A court has ruled Ryanair flouted EU law by refusing to pay out cash to a customer left stranded by the Icelandic volcanic ash cloud three years ago.
Denise McDonagh, from Ireland (OTC BB: IRLD - news) , was due to fly back to Dublin from Faro on April (Paris: FR0004037125 - news) 17, 2010, but was trapped in Portugal for a week after the eruption closed down much of European airspace for nine days.
She ran up hotel, meal and refreshment bills of 1,130 euro (£940), and submitted them to the airline when she returned to Ireland.
But the company refused to reimburse her, claiming that the consequences of the eruption were so unexpected they could not count as 'extraordinary circumstances'.
Ms McDonagh pursued her claim through the Irish courts, which then sent the case to the European Court of Justice in Luxembourg, which is the highest court in the EU for interpreting and enforcing EU laws.
Last March Advocate General Yves Bot ruled in the plaintiff's favour, which has now been upheld by the court.
And its judges have ordered Ryanair to cover the costs she incurred.
Their decision could also have an impact on prices in the budget airline market.
Ryanair boss Michael O'Leary told Sky News: "Today's decision is a very bad one for the price of air travel in Europe.
"The next time there's an ash cloud or the skies are closed by Europe's governments, the insurance companies will walk away and wash their hands because it is an act of god.
"The airlines will become the insurers of last resort so somebody whose has paid us to go to the Canaries who maybe is stuck there for two weeks, two months, six months will now sue the airlines.
"And you'll have airlines going out of business and the ones who stay in business will be putting up their air fares to recover these crazy claims."
The court ruling said: "EU law does not recognise a separate category of 'particularly extraordinary' events, beyond 'extraordinary circumstances', which would lead to the air carrier being exempted from all its obligations under the regulation."
The court also ruled that the regulation did not set a monetary limit on the care airlines based in the EU should give to passengers in such cases.
The ruling continued: "It is precisely in situations where the waiting period occasioned by the cancellation of a flight is particularly lengthy that it is necessary to ensure that an air passenger can have access to essential goods and services throughout that period."
However, the court did give some relief to the airlines, by stating that they "may pass on the costs incurred as a result of that obligation to airline ticket prices".
After the judgment Ryanair released a statement and said: "Ryanair regrets the decision of the European Court which now allows passengers to claim for flight delays which are clearly and unambiguously outside of an airline's control.
"Today's decision will materially increase the cost of flying across Europe and consumer airfares will increase as airlines will be obliged to recover the cost of these claims from their customers, because the defective European regulation does not allow us to recover such costs from the governments or unions who are responsible for over 95% of flight delays in Europe."
:: More than 100,000 flights were cancelled and eight million passengers stranded after the Icelandic volcano erupted, spewing a massive cloud of ash that caused the world's biggest airspace shutdown since the Second World War.
More From Sky News