The budget airline Ryanair today sparked a furious response from politicians and risked a consumer backlash by refusing to pay the hotel and food bills of passengers stranded by the volcanic ash cloud, in a blatant refusal to abide by strict EU consumer rules.

As Britain's skies opened for business at last after a catastrophic six-day shutdown, the carrier's chief executive, Michael O'Leary, told passengers his airline would not meet hotel and subsistence expenses incurred while they were stuck abroad. Ryanair would reimburse travellers the original price of their air fare and no more, he said.

Europe-wide regulations demand that airlines provide food and drinks and hotel accommodation if appropriate when passengers are stranded. There are no time or monetary limits on the commitment, which Ryanair repeats on its website. Pressed on the legality of his stance, O'Leary challenged Ireland's airline regulator, the Commission for Aviation Regulation, to take him to court. It is estimated Ryanair's stance could affect as many as 400,000 passengers, and potentially save the airline millions of pounds.

The firm was alone in promising to defy the law, but the main European and international airline industry bodies yesterday also attacked the regulations and demanded an urgent review on the basis that they were not intended for extraordinary situations such as erupting volcanos.

Mike Carrivick, chief executive of the Board of Airline Representatives (BAR), which represents more than 90 airlines including British Airways, Virgin and BMI, said the relevant regulation was intended to apply when airlines had individual delays or cancelled flights. "It was never intended to apply to wholesale shutdown of the airways system imposed by governmental rulings and without any limitation of time."

The regulations, said the BAR, were "draconian, disproportionate and impractical".

O'Leary said: "There's no legislation designed that says any airline getting a fare of €30 should be reimbursing passengers many thousands of euros for hotel accommodation. It's absurd. I don't have a problem with everything being grounded for a day or two but there should have been a much faster response by the governments and transport ministers and by the regulators. This is one of these issues we want addressed – why exactly are the airlines expected to be reimbursing people's hotels, meals and everything else when the governments are the ones who made a balls of this?"

Norman Baker, the Liberal Democrat transport spokesman, said the airline's position would make passengers think twice about future travel with Ryanair.

"This is shocking behaviour and rubs salt into the wounds for those who have been stranded overseas," he said.

The row came on an otherwise hopeful day, as air travel started to return to normal with flights coming in and out of Britain on a regular basis for the first time in almost a week. Virgin Atlantic flew a full schedule, while BAA said the transport secretary, Lord Adonis, had granted special permission for planes to land through the night at Heathrow. British Airways said it would take time to return to a "full flying programme" as many of its planes and crew were out of position.

Thousands of Britons remained stranded abroad and the Foreign Office minister Chris Bryant admitted getting hundreds of thousands of people back to the UK was proving "phenomenally complicated and difficult". There were long queues for ferries at Calais and planes out of Britain at Heathrow.

The international airline association, IATA, says the volcano crisis has cost airlines more than $1.7bn in lost revenue.