Ryanair, easyJet and Vueling are among airlines fined more than £127million for taking advantage of their passengers.
Spain's Consumer Rights Ministry fined the carriers for violating customer rights when charging for larger carry-on luggage, picking seats or printing boarding passes and not allowing cash at check-in desks or on-board.
It comes consumer rights associations first challenged the practices in 2018.
The fines are a challenge to the budget airlines' business model which hinges on charging rock-bottom fees for tickets but then adding supplements for things like larger carry-on bags that were previously provided free by traditional airlines.
Consumer group OCU said it expected other European countries to follow suit and also to punish those same "abusive practices".
Spanish airlines industry group ALA, which confirmed the fines, was quick to criticise the government decision as violating the European Union's single market rules and the companies' freedom to set their own prices.
"We defend the consumer's right to pick the best travel option," ALA President Javier Gandara said in a statement, adding Spain's decision would force as many as 50 million passengers who only travel with a small bag under their seat to pay for services they do not require.
The Consumer Rights Ministry did not comment and airlines Ryanair, Volotea and Vueling declined to comment on the fine since ALA spoke on their behalf.
In 2019, a Spanish court ruled Ryanair's policy of charging a fee for hand luggage was "abusive".
However, Ryanair continued with its policy, citing airlines' commercial freedom to determine the size of their cabin baggage.
