Lawyers say the low-cost Irish carrier could be liable for payouts of around £610 million after the firm lost a test case at Manchester County Court.
The airline had argued claims for delays could be limited to two years under a clause in their terms and conditions small print - not six years, as is the rule under European Union Law.
The case was brought by lawyers for six delayed passengers who tried to claim compensation for delayed flights after five years and eight months, which Ryanair contested.
After a long-running legal battle, Judge Platts ruled Ryanair’s rules fall foul of European Flight Delay law. Ryanair said it will appeal the decision.
Lawyers say the ruling in the case, Goel & Trivedi v Ryanair, stands to affect millions of air passengers.
They say if Ryanair had won, all airlines might have been able to put a two-year time bar on all existing and future flight delay claims.
Kevin Clarke, lawyer for Manchester law firm Bott & Co, who fought the case for the passengers, said: “We’re delighted the court has dismissed yet another argument put forward by the airlines to restrict passenger rights.
“The last twelve months have seen a series of landmark judgments obtained by Bott & Co on behalf of millions of passengers and this is as important as any of those that precede it.
“The Supreme Court decision last year said passengers have six years to bring a claim. That is a definitive, binding, clear judgment from the highest court in England and Wales.
“This should have concluded matters but unfortunately Ryanair have been able to tweak the argument; we found ourselves running a complicated court case arguing the fine points of contract law.
“We fully expect the airlines to continue to fight these cases but we are prepared to hold them to account in each and every instance where the law says compensation is payable, and with the courts continuing to find on behalf of consumers we’ve real cause to be optimistic that passengers will receive the compensation they are entitled to.”
However, Ryanair said they will contest the ruling.
In a statement, the firm said: “We note this ruling which reverses Lower Court orders that a two-year time limit for claims is reasonable.
“Since we believe a six-year time limit for submitting such claims is both unnecessary and unreasonable, we have instructed our lawyers to immediately appeal this ruling.”
And Ryanair issued the following statement on Friday: “[we] rubbish the absurd claims about its potential liability under the Manchester Court judgement.
“Firstly, since less than 1% of Ryanair flights are delayed over 3 hours and since more than 90% of passengers make a valid claim within Ryanair’s contractual 2 year period, there is a tiny potential group of passengers who may wish to submit a claim between 2 and 6 years after the date of their flight delay.
“Accordingly, Ryanair estimates that even if its appeal in this matter is ultimately unsuccessful, its potential liability will not be material and is likely to be less than €5m.”
Flight delay Regulation EC 261/2004 entitles passengers to claim flight compensation of up to 600 euro per person for delays of three hours or more, as long as the delay was not caused by “extraordinary circumstances”.
The UK Supreme Court ruling in Dawson v Thomson Airways in October last year clarified that passengers in England and Wales have six years to take a claim to court.
But Ryanair has been arguing that, by accepting the airline’s terms and conditions when they buy a ticket, passengers agree they only have two years to take a claim to court, despite the earlier Supreme Court judgment.
In the ruling, Judge Platts suggested Ryanair did not have this latest legal argument in mind when the Terms and Conditions were drawn up.
Judge Platts said that Ryanair’s complicated legal argument “...requires a somewhat ingenious legal analysis which I doubt was in the mind of the parties when the contract was made”.
The test case of Goel & Trivedi v Ryanair was taken to court by Bott & Co on January 30 2014, five years and eight months after the delay itself.
Six passengers were delayed by nine hours and 50 minutes on a flight from Reus in Spain to Stansted on March 6 2008.
Ryanair put on hold the Goel & Trivedi case pending the outcome of the test cases Huzar v Jet2 and Dawson v Thomson Airways in 2014.
But when the Supreme Court ruled in favour of delayed passengers in both cases, Ryanair changed its argument to focus on its Terms and Conditions to defend the claim.
Lawyers say although no other airlines are currently running the two-year limitation argument, the majority have a similar clause in their terms and conditions stating that passengers only have two years to issue court proceedings.
Richard Lloyd, executive director of consumer champion charity Which? said: “This case is a huge victory for consumers and should deter other attempts to shorten the six-year time limit for seeking redress.
“It’s about time that airlines hold their hands up and pay compensation where it is due.
“We are urging people to hold their airline to account and claim the compensation they are rightly owed if they have a lengthy delay and the airline is at fault.”
A recent investigation by Which? found more than 9,000 flights in the UK are delayed for three hours or more over a 12-month period to May 2015, which could mean around 900,000 passengers are potentially eligible to receive compensation.