Is Luton's reputation really *that* bad ? It's not trying to compete with Heathrow for major intl carriers with premium passengers (El Al is simply an unusual niche) - the customer base is almost entirely LCCs. As long as service isn't too bad and the price is reasonable, Luton will continue to get the passengers - see the CAA stats for details.
If service levels are to be improved signficantly, I'd expect to see builders doing some major work on the terminal first