Britain's competition regulator has scrapped legal action against Ryanair and British Airways.
It had claimed the airlines failed to offer refunds to those prevented from flying by the global health crisis.
Instead of providing refunds to those legally unable to fly, IAG-owned British Airways offered vouchers or rebooking.
And Ryanair provided the option to rebook.
The Competition and Markets Authority started action against the airlines in June.
It said passengers who were legally unable to take flights booked in good faith should have their money back.
But on Thursday (October 7) it said the law did not provide passengers with a sufficiently clear right to a refund in such unusual circumstances.
It concluded that the length of time that would be required to take the case through the courts, and the uncertain outcome, no longer justified further expense of public money.
Instead the CMA hopes the law will now be clarified.
Ryanair said it welcomed the decision.
British Airways said in a statement it had acted lawfully at all times, issuing nearly 4 million refunds and highly flexible booking policies.