and that project has a beginning and an end and a budget.” And by the way, the person responsible for it is a project manager. How is the project manager being measured? He’s measured on time and cost.

You have to change the entire mindset into a product mindset. A product mindset is something that lives forever. It’s not like Facebook has a project where they build the app and then they forget about it. It lives forever, and it’s constantly updating. The product managers in Amit’s organization are not being measured on time and cost. Obviously they are being measured on time and cost, but that’s not their main KPI. They are being measured on value.

The mindset has to shift from “I need to make this project in that timeframe” to “How do I deliver value?” And that value can come from value propositions specifically, from customer experience, from time to market, from data.

But that is a very, very big mental shift for the entire organization because it impacts the actual people working on it. It impacts our work plans, because it’s not like we have a project that starts and stops. We have to constantly upgrade our digital platform and put a lot of capacity on that. It changes the way we do our budgeting and planning because we cannot just budget for a project – I put a budget for a new website and forget about it. No, I need to put a budget for continually improving the website forever. That mindset is quite challenging.

Iztok: To me it’s a very interesting point that you mentioned these two things. One is from a project-based view of working to product, so developing digital products, ongoing optimization. We are now here at Diggintravel in the middle of our 2020 Conversion Optimization, where we basically measure how airlines do exactly that. How do they do this continuous loop of optimization? Do they have a budget for UX optimization, to optimize digital products. Versus “OK we will have a big project, an RFP or a new website, we’ll develop it, and we’ll leave it as this”? This is definitely interesting.

The other aspect that’s even more interesting to me is one thing that you mentioned is the KPIs. What value do you deliver? What customer problem do you solve? I saw some examples of such digital products that you did. I think you developed this Bid2Fly platform for bidding and Taxi Pool for sharing the transfer, the taxi for your passengers. Amit, can you explain a little bit of the logic behind this? Or is this an example of such things that we’re talking about?

Amit: I will talk about the Bid2Fly, which is, as you said, an auction platform that on one hand enables us as the airline to offer tickets for available seats on the plane. Usually we do that for flights that are within 48 hours. This of course enables us to do two things. One is to overcome the need for us to sell the last tickets on the plane, and on the other hand, to overcome – usually the problem with prices is they are very high when you go to the last days of sales. Sometimes people don’t buy the high prices.

The goal for this system was that one, it brought a lot of sales to EL AL. And  we were able to increase the load factor. On the other hand, we brought new customers to us, customers who would not usually buy an El Al ticket. They would usually go to a low cost carrier. Something like 65% of our customers are new customers to El Al who haven’t bought a ticket at El Al in the past 3 years. Of course, it’s enormous data for us, new data, new customers that we can connect with. Really a big success.

Shahar: Let me just add that, by the way, Bid2Fly was developed by a startup. You talked about startups. It was developed by a startup called BidFlyer, a startup trying to disrupt – let’s call it revenue management, and helping airlines improve their yield and load factor by using artificial intelligence.

You also asked about Taxi Pool. Taxi Pool was an experiment we did. We recognized a big customer problem. They tried to save costs on the airline, but then they land in the airport – let’s say London – and they have then to pay 80 pounds, sometimes the price of a low-cost carrier ticket, to take a taxi to the hotel.

We actually did an experiment, just like a startup, where we developed this platform where it connects between people on the same flight that are going to the same hotel or to hotels nearby. Say there are a few people on the same flight and we see that you are all going to the Hilton in London or to the Hilton and Marriott, and the Hilton and Marriott are next to each other. The platform will connect you in a secure way and allow you to share a taxi together.

We ran this experiment for a few months with a few thousand customers that participated, and we then closed the platform and we are now thinking about how to integrate it and make it into a bigger product that we integrate into our value proposition.

Iztok: I understand. It’s an example, like you said, of leveraging the startup ecosystem and trying to develop new MVPs and test them, and then you see if you can roll them out in an overall production environment.

Shahar: Exactly.

Iztok: When we are talking about the startups, I had previous talks with some other airlines – we did a similar interview a few weeks ago with Eurowings Digital, and they were talking about how they had to separate the digital unit because the modus operandi, the mindset of the airline versus the digital is so different. Airlines are very operational, very regulated. They thought it’s necessary that they have a separate digital unit to work under a different culture and methodology.

Do you see working with startups as a part of this in a similar way to inject this new way of thinking and be more agile, more fast? How do you look at that, Shahar?

Shahar: Yes, exactly. We also have an innovation hub which is part small investment fund, part accelerator, part innovation hub. It’s Cockpit Innovation. I sit on the board of Cockpit Innovation. The goal of Cockpit Innovation is to connect between startups and airlines. We have other partners in Cockpit Innovation, like Boeing and Gategroup. Gategroup is Europe’s biggest flight catering company.

What Cockpit does is identify relevant startups that solve business problems. They help bring them into the organization and support the implementation inside the organization, and where necessary they also invest money in that startup so they can have a more prominent seat at the table and become a design partner.

Iztok: Good. I understand. I saw some of the cases that you did, and I really liked this pilot, “let’s try new service, let’s see if we can solve some new customers’ problems with digital solutions.”

Going back to your main strategy or main organizations and pillars, the data, I would like to touch on here again this connection between strategy and execution. Part of your strategy is to be really data-driven, to leverage data, and I saw that you also implemented this agile BI platform, Tableau. I’ve worked on different agile BI projects in the past, so I’m really curious, how do you see this agile BI or let’s say more democratized BI fits into your overall strategy?

Shahar: We’ll have two parts on this answer. I will answer the part from the broad airline perspective, and Amit will answer how he uses the dashboard and the data to drive better operation in digital and better performance.

Iztok: That’s actually my follow-up question, but it’s good that you brought it up already. [laughs]

Shahar: We use this platform to – let me take a step back. One of the missions of the data analytics unit is to improve the decision-making in El Al and generate money out of data. We use Tableau, a BI platform, to basically set our data free and help our entire organization make better decisions.

We created the rapid BI factory, which is a group of people that all they do is they work on generating part-BI, let’s call it dashboard reports inside that can be consumed through self-service by business users. Then they help implement them. We literally track all the business units that use it, and we identify the business problems that we need and we develop them a solution very fast. So, we do a few iterations, and they can use it then.

We are using it now to improve our operational and on-time performance, we use it now to save money on fuel. We use it now to track the performance of aircrafts. Aslo, we use it now to understand the development of our pricing or service levels. Every area where there is data, we use it to basically export the data, break it to the business decision-makers to make better decisions, and use that to make money.

Obviously digital is one of the key areas where we use it to improve the operations. Amit can expand on that.

Amit: When I look at data, I ask myself or I’m looking for four things. One is very basic. It’s knowing. I need to know what’s going on with the business. Then I need to know how the sales are doing. I need to know the shares, I need to know everything. I think one major step that we accomplished here is knowing. Everyone knows the data, everyone speaks the same language, everyone sees the numbers. It’s very basic but very important.

The other part goes to planning. How do I plan my next month? Again, using the data. How do I see the demand going? And how do I see the load factor going? How do I see the demand curves that EL AL runs are going? Then I know what operation or what I need to do in order to increase sales, for example.

I think the third part is what I call using smart data. Using smart models in order to improve or optimize the business. For example, churn reduction model or intent model. How do I know these customers that are going to the website have a high intent to buy or low intent to buy? If we know they have high intent to buy, what do I do with that? Do I change the prices, do I do more remarketing on them? There are many questions that data makes us ask and makes us have to give answers in order to optimize the business.

Iztok: One that you mentioned is for example figuring out the intent, the probability to buy, basically customer next step. This is where I see airlines a lot of times still struggle because we have a several sources of data, like data siloes. You have app analytics data. In your case, for example, you have PNR booking data, loyalty data, operational data.

If I understand correctly, you’re trying to combine this data to gather in this BI platform and try to get a single source where people use the same tool to access data that is basically connected from various sources.

Shahar: Yes. We struggle as well, but we’re making good progress.

Iztok: No, no, it’s a never-ending story, of course. There is so much data. But if you take quick wins from cases like that, it’s something for sure.

One thing – Amit, you were talking about these more complex marketing data calculations and the data analytics projects. I saw that you also did a little bit more complex attribution model where you tried to calculate attribution from your digital campaigns to your offline sales, right?

Amit: Yeah, we did an analysis to see the impact of digital campaigns on our direct sales via the call center. EL AL sells both, tickets via online and on the call center. Of course, the user journey starts digitally. People usually will start through google searching for a flight or information or price of the flight.

What we found out is that 35% of sales that were generated at the call center were actually customers who initially engaged with an online ad or an online marketing campaign of ours. Of course, when we want to control the sales channel and give the channel the right goals and KPIs to measure understanding of how we drive customers to each channel.

Iztok: Very interesting. Shahar, your background I saw is in banking. Is this thing that Amit explained now, offline/online – for traditional airlines, we have a lot of still offline, indirect distribution – is there some similar with banking? How do you look at that?

Shahar: Yes, that’s a very good question. As you know, and I’m sure all of our listeners know, there is also a big channel shift in banking. In the last 10-20 years, people have been migrating from branch-based banking into direct channel banking, and in the last few years, obviously, digital banking. Banks have been working very hard to manage that shift because they see that it drives not only better customer satisfaction and better service, but greater efficiency and better ability to engage with the customer.

In the airline business, it’s slightly different because unlike most of the banks, there are a lot of different distribution channels. Digital platforms have been selling El Al’s tickets for many years now. In fact, you can claim that the GDS has been around even before the internet. It’s like a predecessor to the internet, where all the tickets have been distributed electronically, have gone to different agents, and been sold, initially on the telephone, but in the last years since the 2000s, digitally.

So now the key question and where you see the trend is coming is transition from external digital channels to internal digital channels, and finding the balance between these two channels. The other agents are still selling my tickets, and there’s a lot of cooperation with them, and we work together with them, but I also want to be able to have a more direct relationship with my customer, for obvious reasons. You need to find the right balance between these two channels.

Regarding the call center, my direct call center, this is more of a channel where we see it’s there to provide service and it’s there to allow customers that don’t want to use the digital, allow them an option to engage directly with the company.

Iztok: I see. Good. Maybe to not take too much of your valuable time, maybe if we end on a little bit of a loose note, I saw also that not only did Diggintravel start with a podcast, but also El Al has a podcast. Right, Amit?

Amit: Yeah, it’s a new one.

Iztok: It’s a new one. New marketing channel, yeah?

Amit: Yeah, it’s a new marketing channel. Actually, what we are doing in the past few months is moving up the marketing funnel, working more on the inspiration side of marketing activities, not only on the demand side or the lower part of the funnel. Making a lot of performance. This is important for us because we want to bring new customers. As Shahar said in the beginning, El Al going under big change in the routes that we are flying to in planes, and I think if you want to tell this story to customers and to make preference buying El Al, you need to go up the market funnel. The podcast is part of this strategy.

Shahar: I’m a big fan of podcasts, and obviously podcasts are very big. We wanted to do something in the podcast because a podcast is also a medium that stays forever. Also, we wanted to create a better experience for our customers so on a long flight, you have something interesting to listen to.

We wanted to have a new take on your traditional podcast. What to do in Barcelona, what to do in London, what to do in New York. This podcast unfortunately is in Hebrew, so you cannot enjoy it, but what we decided to do is combine two passions. One is the passion for travel, and the other is the passion for cinema. The podcast brings together both people that are passionate for travel and cinema, and they take one movie and they basically talk about that movie from a travel perspective, so the interesting aspects of the city in terms of travel.

In New York, we have When Harry Met Sally. You can talk about Central Park, etc. In Boston we have Good Will Hunting, where you can talk a little bit about Harvard versus Cambridge versus the city. We talk a little bit about The Departed. In Barcelona we have Vicky Cristina Barcelona. In Las Vegas we have Casino. It really combines very interesting viewpoints, and people can hear new perspectives about the area they are about to travel to.

Iztok: Obviously, I’m a huge podcast junkie myself, so I think it’s a great idea. But also, like we talked about initially, it’s being more customer-centric, so providing new digital customers a medium that they want. Being on the channels where your customers are versus being on the traditional channels.

One maybe last example of this that I really think was a great way of this new customer-centric digital mindset thinking was I read an interview with one of your chief chefs. Basically, he explained that when they plan the food onboard, they don’t only plan obviously about the taste and about the logistics, but also how it looks on new digital media, on selfies people make. So they plan the colors, they plan how people use mobile, how it looks on Instagram and Facebook. Is this right?

Shahar: Yes. We are an Instagram generation, so the food needs to be Instagrammable.

Iztok: To me that was really a great example of such thinking. Also, not only how you put it, but also how big it is, because we obviously now want to have a place for mobile on our table trays.

Shahar: Exactly. This is the type of challenge we are still working with. We’re still improving on let’s call it the Instagrammability, because you have to think about the operational aspect of an airline. It’s not like a restaurant, where the chef – Chef Shabtay, our Executive Chef, is a master of creating very visual, very interesting dishes. In his restaurant, he has a lot of control on the dish. He combines the color on the plate and the exact design on the plate.

But when you serve it on the plane and you have a flight attendant serving it on the plane with hundreds of people that they need to serve the food to and only probably a few seconds to put the food on your table because everybody is super hungry, how do you make sure that it still looks appealing and it’s still tasty and you still do it through service? That is a challenge we are still working through. We are not there yet.

Iztok: I think it’s the right direction.

Shahar: Thank you.

Iztok: Sure. The last thing, Shahar, you said you like podcasts. One thing that I like to ask our guests, just to see – because obviously this digital world is rapidly changing. How do you learn? What do you consume? Podcasts, books? How do you learn to keep up with our digital world?

Shahar: I ask Amit. He teaches me.

Iztok: And Amit listens to the Diggintravel podcast, yeah?

Amit: Yeah. [laughs]. No a bit more seriously, we listen of course and we learn from peers around the world and from research. But I think the major change that we are seeing here is that we are really learning from the people here. We learned from them and we made them try things that as a legacy airline, people were very afraid to pilot, to bring new thinking. Everything was very uptight. Now we let people, “you have an idea, let’s try it.” The system supports that. We really learn from the people.

Shahar: On top of all the regular things, like listening to podcasts, which is easier when you’re driving, or watching YouTube or talking to people over going to conferences, all the usual things, I also use Twitter a lot. I think Twitter is a great platform to learn from because there’s a lot of smart people on Twitter. Because of the format, they tend to distill the content in very precise and specific ways so you don’t have to read a lot. You read a few tweets or a tweet storm and you immediately get smart on a few interesting topics.

I also subscribe to a few newsletters. Newsletters are on the rise. Newsletters basically digest some of the information. There’s a few good ones, and I use that to get up to speed on technology and innovation and new things happening both in the tech world/startup world but also in airlines.

Iztok: Thank you both. This was, for me, really exciting and a pleasure. You shared so much great information. I wish you all the best in your new digital challenges and new exciting MVPs and all the projects. It sounds like you are really in for an exciting ride.

Shahar: Thank you very much. Looking forward.

Amit: Thank you.

Iztok Franko

I am passionate about digital marketing and ecommerce, with more than 10 years of experience as a CMO and CIO in travel and multinational companies. I work as a strategic digital marketing and ecommerce consultant for global online travel brands. Constant learning is my main motivation, and this is why I launched Diggintravel.com, a content platform for travel digital marketers to obtain and share knowledge. If you want to learn or work with me check our Academy (learning with me) and Services (working with me) pages in the main menu of our website.

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