On the face of it the European Commission's ruling appears to be a setback for Ryanair, although it is more of a slap on the wrist than a body blow. But it will mean higher air fares for consumers.

The Irish-based low fares airline has been found to have received illegal state aid to subsidise its deal at Belgium's Charleroi airport and will have to repay at least €4 million to the Walloon regional government.

It will also have to renegotiate the terms of the 15-year deal it had agreed at Charleroi which could raise its costs. The benefits it receives in terms of marketing and other supports from the airport will also be curtailed to run for a maximum of five years rather than 15.

About 20 per cent of the airports used by Ryanair are publicly owned and the ruling is likely to force it to pay more to use these airports in the future. The airline has made it clear that it will not absorb these increases and has said the ruling will make it more expensive for consumers to fly to Charleroi with Ryanair.

EU Transport Commissioner Ms Loyola De Palacio accepts that the ruling will cost consumers more money but only about another €3 or €4 per ticket. She believes that in the longer term the ruling will foster even greater competition and bring new airlines to airports such as Charleroi. Mr O'Leary suggests its fares will rise even further and said Ryanair will appeal the ruling to the European courts.

Things could have been a lot worse.

The Commission has been involved in lengthy negotiations with the Walloon government which battled hard to justify the deal. In recent days, the Minister for Transport, Mr Brennan and Ireland's European Commissioner, Mr David Byrne, have also been lobbying to influence the outcome and together these efforts helped to limit the damage for Ryanair.

Various parts of the consultation documents that were circulating around Brussels had been signalling that the Commission would put a three-year limit on the marketing and other such supports that could be offered by the airport. When the ruling was announced yesterday, this had been lengthened to five years.

And the most significant achievement of those battling in Brussels was to confine the ruling to Charleroi, thwarting Ms De Palacio from using the ruling to issue guidelines for Europe's airports. Yesterday, Mr Brennan said he would continue to influence the next phase of Ms De Palacio's endeavours and contain any further damage for Ryanair and other low-cost carriers.

Ryanair has been quick to suggest that it could close down some of the routes it offers from Charleroi as a result of the ruling. It also accepts that the ruling could potentially also affect some of its routes into France's state-owned airports.

Investors were relieved by the outcome of the lengthy and controversial deal which was reflected in the rise in Ryanair's shares yesterday. As the majority of its airport deals are with privately-owned airports, where it has secured deals for up to 20 years, investors are not overly concerned about any significant increase in its costs after yesterday.

But they are still nervous about Ryanair's prospects after it issued a profit warning last week. Mr O'Leary's biggest challenge is to win some victories for the airline in the fare wars raging across Europe.

Only then will the share price improve.