The Commission for Aviation Regulation says it processed over 2,000 refund claims and organised 11 special flights to bring home over 1,500 passengers as five travel companies went bust in the second half of 2008.
It says that in this six month period, it had to process more bond-related work than in the previous eight years.
In its annual report today, the commission - headed by Cathal Guiomard - says that after a number of years of strong growth in Irish aviation, 2008 brought a 'sudden and sharp weakening in the air travel business'.
The cost of the refunds and 'rescues' - which totalled over €3.8m - was mainly borne from the bonds that licensed travel companies are required to enter into with the Aviation Commission.
In the current economic downturn, Mr Guiomard said the commission has scrutinised very carefully the financial resources of firms it licenses in the travel trade, airline and airport ground-handling sectors to make sure that they have the financial means to provide the services they offer.
Earlier this month, the aviation regulator proposed that passenger charges at Dublin Airport should increase by almost €1 from January.
The regulator's draft decision says the impact of the economic downturn means there are fewer passengers than expected from which to recover costs. The charges will increase from €7.39 to €8.35 under the proposals.
It also said that prices may have to rise further later next year to help pay for the second terminal at Dublin Airport.
In its annual report today, the Commission reported a surplus of €1.3m for 2008, up from a surplus of €376,778 the previous year. During the year its salary costs rose to €1.7m from €1.59m while its pension costs rose substantially to €98,916 from €54,229.
Training costs at the commission fell to €16,251 from €50,158 during the year, while the commission also managed to reduce its consultancy costs from €475,525 to €43,860 in 2008.
