LOW-fares airline Ryanair has backed down on its threat not to reimburse stranded passengers for their hotel and food costs
In a dramatic U-turn, the airline said it will now meet the requirement to pay reasonable expenses covered by receipts.
But it vowed to lobby the EU to change these "absurd and discriminatory" provisions and may seek compensation for the costs incurred.
Airline chief Michael O'Leary had threatened not to pay out any more than the cost of passengers' original ticket.
However, the airline was forced to back down in the face of intense criticism from successive European governments and consumer watchdogs.
Their admission they had "got it wrong" came as the Government Taskforce on Emergency Planning called for aviation bodies to give clear guidance to airlines about what counted as "reasonable costs" to remove the possibility of disputes. It also urged passengers to be patient about the processing of their claims.
Mr O'Leary yesterday said Ryanair will now meet the requirement to pay expenses.
The Commission for Aviation Regulation said they welcomed Ryanair's decision.
The airline faced huge fines if legal action against them was pursued for breaching EU laws requiring them to pay the expenses of passengers forced to wait days for a flight home.
Mr O'Leary said the events of the last seven days "highlight how absurd and discriminatory the EU261 regulations are towards Europe's airlines".
He added he wanted limits similar to those applicable to ferry, coach and ferry operators.
Ryanair said it expected its total losses from the week-long grounding of flights would amount to around €40m, including these passenger reimbursement costs, but exact figures would not be available for some time.
Reimbursement would mainly apply to Irish and British passengers who had been stranded in Europe as most continental European customers had been able to make their way home by land.
The airline said it might seek to recover some of their costs from the EU. However, passengers would not end up paying extra for flights to cover these losses as Ryanair had already launched a special seat sale.
Patricia Barton, of the Commission for Aviation Regulation, also welcomed the U-turn by Ryanair.
Ms Barton added: "There is an obvious disproportionality to the cost of the tickets we are talking about here, and the cost of the accommodation, but the fact remains that the right to accommodation and meals is set out in the regulation which is in place and which doesn't exclude situations like volcanic eruptions and subsequent cancellations en masse.
"Even if there is a disproportionality, the law is the law and it must be applied."
The regulations specify meals and accommodation expenses incurred while waiting for a flight must be paid for.
Independent MEP Marian Harkin called on the EU to set up a temporary body to help citizens pursue compensation claims in foreign countries.
A record 72,000 ferry passengers have passed through Dublin Port in the last week.
Transport Minister Noel Dempsey congratulated all the ports and ferry companies for their flexibility and efficiency in handling this unprecedented demand.
Information on how to pursue claims in Ireland and throughout Europe is available on www.aviationreg.ie.