(CNN) -- Airline passengers still want it all: low prices, comfortable seating, "free" baggage check-in and other freebies.
And they think JetBlue Airways and Southwest Airlines do it best.
Although passenger satisfaction with traditional "legacy" carriers declined slightly, satisfaction with low-cost carriers continued to improve for the third year in a row, according to the J.D. Power and Associates 2012 North America Airline Satisfaction Study released Wednesday.
"The airline industry is caught between trying to satisfy customers who demand low prices, high-quality service and comfort, and contending with the economic challenges of profitably operating an airline," said Stuart Greif, vice president and general manager of the global travel and hospitality practice at J.D. Power and Associates, in a statement. "Passengers want it all, but they are not necessarily willing to pay for it all. Carriers often must make decisions for financial reasons that they know will negatively impact passenger satisfaction, and therein lies the conundrum."
Overall airline passenger satisfaction declined two index points to 681 index points on a 1,000-point scale compared with 2011. The low-cost carriers' rating increased three index points from 2011 to 754 points this year, but traditional carriers dropped four points to 647 points.
"We never take this recognition for granted," said JetBlue chief operating officer Rob Maruster, attributing the airline's top ranking to "all aspects of our offering: our fares, the fees we do and don't have, the hard product we offer, the aircraft, the seat on board, our new terminals and the service that crew members give to our customers.
"Customer satisfaction to JetBlue is like a religion, and we know what moves the customer needle -- a lot of it has to do with communication," he said. "When our pilots come out of the flight deck and introduce themselves to the cabin, it makes an enormous difference in terms of customer satisfaction."
Passengers do not seem to be rewarding airlines for delivering the basics. Airlines actually had their best performance in 22 years, based on on-time arrivals, reductions in mishandled bags, reductions in denied boardings and lower customer complaint numbers, according to the J.D. Powers report of U.S. Department of Transportation data.
While Alaska Airlines and Air Canada took the top two spots for traditional airlines, Delta Air Lines moved up two spots to come in third place, the only traditional carrier to improve from the previous year. The J.D. Powers report credits Delta's innovations in technology with improving the passenger experience.
"Investing in technology has been a major area of focus for Delta and it's clear that investment is paying off," wrote Chris Kelley, a Delta spokesman, in an email. "Our goal is it make it easier to do business with us. Much of that simplification can be solved with technology. So from mobile boarding passes to in-flight Wi-Fi to recharging stations in the gate areas -- we're making it easier for customer to stay connected."
Checked bag fees appear to be a source of contention. Customers who pay to check their bags have much lower average satisfaction scores (5 points lower) than passengers who do not. Top-ranked JetBlue doesn't charge for the first checked bag, and second place Southwest allows two free checked bags.
"We've been touting the "No Bag Fee" message for a few years now, and here's proof that customers love it," wrote Ashley Dillon, a Southwest Airlines spokeswoman, in an e-mail. "We carry more passengers than any other airline in the country, and we consistently rank high in customer satisfaction surveys as evidenced in today's JD Power and Associates airline satisfaction rating. People don't want to be nickeled and dimed and they want low fares."
Those bag fees are a key source of income for many airlines, earning them $3.4 billion in revenue last year, according to the Department of Transportation. (Delta Air Lines made the most at nearly $864 million but will waive the first checked bag fee if a customer has its frequent-flier credit card.)
United Airlines recently raised the fee it charges for a second checked bag for some international flights from $70 to $100, matching Delta's earlier fee hike from $75 to $100 (with a discount for online check-in).
Airlines using an "a la carte" pricing system for services aren't likely to reverse themselves in the near future, according to R. John Hansman, an aeronautics and astronautics professor at the Massachusetts Institute of Technology. "Passengers are already becoming acclimated and some actually like it as they can pay for the services that they want such as extended legroom, etc.," he said.
Top-ranked JetBlue led the low-cost carriers with 776 points out of a possible 1,000 points, followed by Southwest with 770 points and WestJet Airlines with 773 points. Among the low-cost carriers, Frontier Airlines came in last with 694 points but was still
ahead of top-ranked legacy carrier Alaska Airlines.
Alaska Airlines topped the list of legacy carriers with a score of 678 points, followed by Air Canada with 677 points and Delta with 659 points. US Airways ranked last with 614 points.
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