British Airways IT meltdown is latest incident to highlight “catastrophic” impact of data loss

British Airways IT meltdown is latest incident to highlight “catastrophic” impact of data loss

British Airways’ IT meltdown has highlighted the “dependency” of airlines on computer systems and the potentially catastrophic impact if data centres fail.

The company was forced to cancel all departing flights at Heathrow and Gatwick airports when check-in and operating systems crashed on May 27, leaving 75,000 passengers stranded over a bank holiday weekend.

As BA staff worked frantically to get systems up and running again, the incident generated negative headlines all over the world and quickly became a major trending topic on social media.

The fall-out of the IT meltdown could be costly: tens of millions of pounds was wiped off BA owner IAG’s market value within days of the incident, while industry experts also believe passenger compensation claims could top £150 million.

Although initially attributed to a “power surge” at its data centre, within days human error was being blamed, with the finger pointed at a sole technician suspected of switching off and then reconnecting the power supply at the centre.

Despite the incident putting the issue of data security and information systems firmly into the global spotlight, it is only the latest in a line of similar incidents affecting carriers globally.

On February 18 this year, the Sabre reservations system, used by more than 400 airlines worldwide, experienced a global outage.

Locally, the incident caused issues with Air Malta, with the airline forced to channel all enquiries to its call centre while Sabre worked to get its system operational, thus avoiding any disruptions to flights.

Meanwhile on November 11 last year, another Sabre malfunction caused delays in boarding for passengers at several airports, including New York’s John F. Kennedy.

On August 8 of last year, a “major system wide outage” temporarily grounded all Delta Air Lines flights. The carrier blamed a power outage in Atlanta where the airline is headquartered.

Although none of these incidents are believed to have endangered actual flights, the disruption and inconvenience to passengers as well as the enormous cost to airlines means they are being taken very seriously.

Charlot Bartolo, managing director of Osprey Insurance Brokers, explained that incidents like these demonstrated how airlines had developed a reliance on systems which contained the potential for numerous vulnerabilities.

They also demonstrated the importance of having robust contingency planning for such ancillary services which, when failing, can seriously disrupt or even cripple the business operation.

He said: “Events like these show the importance and necessity of the booking systems which airlines rely on.

“This incident with British Airways was caused by a human error but it could just as easily be a part not replaced correctly, incorrect training or quality checks not in place.

“It shows the dependency of major airlines on these booking systems and the importance of having contingency planning which would kick in when they fail. I am sure that most airlines are already thinking of extending the triple redundancy principle to these systems too.”

Failure of these systems can be caused by a myriad of factors. The insurance market is aware of these exposures and now provides a number of specialised products for the peace of mind of operators.

Cyber and/or electronic equipment-specialised policies can provide coverage for expenses required to re-generate lost customer data, damage resulting from malicious intrusion and loss of revenue arising out of covered losses.

Osprey Insurance Brokers provides brokering services for all types of aviation insurance products and supports its global customers in achieving risk mitigation in the most affordable method possible.

Osprey Insurance Brokers Co Ltd (C 19103) is licensed to carry on business of insurance broking and is regulated by the Malta Financial Services Authority.

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