FAA no longer refers to airlines as "customers"

* FAA taking steps to improve oversight of airlines

* Safety regulators reaching out to whistleblowers

* Regulators want to ensure compliance with directives

WASHINGTON, Sept 17 (Reuters) - The U.S. Federal Aviation Administration, trying to shake criticism it has been too close to the industry it regulates, will drop its practice of calling airlines its customers and will beef up safety practices.

"When we say customer, we mean the flying public," FAA Administrator Randy Babbitt said in announcing policy changes aimed at strengthening safety oversight and streamlining avenues for whistleblowers and others to report problems without fear of reprisals.

Some members of Congress, safety watchdogs, and whistleblowers have long complained of a revolving door culture that fostered coziness between the FAA and major U.S. airlines.

The issue erupted publicly last year when a whistleblower case over maintenance lapses at Southwest Airlines Co (LUV.N) led to a congressional investigation and harsh criticism of FAA oversight.

Babbitt said the FAA would create an office to handle safety complaints from whistleblowers and the public. It is also improving procedures to ensure airlines comply fully with the hundreds of FAA directives issued each year, mainly on matters that require precise recordkeeping and a maintenance response.

(Reporting by John Crawley; Editing Bernard Orr)