EU top court sides against Ryanair in volcano case

BRUSSELS (AP) -- The European Union's top court said Thursday that Irish low-cost airline Ryanair has to pay out compensation to passengers that were stranded due to the 2010 volcano eruption in Iceland.

The European Court of Justice ruled that airlines have an obligation to provide care, even in such "extraordinary circumstances" as the eruption of the Eyjafjallajokull volcano. The volcano's ash cloud was considered too dangerous to fly through and millions of passengers were left stranded after airplanes were grounded.

Ryanair said in a statement the ruling would make flying more expensive for consumers. It said the 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."

In 2011, Ryanair imposed a new €2 ($2.71) fee on all flight bookings to "cover future compensation costs."

The company also said that volcano eruptions and subsequent closure of airports were "clearly and unambiguously" events outside an airline's control.

"The European Court now makes the airlines the insurer of last resort even when in the majority of cases ... these delays are entirely beyond an airline's control," the company said.

The court gave its opinion after a one Irish passenger was stranded in southern Portugal for a week during the crisis and demanded compensation from Ryanair of almost €1,130 ($1,530.13).

Ryanair has said it paid out €26.1 million ($35.4 million) to stranded passengers but it has refused many claims, citing their "excessive" cost.

Even though EU rules do not set financial limits on compensation, the court said passengers can only claim costs that proved "necessary, appropriate and reasonable to make up for the shortcomings of the air carrier."

It left it to national courts to assess what that meant in their cases.

The case centers on Denise McDonagh of Ireland who was scheduled to fly back from Faro to Dublin April 17, 2010 only to learn that the flight was canceled. She was stranded in the Algarve for a week before being able to return and charged the costs of meals, refreshments and accommodation.

EU rules say that airlines do not have to pay their passengers if the conditions are beyond extraordinary circumstances, but the court said the volcano eruption and subsequent chaos at European airports "do not release air carriers for their obligation to provide care."

Chief executive Michael O'Leary has already called on the European Commission and the European Parliament to reform their laws on passengers' reimbursement rights, saying they discriminate against airlines since payouts for stranded passengers of ferry, rail and bus services are capped at the original ticket cost.

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Shawn Pogatchnik contributed from Dublin