Ryanair given compensation deadline over 20,000 cancelled flights Paul Faith/AFP/Getty Images

Ryanair has been given a deadline to arrange compensation for the 700,000 passengers that have been affected by a raft of cancelled flights, or it could face legal action from the Civil Aviation Authority.

The Irish budget airline, which has cancelled 20,000 flights between September 2017 and March 2018, has until 5pm BST on Friday (29 September) to communicate to affected passengers they are entitled to be re-routed with another carrier.

The CAA has also instructed the airline to publicly state how it intends to reimburse expenses, such as meals, hotels and transfer costs incurred by passengers as a result of cancellations. The Dublin-based carrier has also been told it has to commit to help passengers who were misled into choosing an unsuitable alternative to their cancelled flight.

The CAA has also warned Ryanair it faced "enforcement action" for failing to give customers accurate information after announcing almost 700,000 passengers would be affected by flight cancellations over the next six months.

In the letter, the aviation regulator argued Ryanair chief executive Michael O'Leary wrongly told passengers the airline did not have to organise replacement flights after the first round of cancellations was announced.

"They are not making it clear to people their entitlement," CAA chief executive Andrew Haines told BBC Radio 4's Today programme.

"If they follow through on what they are saying, then they would be breaking the law."

O'Leary has vowed to fully cooperate with the CAA but Haines warned his promises had to be taken with "a pinch of salt" as he urged the airline to get its act together, adding he was "furious" at the "disregard for consumers and for the law" displayed by Ryanair.

"They told us that last week and yesterday they continued to put out information that wasn't accurate and was misleading to people so I take that statement with a pinch of salt," Haines said.

"Let's see action not words."

Meanwhile, according to ITV, an internal memo allegedly instructed call centre staff to offer to re-route passengers with other carriers, provided the price did not "exceed three times the value of the original Ryanair fare".

Consumer group Which? strongly criticised the document, arguing there was no legal basis for the figures.

"Ryanair appears to be plucking figures out of thin air as there is no legal basis for the arbitrary figure they've set," said Which? managing director Alex Neill.

"The law says passengers must be rerouted and there's no specified limit on cost. This yet again highlights the importance of the action which the Civil Aviation Authority has started.

"It must force Ryanair to immediately change its behaviour and comply with the law."

Ryanair said it was "surprised" by the comments from Which? and CAA as EU Reg 261/2004 requires customers to be offered reasonable re-routing or re-routing under comparable transport conditions.

"Ryanair tries to accommodate such reasonable re-routing requests using a guideline [only] of three-times the original airfare," the airline said in an emailed statement.

"This compares favourably with Easyjet's stated policy, which limits the cost of "alternative transport" to be "within the price range you paid for your original return flight or as close as possible"

"British Airways' stated policy says only that its disrupted customers will be booked 'onto another British Airways flight' with no reference to alternative transport (see attached).

"Ryanair respectfully calls on the CAA to explain what enforcement action it took against British Airways when it suffered a computer systems meltdown at Heathrow on the May Bank Holiday weekend earlier this year."

MPs call for O'Leary to quit

On Thursday (28 September), a number of MPs called for O'Leary to quit in the wake of the flight cancellations fiasco, claiming he must take responsibility for his actions.

"He has let passengers down," Labour MP Graham Stringer, who sits on the Commons transport committee said.

"He has let his shareholders down. Nobody can continue with that level of failure."

His stance was echoed by Ed Davey, a former cabinet minister for the Liberal Democrat, who called for radical changes to be made within the Irish airline's hierarchy.

"Given the misery inflicted on tens of thousands of passengers, heads need to roll at the very top of Ryanair," he added.

O'Leary also came under fire from former Conservative transport minister Stephen Hammond, who said Ryanair needed to "understand the concept of corporate honesty" and show the public contrition.

"If they do not, Mr O'Leary must be made to consider his position," he added.

Meanwhile, the airline has also published a list of all the cancelled flights from London Stansted airport between 1 November and 24 March, as well as flights that have been cancelled from other UK airports over the same period and of the 34 routes to be affected by the winter schedule change.