Under the old policy, Ryanair said adults travelling with children paid one reserved seat fee, and could select seats beside them for up to four children for free.
This typically led to a fee of £8 each way, the CMA said when it launched its investigation earlier this month.
It said at the time it was looking at whether the airline’s “approach to seat reservations may mean parents are being charged for the airline to meet its child safety and disability‑related obligations as set out under aviation rules – and will investigate to determine whether or not this practice is in line with consumer law”.
Other airlines offered to seat children next to a parent or guardian without a fee, or allocate seats together automatically during booking for free, it added.
Ryanair said its policy had given families certainty of where they would be sitting at the time of booking, which they had valued.
It said the “free parent seats” will now be available at the back of the aircraft, as front rows tend to be reserved.
The “minor policy tweak” came into effect on Thursday, it said. It does not expect the change to have an effect on Ryanair’s revenue.
O’Leary hit out at the CMA for targeting its family seating policy, which he said had been “universally embraced by consumers as the most progressive and transparent in Europe”.
“Instead of promoting competitiveness and lower fares for consumers, the CMA is on a mission to force Ryanair to adopt the less transparent and less consumer-friendly family seating policy applied by most other airlines – just because it’s the industry standard,” he said.
