SAS is very simply typed. It knows about character and numeric fields. The simple replacement for your first statement would be:
If '00:00:00.000't <= Time <= '06:00:00.000't then Time= 'Night';
But that won't do what you want. Note, for example that if the time is exactly 6am, your next statement will override it with Morning. But that isn't right either! Because you've already implicitly defined Time as being 5 characters long (Night), it'll be Morni. But that won't work either, because you've already defined Time as numeric. So you need a new variable.
Here's how I would recommend you re-write it.
Data TimeofDay;
set Airplane;
length Timename $ 9;
select;
when('00:00:00't <= Time < '6:00:00't) Timename= 'Night';
when('06:00:00't <= Time < '12:00:00't) Timename= 'Morning';
when('12:00:00't <= Time < '18:00:00't) Timename= 'Afternoon';
otherwise Timename = 'Evening';
end;
run;