State allowed to yank airline’s liquor license

updated 3:14 p.m. ET Oct. 1, 2009

ALBUQUERQUE, New Mexico - A federal judge has ruled that officials in this southwestern state can keep US Airways from serving alcohol on its New Mexico after a passenger caused a drunken-driving crash that killed five people.

US Airways sued the state in 2007 after the New Mexico Regulation and License Department denied its application for a liquor license.

The judge's ruling means US Airways cannot serve alcohol on flights while its aircraft are over New Mexico or while grounded in the state.

Kelly O'Donnell, the department's superintendent, said Thursday she was "gratified and satisfied" by the decision.

"It is a victory, a huge victory, for public safety here in New Mexico and for other states that want to ensure their liquor laws are upheld by everybody who is selling liquor within their borders," O'Donnell said.

The airline argued that New Mexico has no authority to regulate on-board alcohol service, require alcohol training or enforce sanctions against the carrier because the state is pre-empted by federal law.

However, in a 24-page opinion issued late Wednesday, U.S. District Judge M. Christina Armijo in Albuquerque found that neither the Airline Deregulation Act nor the Federal Aviation Act can pre-empt state liquor control laws.

A spokeswoman for US Airways Group Inc. said the airline was reviewing the ruling and had no immediate comment.

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