Ryanair this week told around 100,000 passengers who bought tickets on Buzz for April that their flights have been cancelled following its takeover of the airline.

But angry customers should not despair - under contract law, Ryanair is liable for more than just the cost of the basic fare, and one firm of London lawyers is putting together a class action against the no-frills airline.

Ryanair took over Buzz on January 31. Its chief executive Michael O'Leary says that only passengers who had booked flights after April 1 will be offered a refund of the fare. Passengers would then be able to rebook with new tickets from March 12.

But the airline is not prepared to pay compensation beyond the cost of the original fare, even if passengers have organised hotels, car hire and insurance. It is unlikely to pay out unless ordered to do so by a court.

So how would the courts look on this? The basic rule is that if someone breaches a contract, the victim can chose between being put in the position they would have been in had the contract not been made, or having the cost of performing the contract another way.

This means those who elect to take their trips on alternative airlines will be able to claim the difference in fares. People who cannot obtain a flight to or from the same airport as they had booked with Buzz, will be entitled to reasonable additional transport costs.

If making new arrangements is particularly time-consuming or inconvenient, further compensation may be payable.

Those who can't or don't want to make alternative arrangements may already have booked non-refundable accommodation or car hire. The self-employed may have turned down work on the basis that they would be on holiday at that time. These are all recoverable and damages for disappointment may be added to the financial loss.

Many passengers are likely to be able to obtain compensation of substantially more than the fares. In February 2002, Lambeth County court decided that Buzz's liability was not restricted to a refund when it cancelled flights.

While many will consider their own claims too small to be worth bothering with, Hampstead solicitors, Ian Guyster & Co, are considering launching a class action on behalf of Buzz passengers.

Mr Guyster says: "On the face of it the claims that will be made against the airlines seem virtually unanswerable. We would need to know more about the contractual arrangements between Ryanair and Buzz before starting proceedings, but I hope enough irate passengers come forward to make a group action worthwhile."

· Richard Colbey is a barrister

We were left up in the air

For once we were organised, writes Ian Wylie. The villa in Le Rayol-Canadel between Hyères and St. Tropez was booked in December and by the middle of January we'd booked our six return flights (four adults, two kids) from Newcastle to Toulon via Stansted for the last two weeks in August. All we had left to do was arrange car hire and decide which factor of sun cream to buy.

We weren't so smug 11 days later, when Buzz (the airline supposed to be taking us from Stansted to Toulon) was bought by Ryanair. We didn't panic - after all, Ryanair likes flying to small airports, so flights to Toulon might survive. Not so. Toulon was one of the 12 routes axed this week.

With the position on refunds uncertain, we could be facing a £915 loss, plus the £140 wasted on connecting Easyjet flights.

We thought we'd been prudent, saving money with a low-cost airline. We won't make that mistake again, Mr O'Leary.