Airport Management In The United Sates Business Essay

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The United States possesses the largest, most extensive aviation system in the world with more than 19,800 airports, ranging from large commercial transportation centers enplaning more than 30 million passengers annually to small grass or cobblestone strips serving only a few aircraft each year. Of these, 3,356 are designated as part of the national airport system and are therefore eligible for federal assistance. The federal interest in capital investment for airports is guided by several objectives, most notably ensuring safety and security, preserving and enhancing the system's capacity, helping small commercial and general aviation airports, funding noise mitigation and protecting the environment.

The United States possesses the largest, most extensive aviation system in the world with more than 19,800 airports, ranging from large commercial transportation centers enplaning more than 30 million passengers annually to small grass or cobblestone strips serving only a few aircraft each year. Of these, 3,356 are designated as part of the national airport system and are therefore eligible for federal assistance. The federal interest in capital investment for airports is guided by several objectives, most notably ensuring safety and security, preserving and enhancing the system's capacity, helping small commercial and general aviation airports, funding noise mitigation and protecting the environment.

As you can see airports are huge businesses. For example, you've noticed that big airport's can have over a hundred acres of floor space in the terminals, millions of cubic yards of concrete in the runways and hundreds of people staffing the facilities. Some airport's can cost around $5 billion to build, and operating costs can run up to $160 million a year.

In the United States commercial airports are publicly owned and generally financed through municipal bonds. Most airports typically own all of their facilities and make money by leasing them to airlines , air-freight companies  and retail shops and services, as well as by charging for services like fuel and parking and through fees and taxes on airline tickets. The revenues pay off the municipal debt and cover the operating costs. Airports often require other sources of funding as well, such as airport bonds and government grants. But most airports are self-sustaining businesses once they become operational.

About 90 percent of employees at airports work for private companies, such as airlines, contractors and concessions. Most of the remaining 10 percent work directly for the airport as administrators, terminal- and grounds-maintenance personnel and safety crews., except for Air traffic controller which are employees of the federal government. Airports have their own departments of finance, personnel, administration and public relations, much like any city or municipality.

Airports with regularly scheduled flights are regulated by the Federal Aviation Administration (FAA) and must also follow local and state government regulations.

Airport manager's may work for a large international airport or they may work for a small municipal airport, but generally the job duties and description will be almost the same. One of the main responsibilities of airport manager's is to ensure the safe and efficient operation of the airport on a daily basis. This includes supporting staff and making sure that all staff is able to provide polite, prompt and correct information to travels, know airport policies and procedures and that passengers, luggage and freight are moving through the airport in a logical and timely manner. Scheduling the appropriate number of staff, ensuring that all ticketing and security systems are in excellent working condition and troubleshooting any problems are all part of the airport managers job.

The airport manager works closely with federal and state aviation committees and department that generate rules and regulations for all aspects of airport business and security. They must ensure that all aspects of the airport are functioning within these regulations or he or she must take the necessary actions to bring them into compliance. This may mean directly working with airport staff or working with the employees or businesses that rent space in the airport terminal. Occasionally the airport manager may also have to work with airlines and shuttle services that are out of compliance with airport policy.

The airport manager is responsible for entering into contracts with vendors in the airport with regards to renting space. He or she will also work with city planners, by-law officials and on transportation and emergency evacuation and local disaster planning committees. The airport manager may be required to speak directly to the media on issues relating to the airport, and may respond to issues around security and check-in procedures to keep the public notified of changes.

Common work activities include:

• Managing the daily operation of the airport terminal from scheduling appropriate numbers of staff to overseeing or participating in staff hiring, development and training.

• Monitoring all employees and outside vendors and businesses to ensure that they are in compliance with aviation regulations and security procedures.

• Overseeing capital investments, expansions, entering into contacts on behalf of the airport, and negotiating the budget with funding sources.

• Managing the financial aspects of running the airport from the accounts receivable to the accounts payable fund.

• Implementing and ensuring that staff is correctly trained on all airport procedures including emergency responses.

• Handling customer complaints or issues with airport service or personnel.

The disruptions to air travel caused by the recent volcano eruption in Iceland illustrate how our global economy depends on aviation. Nearly one-third, by value, of all world trade moves by air. Components for BMW's South Carolina auto plant arrive daily by air. Summer fruit from Chile reaches our supermarkets all winter by air and flowers from Kenya reach the whole world by air via The Netherlands. Global tourism, made possible by aviation, is by some measures the world's largest industry.

Many European flights originating from the United States had to be cancelled stranding thousands around the country. The Federal Aviation Administration had been working with airlines and airport officials in determining the best way to reroute some flights. The decision to ground flights was based on the view that any level of ash in the atmosphere posed some risk to aircraft, and that no matter how slight that risk might be, the government's job was, as British Prime Minister Gordon Brown put it, "to make sure that safety was paramount."

Airlines lost nearly $2 billion in revenues from the European shutdown, European Union airports lost an additional $400 million, and air traffic control providers lost another $160 million. In short, the Iceland volcano eruption was a wake-up call to all professionals in the aviation industry, which was caught unprepared. But the good news is that we know how to do much better going forward.

http://roomfordebate.blogs.nytimes.com/2010/04/22/the-new-age-of-travel-blimps-and-beyond/#robert

Let's Be Realistic

Robert Poole  is director of transportation policy at the Reason Foundation. He received two engineering degrees from M.I.T. and has worked in aerospace.

The disruptions to air travel caused by a hasty overreaction to the volcano eruption in Iceland illustrate how our global economy depends on aviation.

Nearly one-third, by value, of all world trade moves by air. Components for BMW's South Carolina auto plant arrive daily by air. Summer fruit from Chile reaches our supermarkets all winter by air and flowers from Kenya reach the whole world by air via The Netherlands. Global tourism, made possible by aviation, is by some measures the world's largest industry.

Airlines lost nearly $2 billion in revenues from the European shutdown, European Union airports an additional $400 million, and air traffic control providers another $160 million.

All had a stake in reopening airspace as rapidly as possible - but they were stymied by confused and panicked government policymakers. Officials relied on generic computer models rather than sending up test planes from day one to more precisely map the ash cloud in real time.

Close

That's what Alaska Airlines has been doing ever since it was nearly closed by the Mount St. Helens eruption 30 years ago. Since volcanoes are an ever-present threat to Alaska's operations, it has well-developed protocols for coping with ash clouds in a safe manner.

Both the forthcoming Single European Sky  and the U.S. NextGen air traffic management systems  will provide integrated real-time weather information to all aviation participants, and the former's unification of European airspace will make coordinated responses to future eruptions far easier to manage.

But it's clear that all of global aviation can learn from Alaska Airlines' pioneering approach to evidence-based procedures on when and where it is safe to fly following volcanic eruptions.

In short, the Iceland volcano eruption was a global wake-up call to aviation, which was caught unprepared. But the good news is that we know how to do much better going forward.

http://reason.org/areas/topic/airports

Airport Stories

http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=36293&pageNum=3

IT'S BACK; SCOTTISH AIRPORTS TO CLOSE AS VOLCANIC ASH RETURNS

http://www.airportbusiness.com/web/online/Top-News-Headlines/Widespread-airline-cancellations-imposed-in-LAX-due-to-volcanic-ash-in-Europe/1$35825

Widespread airline cancellations imposed in LAX due to volcanic ash in Europe

Widespread airline cancellations imposed in LAX due to volcanic ash in Europe

All flights originated from the Los Angeles International Airport (LAX) to British airports were canceled on Thursday until at least 10 p.m. Pacific time ( 0500 GMT) due to the volcanic ash hung in the atmosphere above British and European airports, airlines and airport officials said.

At least one Virgin Atlantic flight and one British Airways flight were canceled late last night, according to Marshall Lowe of Los Angeles World Airports.

United Airlines and American Airlines have already canceled all flights bound for Europe on Thursday, and cancellations by British Airways, Air New Zealand and Lufthansa were also expected, the official said.

Five airlines serving the LAX have about 10 flights daily to the United Kingdom.

The Federal Aviation Administration was working with airlines trying to reroute some flights, a spokeswoman was quoted as saying by local media.

The airspace over Ireland, Norway, Denmark and Sweden was also closed due to the eruption in Iceland. The interruption in air traffic is believed to be the biggest since World War II. Thick ash clouds from Iceland's spewing volcano hang over the Atlantic Ocean close to the flight paths for most routes from the U.S. east and west coast to Europe.

Officials at Heathrow Airport, Britain's busiest, were telling ticketed travelers to go home, because they had no estimate when flights would resume. Some 45,000 people were reported stranded at the Manchester airport this morning.

It was unclear how long atmosphere would be fouled as the volcano was still erupting this morning. A scientist in Iceland said the ejection of volcanic ash could continue for days or even weeks.

The first flight to London, a United Airlines', was scheduled for 12:45 p.m. (0745 GMT).

One of the last Los Angeles-bound flights to make it out of the United Kingdom before British airspace was closed was a United flight set to arrive at 2:38 p.m. (0938 GMT), local television channels reported.

http://www.airportbusiness.com/online/article.jsp?siteSection=1&id=36308&pageNum=2

A cloud over airplane safety

PRINCETON: When airports across Europe reopened after the closure caused by the eruption of Iceland's Eyjafjallajökull volcano, it was not because the amount of ash in the atmosphere had dropped, but because the risk that the ash posed to airplane safety had been reassessed. Was it new scientific information that led to the lifting of the flight ban, or was it a reflection of the hardship, both personal and economic, that the ban was causing?

Over six days, about 95,000 flights were canceled, at a cost to airlines of more than $1 billion. An estimated five million people were stranded or delayed. The British economy lost £1.5 billion, and others were similarly affected. Flower growers in Kenya, who depend on air transport to take their short-lived product to Europe, suddenly had no income. Sixteen cancer patients in critical need of bone marrow for transplants were put at risk because the matching marrow could not be flown in from the United States or Canada.

In the past, jets flying into ash from volcanoes in the US, Indonesia, the Philippines, and Mexico have temporarily lost engine power, and in one case, dropped thousands of feet, although all managed to land safely. But there was no evidence that the more widely dispersed ash blowing over Europe from Iceland would cause similar problems. The decision to ground flights was based on the view that any level of ash in the atmosphere posed some risk to aircraft, and that no matter how slight that risk might be, the government's job was, as British Prime Minister Gordon Brown put it, "to make sure that safety was paramount."

Indeed, in closing their skies, European governments seem to have given safety absolute priority over everything else. Yet none of them act on that principle in other areas. Some 3,000 people die on the world's roads every day. Cutting speed limits to, say, 10 kilometers per hour would prevent most accidents and save many lives. We don't do it, because we give safety a lower priority than our desire to spend less time driving.

The price we are willing to pay for safety cannot be infinite. It is distasteful to put a price on human life, but the more we spend on safety, the less we will have for our other goals. The British government uses a figure of a little more than £1 million as a general limit to the amount it is prepared to pay to save a statistical life - for example, by improving road safety. In the US, the Department of Transportation is prepared to go up to $5.8 million - nearly four times as much, at current exchange rates - for the same purpose. Does that mean that safety is paramount in the US, but not in Britain?

Giovanni Bisignani, the head of the International Air Transport Association, an industry group, criticized the shutdown, saying that no risk assessment had been undertaken. On the whole, though, the public seemed to support the decision. Stranded travelers, interviewed at airports, typically said that they would rather be stuck at an airport than in a plane falling out of the sky.

But what if some travelers have a higher tolerance of risk, or just a more urgent need to travel, than others? John Stuart Mill, in his classic book On Liberty, considered a situation in which a man sets out to cross a bridge that we know is unsafe. In Mill's view, we are justified in stopping him only to make sure that he is aware of the danger. Once he knows of it, the decision is his to make, because only he can judge the importance of his journey, and balance that against the risk he is running.

Air safety is slightly different, because a crashing plane can kill people on the ground, but the greatest risks by far are borne by the passengers and crew. If they are fully informed of the risks, and are still willing to fly - perhaps the crew has been offered more money, as workers in dangerous occupations often are - should we prevent them from making the decision to fly?

In the end, after test flights with no passengers aboard had shown no engine damage, and aircraft engine manufacturers told aviation authorities that their engines could operate safely with a low level of ash in the atmosphere, Europe's skies were reopened. The International Civil Aviation Authority has announced that it will convene a group of experts to help it provide guidance for the industry to decide what level of ash in the atmosphere makes it unsafe to fly. Now that we have seen the costs of giving absolute priority to safety, we know that this is not only a technical question. I trust that among the experts will be some who have pondered the underlying ethical question: how safe should we aim to be?

Peter Singeris Professor of Bioethics at Princeton University and Laureate Professor at the University of Melbourne. His books include Practical Ethics, One World, and most recently, The Life You Can Save. This commentary is published by DAILY NEWS EGYPT in collaboration with Project Syndicate (ww.project-syndicate.org).

http://www.airlines.org/ATAResources/Handbook/Pages/AirlineHandbookChapter8Airports.aspx

Airline Handbook Chapter 8: Airports

The United States possesses the largest, most extensive aviation system in the world with more than 19,800 airports, ranging from large commercial transportation centers enplaning more than 30 million passengers annually to small grass or cobblestone strips serving only a few aircraft each year. Of these, 3,356 are designated as part of the national airport system and are therefore eligible for federal assistance. The federal interest in capital investment for airports is guided by several objectives, most notably ensuring safety and security, preserving and enhancing the system's capacity, helping small commercial and general aviation airports, funding noise mitigation and protecting the environment.

NATIONAL SYSTEM AIRPORTS - 3,356 total airports categorized as follows:

Commercial Service Airports (522 airports) - publicly owned airports that have at least 2,500 passenger boardings each calendar year and receive scheduled passenger service:

383 primary airports designated as large, medium, small or non-hub (more than 10,000 passenger boardings each year) 139 nonprimary airports (between 2,500 and 9,999 passenger boardings each year)

Reliever airports (270 airports) - those designated by the FAA to relieve congestion at Commercial Service Airports and to provide improved general aviation access.

General Aviation Airports (2,564 airports) - the remaining airports including privately owned, public use airports that enplane more than 2,500 or more passengers annually and receive scheduled airline service.

Ownership

Although almost all commercial airports in the United States are publicly owned, the private sector plays a significant role in their operations and financing. Employees of private companies - airlines, concessionaires and contractors - account for 90 percent of all employees at the nation's airports. The largest source of capital for airport development is tax-exempt bonds, secured by future airport revenue and subject to the scrutiny of credit-rating agencies. In other countries, most airports are owned and operated by national governments.

Privatization

The possible sale or lease of commercial airports in the United States to private companies has generated considerable attention in recent years. Several factors, such as providing additional private capital for development, have motivated greater interest in airport privatization. Concerns over the possible abuse of the monopoly power of an airport, along with long-established legal and regulatory protections for existing airport investments and their revenue streams, however, have held back wholesale airport privatization in the United States.

Even if a sale or lease transfer could overcome legal obstacles, the ability of a private airport to operate profitably is uncertain. A privately owned airport would not be eligible for tax-exempt debt financing, federal airport grants or passenger facility charges (PFCs). Since these sources constitute the majority of capital funding at most airports, financing costs would rise significantly.

As part of the Federal Aviation Reauthorization Act of 1996, Congress established an airport-privatization pilot program that exempted up to five airports from legal requirements that limit their sale or lease to private entities. A single commercial service passenger airport (Stewart/Newburgh, New York) joined the program. While the facility was originally operated by a private management company under a 99-year lease, they subsequently assigned their interest to the Port Authority of New York & New Jersey, with the Port Authority assuming control in November 2007. As a result, Stewart is removed from the Privatization Pilot Program.

The City of Chicago has entered into discussions with the FAA, the airlines and potential buyers about the sale of Chicago Midway Airport. The FAA preliminarily approved the city's application for participation in the pilot privatization program in October 2006. The city selected Midway Investment and Development Corporation to operate the airport under a 99-year lease. The corporation consists of a team that includes Vancouver Airport Services Ltd., Citigroup and John Hancock Insurance Company. The city will receive an initial payment of $2.5 billion for the right to lease the airport. The FAA received the final application for review and approval in October 2008.

National governments of many foreign countries have historically owned and operated airports; over the past decade and a half many countries have begun to privatize all or parts of their nation's aviation system. The United Kingdom, which sold its major commercial airports in 1987, is one of the few countries where airports have generated profits for their shareholders.

Organizational Structure & Governance

Airports in the U.S. that receive scheduled commercial service typically are owned by cities or counties and operated by governmental units. Types of airport ownership/management structures include:

Department of City/County Government - the head of the airport department reports to the mayor or city/county manager; another variation is where the airport is governed by an appointed commission that is subordinate to the city council or board

Component of State Government - the airport is controlled by the state rather than the local government with the Department of Transportation or a subagency owning and operating the airport

Airport Authority/Commission - these are autonomous bodies with an appointed board that makes final decisions on policy and expenditures

Port Authority - airport management reports to the head of the Port Authority who also oversees the marine facilities and other related transportation departments

Bifurcated Arrangement - the city or an individual corporation operates the airport terminal while the state manages the airfield

Because airports resemble small cities, they are organized like a small city, with departments that include purchasing, engineering, finance, legal, operations, personnel, administration, security and public relations. They also have fire and police departments and must handle such typical municipal duties as trash and snow removal.

Financing

Commercial service airports, contrary to popular misconception, are not funded by government general fund tax dollars - federal, state or local. Rather, those airports are funded either directly or indirectly out of aviation revenue generated by airlines, their passengers or airport vendors in the form of direct payments or through earmarked taxes collected from aviation system users. Over 80 percent of commercial service airport revenues are generated via the aeronautical activities on the airports; the balance coming from concessions revenues, interest, etc.

Airports rely on a variety of public and private funding sources to finance their capital development, including airport bonds, federal and state grants, PFCs, and airport-generated income.

Airport Improvement Program (AIP)

Airport grant programs are funded from taxes and fees specifically collected for that purpose. As of January 2009, these included a 7.5 percent domestic ticket tax and a $3.60 per-person per-flight-segment fee for all domestic flights, except to certain rural airports. A $16.10 international arrival tax and a $16.10 international departure tax (both adjusted for the annual rate of inflation, beginning Jan. 1, 1999), a 6.25 percent tax on domestic air freight, a 4.3 cents-per-gallon domestic air fuel tax, and taxes on the fuel used in small planes and for noncommercial purposes also fund the grant programs. These revenues are credited to the Airport and Airway Trust Fund (AATF), created by Congress in 1970 to fund improvements to airports and the nation's air traffic control system. The FAA dispenses grants to airports out of the fund for projects under the Airport Improvement Program (AIP), which had total distributions of $3.4 billion in FY2006.

Passenger Facility Charge (PFC)

Since 1992, airports gained the right to charge airline passengers a $3.00 fee, known as a passenger facility charge, which the airlines collect as an add-on to the airfare. Effective April 2001, Congress authorized an increase in the maximum PFC rate that airports can charge passengers - $4.50 per segment, with a cap of $18.00 for a round trip. These taxes must be pledged to specific capital improvements that will: (1) preserve or enhance safety, capacity or security of the national air transportation system; (2) reduce noise; or (3) enhance competition between or among air carriers. Every PFC is tied to specific capital improvement projects that have been approved by the FAA, and the fee expires when all of the money needed for the approved projects has been raised (unless new projects have been approved under a separate application).

More than 370 airports have received federal government approval to levy this tax. Currently, more than $2.6 billion in PFCs were collected in 2008, and the FAA has already authorized the collection of more than $66 billion. However, even though one of the main objectives of the PFC program is to increase airport safety and capacity, only 18 percent of collected funds have been used for airfield safety and capacity improvements. In fact, more PFC funds are now being spent on interest for capital projects (32 percent) than are being spent on airfield safety and capacity. Passenger facility charges, when used wisely, have been a useful tool in meeting aviation infrastructure needs.

Revenue Bonds

More than 95 percent of all airport debt issued since 1982 has been in the form of general airport revenue bonds (GARBs), which are secured by an airport's future revenue. For the period 2001-2005, airports issued $30.1 billion in new debt and refinanced an additional $19.6 billion, all via general airport revenue bonds.

Capital improvements such as the construction of a new terminal or parking garage are sometimes funded privately (for example, by an airline if the new facility is for its exclusive use), but more often through the sale of revenue bonds by the airport operator. Revenue bonds are repaid, with interest, from the future revenue the new facility generates. For example, revenue bonds sold for a new terminal would be repaid with the rent the airport collects from the airlines and other tenants using the terminal.

Usually, the airport owns all of the facilities built on its property, regardless of how their construction was financed. Facilities built for exclusive use of a tenant, however, are sometimes leased to that tenant for a long period of time.

Years ago, general obligation bonds, which are backed by the taxing power of a governmental unit, were far more common because of their stronger credit standing and, therefore, lower financing costs. The decline in general obligation bonds reflects the improved acceptance of GARBs by investors. Today, smaller commercial service and general aviation airports are the most common issuers of general obligation bonds for airport development.

Airport Costs

With the exception of some small and nonhub airports that receive subsidies from their municipality, U.S. airports are self-sustaining. The revenue, collected from businesses, passengers and shippers using the airport, covers most of the operating expenses associated with operating the airport.

Typically, companies doing business at an airport (airlines, car rental companies, restaurants, stores, etc.) pay rents for the space they occupy. Many businesses also pay a gross-receipts fee based on the total value of their business at the airport. Airlines do not pay gross-receipts fees, but pay flight fees based on the weight of each aircraft that lands and/or departs. In some instances, they also pay aircraft parking and fueling fees, or make direct payments on long-term airport debt.

Rate-Making Concepts

There are two common methods for computing air-carrier fees: residual and compensatory. In a residual agreement, the signatory airlines accept the financial risk and guarantee the airport sufficient revenues to meet its operating costs and debt-service costs. Under the residual method, after an airport deducts all non-airline revenue from its total annual expenses, the airlines are responsible for the remaining (residual) amount, and rates are set accordingly.

Compensatory agreements are generally found at mature airports that have realized successful revenue generation. The airport undertakes the risk of meeting costs but also receives all the upside advantage. Under the compensatory method, an airport is divided into various cost centers (e.g., airfield, terminals, parking areas), and airlines pay a share of those costs based on the amount of space they occupy, planes they land/depart and other measures of airport use.

While the fees airlines pay to airports represent a small portion of overall airline operating costs (approximately 5.7 percent), they have been one of the industry's fastest-rising costs. Between 2000 and 2007, airport costs exclusive of PFCs rose 44 percent. Including PFCs, they rose 50 percent. In contrast, the consumer price index over that same period of time increased more than 20 percent and domestic airline prices fell 10 percent.

Revenue Diversion

Of increasing concern to airlines (and many airport operators) has been local political interest in diverting money away from airports for other nonaviation purposes. This activity, known as revenue diversion, is prohibited by federal law, but is allowed, in a few instances, under special arrangements that were "grandfathered" in the federal statutes addressing this issue.

Regulation of Airports

As mentioned in Chapter 6, airports that receive scheduled air service by carriers must be certified by the FAA as operating within strict federal safety guidelines for design and operation. This certificate is known as a Part 139 certificate after the section of the federal air regulations (FARs) dealing with airport safety. Part 139 certificates are the equivalent of the Part 121 certificates for airline operations. Airports also may have to comply with state and local regulations, although these usually deal with environmental or administrative matters rather than strictly with safety.

Airport Capacity

Airports have two components - landside and airside. Landside includes an airport's roads, parking lots, passenger drop-off and pick-up points, check-in areas, baggage-claim areas, and concession areas. Airside includes aircraft gates, aprons, taxiways and runways.

Landside capacity is the number of passengers per year that the airport's roads, parking lots and terminals can handle. Airside capacity, on the other hand, is the number of aircraft operations that the airport's runways, taxiways and gates can accommodate safely. Landside is geared toward the movement of ground traffic (people and packages) into and out of the airport, and airside to the movement of air traffic into and out of the airport.

The FAA calculates an airport's airside capacity using an engineering formula that takes into account the various ways an airport's runways are used, or not used, in different wind and weather conditions. Known as an Engineered Performance Standard (EPS), it is expressed in aircraft operations per hour.

Decisions that the FAA air traffic control division makes about the flight paths carriers will follow in and out of an airport also affect airside capacity. Airport capacity, or lack of it, is one of the most significant issues facing civil aviation. A great deal of attention has been focused in recent years on getting more capacity out of airports that already exist. This can be done by adding, extending or altering runways, taxiways and landing aids or, perhaps, by changing departure and approach patterns.

These and other capacity enhancements, however, often face stiff opposition from residents of surrounding communities, who often want to see airport operations scaled back because of environmental concerns. Building entirely new airports in less densely populated areas, on the other hand, is a more expensive option to expanding existing facilities, and often less convenient for most travelers.

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