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Passenger anger is among the reasons that once-climbing airline stocks have flattened out or dropped lately. For years, when carriers were losing money, airline shares had a sign around their neck: Videos of a bloody-faced passenger being hauled off a United Airlines flight on April 9 crystallized long-festering customer dissatisfaction and have helped sour investors on the industry.

Passenger unhappiness, along with so-so earnings due to expensive labor pacts and fuel cost increases, plus overcapacity, are to blame for creating the air pocket, causing some investors to rethink their euphoria over the industry. Despite improvements in profitability, many mutual fund managers still "don't think it's a good business," said Craig Hodges, CEO of Hodges Capital Management, which sponsors funds.

Look at the exchange-traded fund that tracks the air carriers, US Global Jets JETS. Since then it has slipped 0. From their winter highs, the two largest domestic carriers, No. The next two major airlines, United Continental Holdings UAL and Southwest Airlines LUV are off 3 percent and 2 percent, respectively. United Airlines has settled with the passenger who was dragged off of an overbooked plane.

The video of Dr. David Dao being forcibly removed from Of course, these travails were nothing like what the industry encountered in the past. Before airlines were deregulated inprices were set at a high level, and air travel was civilized. Then came a chaotic explosion of low-cost carriers like People Express and fares plummeted.

So did the fortunes of many of the upstarts and also the legacy airlines like Eastern Airlines. But then there was a consolidation: Numerous competitors vanished from the skies and landed in bankruptcy court. The seven majors left in shrank to four byowing to a spate of mergers. What also shrank were passenger services like free food and checked bags. Nevertheless, the sector began running regular profits.

So enticing were the prospects for air travel that Warren Buffettwho previously had disdained airlines, began buying their stocks two years ago. The legendary investor's holding company, Berkshire Hathaway BRK.

Anow holds positions in all four of the industry leaders. Despite their bull run, airline stocks have never been able to shake the underlying doubts among a part of Wall Street that Hodges pointed to. Their price-earnings ratios, which gauge stocks' affordability, are below-market. Among the majors, p-e's run from Delta's 9. House Transportation Committee hearing on Tuesday, Chairman Bill Shuster, R-Pennsylvania, warned airline executives that "something is broken" in industry customer service and that they had better "seize the opportunity" to fix it.

Otherwise, he said, Congress might clamp down on them and "you're not going to like it. The United incident, where the passenger was dragged off the flight after refusing to surrender his seat to an airline employee, caused a public uproar -- and became a perfect symbol of the discomfort and the indignities that many passengers grouse about.

At the hearing, United CEO Oscar Munoz apologized for the violent treatment that customer David Dao suffered -- he has reached an undisclosed legal settlement with the company.

CBS News transportation safety expert Mark Rosenker weighs in on the incident involving a YouTube blogger being removed form a Delta flight.

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Plus, as Munoz and other industry executives argue, the industry has improved service in several key areas. Involuntary bumping and mishandled baggage reports were down last year, for instance.

Fine, but the list of customer woes remains long. The proliferation of fees has spread like a storm front -- for children's books author forex selection, for checked baggage, on and on. Another committee member, Rep. Michael Capuano, D-Massachusetts, recalled blighted playgrounds in his youth that worn-down citizens had learned to accept.

By the same token, he said, air travelers have succumbed to "lowered expectations. A lot of passenger peevishness stems from crowding. Airlines, especially the majors, like to squeeze as many people as they can onto their aircraft. Cabins have been reconfigured to fit in more seats, shrinking legroom by three inches in recent years, as measured by cbs stocks market Atmosphere Research Group, a travel industry consulting firm. Most planes are flying nearly full, averaging 84 percent of capacity last year.

Overbooking is one strategy that the industry has adopted to ensure that planes are as full as possible. The airlines view this practice as buffering themselves from trip cancellations and transfers to other flights as people change their plans.

And they argue that this practice has helped keep down fares. The flight attendants' union chief is asking people to withhold judgment on an American Airlines attendant who passengers wealth forex trading hit a mother of twi What that translates to is that, in aggregate, the airlines' capacity additions too often have outpaced the number of fliers, even though that doesn't seem to be the case when you're jammed into a plane like a herd animal.

Mann in Port Washington, New York. Profit margins are on the downswing among many airlines, at least for the moment. At United, for instance, the margin aig shares buy to 2.

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For all four of the majors, first-quarter earnings all had slides ranging define margin in stock market Delta's 30 percent to United's 70 percent. One factor is falling fares: Then there are labor costs, which are escalating after the red-ink years when carriers endured trips through bankruptcy court and airline unions had to make concessions.

Last year, Delta and United forged new labor pacts that pumped up their crews' incomes considerably. Delta inked a four-year contract with its pilots that gave them a 30 percent raise, while flight attendants signed a five-year deal that increased wages from 18 percent to 31 percent, depending on seniority. That posed a quandary for American, whose contracts don't come up until the end ofwhich meant savings in the interim but a lot of worker discontent.

So to keep employees happy, the company agreed to an interim 8 percent increase for pilots and 5 percent for flight attendants. When that came to light with American's earnings release on April 27, the carrier's stock fell more than 5 percent. What's the outlook for airlines stocks? Most likely, an eventual recovery, assuming no economic downturns, which always suppresses air travel and industry performance.

Growing capacity and expected better profit margins by year-end means "stock prices could follow," said Helane Becker, an analyst at investment firm Cowan and Co. That still leaves customer dissatisfaction as a drag on the stocks. Duncan Hunter, R-California, asked the airline executives at the hearing: Larry Light is a veteran financial editor and reporter who has worked for the Wall Street Journal, Forbes, Business Week, Money, AdviceIQ and Newsday.

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