(FORTUNE Magazine) – Everyone has a special horror story about customer service. The most infuriating these days probably concern air travel. Runaway traffic growth and many carriers' difficulty in adapting to mergers are major reasons passenger complaints have nearly quadrupled since last year. Now bad service has become a federal case: Both houses of Congress have passed bills that require airlines to post their on-time and lost-baggage records for all to see. The worst offender is Texas Air, the union-busting holding company that absorbed Continental, Eastern, and People Express. Continental led the industry in complaints per 100,000 passengers for the first nine months of 1987. But it isn't always the worst. In September only two-thirds of USAir's flights arrived on time, the sorriest showing by any major domestic airline, and Pan Am got the booby prize for the highest percentage of passengers bumped and highest percentage of flights that usually arrive more than 15 minutes late. Bigness, conglomeration, and lack of competition often lead to poor service. Beatrice, a giant in packaged foods, went private last year and is in the throes of dissolution. It gets the lowest ratings for service to food retailers and distributors. After visiting relatively high-priced national hotel chains, readers of Consumer Reports criticized Hilton and Sheraton, ITT's giant hotel subsidiary. Consumer satisfaction with cable TV operators, which are monopolies in most areas, has been declining ever since the Yankelovich Monitor started measuring it in 1984. Smallness and competition, however, don't guarantee caring service. Independent auto repair shops and home repair and maintenance companies tend to be modest neighborhood enterprises, but polls say they offer abysmal service. For service so awful that it verges on fraud, try the sleazier mail- order merchants, especially some of those that offer exotic clothing, imitations of famous perfumes, and cheap plants, bulbs, and seeds for the garden. To the detriment of some companies, reputation can belie reality. Customers tend to recall bad experiences more vividly than good ones. Several studies have indicated that a customer will tell only a handful of friends about the great service he has received, but will singe the ears of as many as 20 people with tales of shabby treatment. They in turn tell their friends, and word of mouth soon blackens the reputation of the offending company, even if its general level of service is top-notch. No wonder Jan Carlzon of Scandinavian Airlines System says that every year his employees' contacts with customers create ''50 million moments of truth.'' If the difficulties of giving good service seem daunting, consider the far higher cost of polishing a tarnished reputation. Continental Airlines is spending millions this year to advertise its rededication to service, and some $60 million on training employees to be more courteous and efficient. Even so, Continental cannot expect to recoup its investment quickly. Today's horror stories will take years to die.