Ryanair is to reimburse reasonable expenses incurred by passengers affected by the volcanic ash plume but says passengers are not entitled to compensation under EU law.
The airline said it would have to cover "reasonable receipted expenses", such as accommodation and refreshment, for passengers who encountered disruption over the last week.
It previously said it would limit reimbursement to the original ticket fare paid by passengers.
The Commission for Aviation Regulation yesterday warned that airlines would face large fines if they failed to adequately reimburse passengers stranded by the disruption caused by the volcanic ash cloud.
Ryanair chief executive Michael O'Leary last night said the legal obligations faced by European airlines for passengers who are re-routed were "absurd" and that he would be willing to fight the commission in court.
Today, the airline changed its stance but said that EU regulation number 261 said passengers were not entitled to compensation "as the closure of European airspace over the past seven days was beyond the control" of airlines.
Mr O'Leary said airlines were required by regulation to meet potentially unlimited expenses while governments and Regulators wrongly applied a blanket ban on flights over European airspace.
As flights around Europe and in Ireland began to return to normal yesterday, the focus switched to compensation claims by passengers who were left with large hotel and food bills after being stranded.
Aer Lingus and Ryanair are expecting to return to normal service within the next two days.
Aer Lingus hopes to operate a full schedule today with all flights between Ireland and the UK, Europe and the US expected to operate as normal.
Ryanair will not be operating any flights between Ireland and the UK until tomorrow at 5am to allow aircraft to fly to continental destinations to collect stranded passengers. Extra flights have been arranged to and from Dublin to Alicante, Faro, Fuerteventura, Palma and Tenerife to allow passengers stranded in these destinations to return home.
The Government’s taskforce on emergency planning will meet again at 10am today. Speaking after the group met yesterday, Denis Daly of the Irish Aviation Authority said it would take two to three days before airlines got back to normal operations.
“And, of course, everything is predicated upon what happens in Iceland,” he said. “The volcano is still active. It will depend on the cloud of ash, where it is, the intensity of it and also the weather conditions, both wind direction and strength.”
Mr O’Leary said yesterday there was “no legislation designed that said any airline getting a fare of €30 should be reimbursing passengers many thousands of euro for hotel accommodation” and called for legislation to put airlines on the same footing as as coach, train and ferry operators, which are only liable for the original fare cost.
“We will look forward to seeing this in court because, frankly, I think this is a great opportunity for the airlines to expose this nonsense,” he added.
The commission’s spokeswoman, Patricia Barton, said that if an airline fails to comply with a directive then “it is committing a criminal offence”.
“The courts can impose a fine of between €5,000 and €150,000 for each breach of a directive,” she said. The commission encouraged affected passengers to pursue “proportionate and reasonable” claims.
Aviation regulators in Europe expect almost all scheduled flights to operate in European airspace today due to an easing of volcanic ash restrictions; however, a huge backlog of flights is likely to cause further disruption.
The resumption of flights follows the adoption by EU transport ministers of a new safety system designed to determine more precisely where the risks are located from the Eyjafjallajökull eruption in Iceland.
Icelandic authorities said the volcano was still erupting yesterday but was producing less ash.
Forecasters believe a low-pressure weather system moving into Iceland may help clear the ash cloud within days.