The shorter the time horizon, the higher the percentage of total costs considered fixed. For example, suppose an American Airlines plane will depart from its gate in the next hour and currently has 20 seats unsold. A potential passenger arrives with a transferable ticket from a competing airline. American’s variable costs of placing one more passenger in an otherwise empty seat (such as the cost of providing the passenger with a free beverage) is negligible. With only an hour to go before the flight departs, virtually all costs (such as crew costs and baggage-handling costs) are fixed.