As Asia rocks from the effects of the year-old financial crisis, a new demon is lurking on the horizon in the shape of the year 2000 date change. The big question is whether Asian airlines will fix the millennium bug in time.
Estimates of the global cost to make all systems Y2K compliant have been put as high as US$600 billion, but the potential amount from legal costs arising from actions surrounding Y2K failures is unknown. There are also apocalyptic warnings of a worldwide recession brought about by Y2K computer failures.
Peter Harbison of the Centre for Asia Pacific Aviation (Capa) says of the potential cost of fixing the problem: 'Think of a big number and multiply it by a billion.' At present, there are no figures available on how much the problem will cost Asia alone, he adds.
Harbison is worried that the economic crisis is distracting Asian carriers from the Y2K problem. Dealing with the Y2K issue has already been postponed, whereas in richer times the problem would have been addressed earlier, he says. He detects 'a lack of excitement' on the part of some airlines in dealing with problem.
At a June conference in Dubai a number of airlines outlined proposals and plans. But at least one airline source is concerned at the general reluctance in Asia to speak openly about the Y2K problem. 'I wouldn't know whether they'll be ready in time, which is a worry,' he says. Privately, many of the non-Asian carriers are concerned at the region's low level of interest. However, Iata was due to hold a meeting in Geneva in August, which most Asian carriers will attend.
It has become clear that Asia has been generally slower to acknowledge the problem than the US and Europe. Equally worrying, consultants reckon that only the US, Canada and the UKare spending enough to fix the problem in time.
'Time is not on our side for such a massive project. The degree of awareness is not sufficient,' warns Carlos Chua, commercial director at the Association of Asia Pacific Airlines (AAPA). He adds that his organisation's goal is to complement the global efforts of Iata.
Chua says the AAPA is working to raise awareness of the Y2K problem with air service providers and their suppliers, chasing down the entire supply chain to demonstrate compliancy.
A proactive approach is being taken to raise awareness: the association is organising interviews and discussion groups with carriers, many of which are unwilling to reveal the extent of their problems. Chua likens the scheme to the role of a doctor diagnosing a patient's illness with pertinent and leading questions.
Jim Barlow, senior vice president of Sabre Technology Solutions (STS), estimates that Asian carriers were six months to a year behind Europe and the US in acknowledging the problem. 'No-one's admitted they haven't addressed it; they're possibly embarrassed,' he says. Barlow also highlights a lack of leadership across the region in dealing with Y2K.
Chua says US carriers were alerted to the problem as early as 1994, yet Korean Airlines is typical of many Asian carriers in having only started addressing the problem in 1997.
However, Thai Airways claims it is well ahead with its millennium preparations. Bunga Kornivinai, director of Thai's information technology services group, says all the critical areas will be under control by the end of 1998. Thai Airways estimates the final cost at between 200 and 300 million baht ($5-7 million).
'This has been a top priority project for the last many months. We have to work not only with our internal systems but also our worldwide offices, all our technological suppliers, as well as the Airports Authority of Thailand, the Department of Aviation and Aerothai to make sure we are doing the right thing,' says Kornivinai.
Thai is also coordinating its efforts with its Star Alliance partners. 'These are the pluses about alliances. The values and corporate pressures on longer established airlines have filtered through. This corporate culture overlay is needed to get systems in working order,' says Harbison, adding that Thai almost certainly received peer pressure from alliance partners Lufthansa and United Airlines.Equipment manufacturers are also lending a hand, with both Boeing and Airbus offering Y2K solutions.
Given that many of the region's airlines are still state owned, awareness of the Y2K problem often depends on how seriously their governments take the problem.
Again, Asia is lagging behind Europe and the US in this area. The Thai government began to assess the extent and cost of the Y2K problems in early July. That seems very late, even taking into account the fact that Thailand may avoid some problems because many computers in the government sector use the Buddhist-era calendar.
Harbison warns that being a government-owned company is not necessarily a plus: airlines and airports have to fight for funds in the budget along with other departments and it is often difficult to focus on the Y2K issue as a distinct problem.
Further pressure on the region's governments could be brought to bear by the United Nations, already worried about the impact of the Y2K bug on less developed countries. At presstime the UN was reported to be considering a Y2K resolution calling on member states to give the millennium bug the highest priority. The UN is also considering drawing up its own checklist.
Evidence of government activity is visible in South Korea where the government is taking a keen interest in Korean Airlines' preparations, conducting regular site visits to the carrier and summarising progress in reports.
Despite a late start, the flag-carrier claims to have the problem well in hand. Korean says it will achieve Y2K conformity by the end of 1998 and will then conduct a four month testing programme for its systems. However, Korean has yet to set aside a dedicated budget and a spokesman says this will be done with the airline's next audit.
Chua points out that the testing process is exhaustive. It is, he believes, like a very complex jigsaw; all the systems must be probed and tested individually costing carriers billions of dollars.
Thai Airways has identified 137 software applications that need to be looked at and estimates the fix will take up to 12,000 person days. The airline has an IT staff of 340, which is working closely with the airline's corporate Y2K committee.
Industry analysts point to two recent regional examples of the kind of problems airlines and airports could face at the turn of the century. Hong Kong's Chep Lap Kok and Kuala Lumpur International both opened in a blaze of publicity but the celebrations were spoilt by a host of computer glitches.
Baggage handling software failed at Kuala Lumpur, leaving many passengers stranded for hours at the check-in. Similar problems in Hong Kong caused airfreight companies to revert to old facilities at Kai Tak. One source says events at Chep Lap Kok and Kuala Lumpur show how vital thorough testing is and how much reality differs from test conditions.
Sabre's Barlow says the airlines' main dilemma is whether to invest in the existing infrastructure or replace it with Y2K compliant systems. In Asia the current economic climate might cause airlines to think twice about spending the cash, but Barlow believes carriers will invest wisely to enhance their systems and not just to fix the Y2K bug. Either way, the problem will affect bottom lines already savaged by the economic crisis.
Sabre has recently launched a push into the Asian market by opening offices in countries across the region. The company is a major supplier of Y2K solutions and has also been active in China. Airline officials there are aware of the Y2K problem and asking questions, says Barlow.
Harbison voices some concerns about China. He points out that there are 20 or 30 airports in the country, all at different stages of development with varying levels of resources.
While Capa and AAPA are active in raising awareness among airlines, Airports Council International is doing a similar job with the region's airports. All three organisations will be stepping up their efforts over the crucial next 12-18 months and Iata has drawn up a Y2K compliancy questionnaire specifically for airports.
The general consensus is that, although there will doubtless be some problems and bottom lines will hurt, critical service providers in Asia will be ready in time. Further comfort can be drawn from the fact that industry regulators now insist on Y2K compliancy.
Source: Airline Business
