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EVERT R. DE BOER

STRATEGY IN
AIRLINE LOYALTY
Frequent Flyer Programs
Strategy in Airline Loyalty
Evert R. de Boer

Strategy in Airline
Loyalty
Frequent Flyer Programs
Evert R. de Boer
FFP Investment & Advisory Pte. Ltd.
Singapore, Singapore

ISBN 978-3-319-62599-7    ISBN 978-3-319-62600-0 (eBook)


https://doi.org/10.1007/978-3-319-62600-0

Library of Congress Control Number: 2017955036

© The Editor(s) (if applicable) and The Author(s) 2018


This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and
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The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.

Cover illustration: Yasuhide Fumoto

Printed on acid-free paper

This Palgrave Macmillan imprint is published by Springer Nature


The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
for Olivia and Luc
Foreword I

Airline executives are clearly aware of the forces of disruption and the need
for transformation based on not only what is happening in a wide array of
business sectors (technology, entertainment, retail, and so forth) but also
within the broader travel sector, for example, the hospitality sector and the
air taxi sector. As such, managers at different airlines are working on differ-
ent levels of transformation based on their own actual and perceived situa-
tions as well as the resources available to them. Based on my observations,
however, the transformational initiatives taken so far have tended to be at
the incremental level and related to enhancing the value of existing physical
products. While these incremental improvements are clearly beneficial and
are in the right direction for customers and for the profitability of airlines,
they are not creating anything that is radically different. The situation is
best put in perspective by Peter Thiel, the author of the book, Zero to One.
Many companies, according to Thiel, develop products or services that take
“the world from 1 to n, adding more of something familiar.” However,
what is needed is for a business to develop and create something new that
would take the world “from 0 to 1.1”
Would these incremental changes to conventional airline business models
be sufficient to face, what some people believe, an oncoming tsunami—the
equivalent of a seismic sea wave in the global airline industry? The global
airline industry is perhaps only seeing the forthcoming changes that are
minor. However, the forces of change could become extremely powerful;
vii
viii Foreword I

creating the likes of a tsunami that has enormous impact on existing players
in the marketplace. Such an envisioned tsunami could be the result of pow-
erful converging forces—the changing consumer expectations, the emer-
gence of platform-based and networked businesses, the proliferation of
smart consumer technologies, and the spread of cross-­border joint ventures
and equity arrangements, just to name four. Moreover, all four forces are
interrelated and along with their connection to consumer networks and
consumer databases, they could warrant a need for a step-change transfor-
mation along the lines suggested by Peter Thiel.
There are airline executives who have begun to explore not only differ-
ent ways to manage the core elements of the business and develop next
generation of e-commerce, but also to investigate the challenges and
opportunities relating to digitizing the airline business. A few airlines are
even looking about the possibility of developing platform-based and net-
worked businesses to address effectively the end-to-end journey chal-
lenges relating to connected customers. They recognize the role of
platforms to help businesses innovate quickly to respond to customers’
changing expectations, behaviors, and preferences. They also recognize
that smart technologies, including data, can empower buyers to commu-
nicate with sellers on many fronts. Moreover, they recognize, based on
the success of new businesses (Airbnb and Uber, for example) that capital
has begun to flow toward the platform-based enterprises because of their
demonstrated growth, global scalability, and huge addressable markets.
It is ironic, however, that while a platform is a relatively new term
within the business world, airlines developed and have been using the
attributes of platform businesses for many years. Let us assume that some
key attributes of platforms are: (1) they create marketplaces for buyers
and sellers to make efficient transactions, (2) they are asset-light, (3) they
enable scalability, (4) they enable businesses to extend their boundaries,
and (5) they enable businesses to acquire and manage data. Then, as
pointed out by Evert de Boer, the author of this book, the frequent flyer
loyalty programs (FFPs), developed by airlines, were platform-based busi-
nesses that provided all five of these capabilities. They certainly created a
marketplace for a broad spectrum of buyers and sellers and they definitely
were asset light. As for the last point about data, airlines’ loyalty programs
not only enabled the acquisition and management of data, but also
enabled the monetization of data.
Foreword  
I ix

From a historical point of view, traditional airlines developed loyalty


programs in the early 1980s to defend their market shares after low-cost
airlines began to enter the marketplace in different regions of the world.
In the US, for example, the government regulatory polices changed in the
late 1970s enabling low-cost airlines, such as PeopleExpress, to enter the
marketplace. In essence, a combination of two initiatives helped tradi-
tional airlines to defend their market shares. First was the development of
yield management, now known as revenue management, and the second
was the introduction of the loyalty programs, the Frequent Flyer Programs
(FFPs). However, as also pointed by Evert de Boer, there was a third ini-
tiative, the development and use of Computer Reservation Systems
(CRSs) that enabled airlines to keep track of some key elements relating
to customers’ transactions to facilitate the operations of the FFPs.
As expected, the loyalty programs have gone through a number of
transformations to adapt to the changing needs of customers and airlines.
The first transformation in recent years has been to reward loyalty based
on revenue provided instead of miles flown. This transformation is in line
with the pricing framework (a) in which pricing is not necessarily related
to the distance flown, (2) in which the conversion helped to increase
profitability, and (3) in which the loyalty program increased loyalty from
customers that airlines consider to be more important. The second trans-
formation has been the development of the relationship with credit card
companies that has generated billions of dollars. The third transforma-
tion has been the airlines’ offers to use the miles to purchase an incredible
number of products and services in addition to air travel. The fourth
transformation has been to change, on an ongoing basis, the value of the
miles accumulated. In other words, the number of miles required to
receive a free ticket, for example, has been increasing.
Going forward, I believe that airlines that have developed truly data-­
driven loyalty programs have the potential to bring about step changes in
the airline business. First, FFPs can provide 360 degree views of customers
based on the available data (transactional and behavioral) and customer-­
journey analytics. For example, customers can purchase ­something other
than seats. It has been reported that a significant amount of miles (as much
as 30 percent for some airlines) is used to make purchase of other products
and services. Second, critical data coming from the FFPs can be used to
x Foreword I

determine the optimal allocation of the number of redemption seats rather


than just the number of seats in the distressed category. Think about the
value of the data coming from partners, not just airlines, but retailers and
financial institutions. Third, carefully designed loyalty programs can be
critical not only in retaining customers but also in getting customers to
book online directly with a big impact on profitability. Just for these three
reasons alone, the new generation of FFPs can generate so much data that
airlines need to make a decision on where the power is relating to data (the
intangible asset), having it, owning it, or sharing it. The key insight from
consumers is that they are willing to share data with trusted airlines if the
airlines are willing to develop personalized interactions.
Back to the question of platforms, although the theory of platforms is
sound, in the end it is all about execution. Based on the experience of
successful business that have developed digital platforms, there are four
critical aspects of the digital environment: developing a digital mindset,
leveraging digital technologies, identifying and implementing digit strat-
egies, and creating a digital workplace. Simultaneous focus on all four
aspects will facilitate the development of a platform-based business in the
context of a digital environment. Moreover, a loyalty program can be the
centerpiece of the digital platform if executed in a strategic way. As Evert
de Boer points out, travel will continue to grow and meaningful loyalty
programs will continue to attract new travelers and get existing travelers
to travel more as well as increase profitability on a sustainable basis
through the development of a competitive advantage.

Note
1. Peter Thiel (with Blake Masters), ZERO to ONE: Notes on Startups, or
How to Build the Future (New York: Crown Publishing Group, 2014),
Preface.

Airline Business Strategist Nawal K. Taneja


Published Airline Business Author
Aviation Professor Emeritus
Columbus, OH
May, 2017
Foreword II

It’s been more than 35 years since the first frequent flyer mile was awarded
and they still capture the imagination of the public.
But the public aren’t the only ones who reap rewards.
The subject of hundreds of academic articles, white papers and the
practice of hundreds of businesses around the globe, travel loyalty pro-
grams remain as relevant as ever but surprisingly ineffective when not
practiced as both an art and a science. There was a time when the axiom
of “if you see a good idea, copy it” played well to the marketing practitio-
ners of the airline business, but these programs also became a victim of
their own success with hundreds of millions of members around the
globe in most any language and most any airline with billion upon bil-
lions of one of the most popular currencies in the world. Somehow sup-
ply and demand doesn’t explain the function and purpose of ‘loyalty’ in
the continuing history of these programs who have nurtured their own
unique definition of “best customer” and “successful business model”.
In this book Evert de Boer tells the stories that comprise their history,
relevance, opportunities and challenges among the topics that serve as a
reference guide for those that want to stand above the ordinary and the
expected. For the most loyal of members of these programs only one
brand “wins”, a stark reality to which share of wallet do you own. This
book researches and presents the nuances and facts of these programs
which account for 2,260,000 results in a Google search.
xi
xii Foreword II

In retailing differentiation is described as: location, location, and loca-


tion. In the airline business differentiation is described as price, schedule
and miles. The problem is that as the industry has matured, price became
less potent as a competitive advantage because airlines were able to tap
into ‘big data’ and finely tune pricing to a programmatic state of competi-
tion. And schedule? “Same Day Service” rings a bell for many. Does any-
one really think that in the U.S., Southwest Airlines is a low cost carrier
any longer? But Southwest has parlayed a change in differentiation con-
siderations and now enjoys one of the most successful frequent flyer pro-
grams in the world. Case studies of frequent flyer programs is an important
part of dissecting the differentiation success and failures and many are
presented in this book, all with an eye toward factualizing what is not
always known.
Frequent flyer programs are a mature market and as such, notorious
for the lack of differentiation between players. Upgrades, awards, person-
alization or product—picking the correct tipping point to affect behav-
ioral is part science, part emotion. And in no other publication is the
reader taken through “the eyes” of all the participants—members, econo-
mists, programs and the eco-system of partners.
One of the most debated topics initially of frequent flyer programs was
despite their ambiguity, doubts and uncertainty—could they be sustain-
able. Proof is this book 36 years later written in ‘real-time’. But that topic
then moved to be—could they be a profitable business model? Asked and
answered all within many of the chapters of this book.
Every good book has “the chapter”—the one most often shared and
bookmarked. This book doesn’t disappoint. The topic of frequent flyer
programs as a stand-alone business has been one of the most studied and
discussed topics since 1981. Air Canada began the topic when spinning
off its loyalty program in 2002 by moving Aeroplan into a separate cor-
porate entity and went farther in 2005 when it sold a 12.5% stake of
what is now called Aimia. By March 2007 it sold the remainder of its
shares in the Aeroplan program and history was made. But the Aeroplan
story has now come full circle with the announcement that Air Canada
would reacquire its frequent flyer program. You have my permission to
skip ahead to this chapter.
But enough with the past.
Foreword  
II xiii

It is often said that the best indicator of the future is the past. But fre-
quent flyer programs being the anomaly of purchase behavior can’t rely
on their past as new generations of travelers rely on technologies to help
make purchase decisions, social channels of influence and of course the
fickleness of simple greed. Rewards are now measured mile-by-mile
unlike the history of fixed assets for members of these programs and of
course the liability of the sponsoring airline. How the future will play out
is detailed in the considerations of opportunities and challenges of which
there are many. What is most obvious is that despite being 36 years of
age, frequent flyer programs may still be figuring out what they want to
be when they grow up.
The legacy of frequent flyer programs has a new curator of its history
and practice and this book will serve well when this history is no longer
known. I’ve been lucky to have known Evert for nearly 20 years always
with an eye and ear on his experience with airline loyalty programs. His
unique view having worked around the world with these programs is
unparalleled and has served him well in compiling the foremost resource
available today on the subject. While I suspect that both academics and
business practitioners will find this book most useful, my guess is that
many of these programs most loyal members will also find this a wonder-
ful read in appreciating their “roots”.
I first started publishing information about the frequent flyer mile in
1986 and have witnessed most every moment of their climb to become
one of the world’s most closely held currencies and most emotional rela-
tionships with a customer. I know first-hand that as a frequent flyer with
miles—you never fly alone. Thanks Evert for compiling this great story
and for others reading—you’ll never research alone.

Founder: FlyerTalk, BoardingArea Randy Petersen


InsideFlyer, Freddie Awards
Colorado Springs, CO
(owner of more than 23 million frequent flyer miles)
Preface

Frequent flyer programs (FFPs) have become an indispensable part of the


airline industry today. For mature programs, the members can account
for more than fifty percent of the total passenger revenues. At the same
time, the FFP itself can be the single largest consumer of seats in the form
of award tickets. And in some cases, the programs are responsible for
more than half of the airline’s profits. The performance of the airline is in
many aspects intrinsically linked to the FFP. The programs operate at the
crossroads of diverse disciplines, including marketing, customer analyt-
ics, revenue management, and behavioral economics. The programs’
appeal is built on what many consider to be the ultimate experiential
award—air travel. But beyond awards, being a member in the FFP has
also become a cornerstone of today’s airline experience, especially so for
holders of the elite tier cards—which can help to turn a potentially mun-
dane experience into a smoother ride through perks offered at virtually
every stage of the customer journey. Over time, the FFP has managed to
reinvent itself, sometimes through seismic changes attracting substantial
attention from the media and members. As the product of two waves of
deregulation and market liberalization, first in the United States and later
in the European Union, the frequent flyer program has undergone a
metamorphosis from gimmicky marketing tool to financial powerhouse.

xv
xvi Preface

Miles have become ubiquitous in certain markets, propelled by expanding


partnerships, turning the FFP business into a multi-billion dollar indus-
try. All these characteristics help to explain the ongoing fascination with
the programs, resulting in a steady stream of publications debating many
of the aspects related to FFPs. Academic literature continues to review
various aspects of the programs, including their effectiveness, ethical
dimensions, and impacts on airline pricing to name just a few. Business
publications regularly express their amazement over the size of the pro-
grams, their financial prowess and ubiquity of miles in certain markets.
Despite the many publications and the interest in the market, there
was not a single comprehensive review of the FFPs. Although a lot was
written, and continues to be written about FFPs, no single source or
book pulls everything together and provides a much-needed and compre-
hensive context. A gap exists both in the academic literature as well as the
business literature as most publications focus on a single topic in the
frequent flyer program space, instead of providing the full picture.
Strategy in Airline Loyalty: Frequent Flyer Programs aims to fill that gap.
It sets out to provide a single point of reference for the key issues relating
to FFPs. The book is built on a foundation of FFP-related materials that
I have been collecting since the late 1990s.
To ensure a review that is both impartial and comprehensive, I have
made use of numerous sources. All sources used are publicly available
material, although some may be placed behind a paywall or subscription
service. Five main categories of sources have been used for the book.
Firstly, there is a wealth of information that is published by the airlines.
This includes annual reports, investor relations materials and the like. In
addition, the book makes use of presentations done at more than fifteen
airline loyalty conferences starting from 2006. These presentations can
provide a sometimes rare insight into how the airlines and program opera-
tors view the program dynamics. For the content of programs (for exam-
ple earn rules, award grids and elite perks), the book makes extensive use
of online program materials. What has been helpful as well is that airlines
are increasingly moving to segment reporting for their FFP, providing
more detailed and complete information on their programs. In the case of
publicly-listed FFPs, there is an increasing wealth of information and data
available as a result of the extensive reporting and disclosure requirements.
Preface
   xvii

The second category is business literature. It includes articles published in


the main stream media but also analyst reports. The third category is the
body of work produced in scientific research. Academic literature actually
has been reviewing FFPs almost from day one, and covers a wide range of
topics. The fourth category is regulatory and government publications.
Although they are not as voluminous as the previous three, they offer an
interesting glimpse into how regulators think about the programs. A good
example of this is the US Department of Transportation Audit Report on
unfair or deceptive practices in frequent flyer programs published in 2016.
The last and fifth category is somewhat of a mixed bag: it includes a variety
of online sources.
For every identifiable source used, a reference is included in the refer-
ence list for the reader which can be found at end of each chapter. To
avoid unnecessary repetition, and other than for the first mention in
every chapter, the book uses the acronym FFP instead of the wordy fre-
quent flyer program description. When discussing loyalty currency, the
book uses miles as the common indicator for program currency (although
other units like points and kilometers are also widely used in the indus-
try). Wherever currencies are referenced, the local currency is used instead
of opting to convert to United States Dollars or any other currency, given
the possible foreign exchange fluctuations.
I have made every effort to ensure the accuracy of the data provided,
but I recognize that inaccuracies may have occurred inadvertently. At
times, I have found conflicting data points from different sources—where
possible I have attempted to triangulate the data or otherwise verify them.
Lastly, the opinions embodied in this work are my own.

Outline of the Structure of the Book


Frequent flyer programs cover a lot of ground. Given the inevitable limi-
tation of the size of the book, a selection was made from the range of
possible angles and topics, with a view to provide a review which is as
comprehensive and relevant as possible. Chapter 1 starts with a concise
overview of the history of the programs and identifies the major develop-
ments in their development over the last thirty-five years. It also addresses
xviii Preface

the question why frequent flyer programs continue to be relevant in today’s


world—both in terms as a loyalty program as well as specifically for airlines.
A myriad of program types exists today, serving different types of air-
lines and geographic regions. Chapter 2 dives into the practical matter of
programs, and seeks to lay a foundation for subsequent chapters. It
addresses what types of programs exist today, and provides a guide on
how to classify a program. It also identifies the differences between pro-
grams across global regions, and examines if programs from low cost car-
riers (LCCs) are different from their full-service carrier (FSC) counterparts.
It will also offer a practical overview of the different functions that make
up a FFP department.
Chapter 3 outlines the main building blocks that make up a FFP value
proposition. It explores how and where members can earn miles, qualify
for a tier, or redeem an award. In addition, it offers an overview of key
program policies, including the most common expiry policies. It will also
explore the more extreme member behaviors that can be observed today,
and addresses the question: are programs steering member behavior, or,
are members increasingly ‘gaming’ the system?
Frequent flyer programs, to a certain extent unintentional, are built on
a number of key principles of economics. Chapter 4 will explore the pro-
grams through the eyes of an economist. What are the underlying eco-
nomic principles that support the design and ongoing management of
these programs? Economic theory, including behavioral economics and
business economics, will be used to explain the core workings of the
FFP. At the end of Chap. 4, an overview of FFP accounting will be offered
as well as some of the anomalous outcomes of airline loyalty strategy.
Chapter 5 will offer a comprehensive overview of the frequent flyer
program ecosystem. Besides airlines, who are the other key stakeholders
that have great vested interests in the programs? A significant part of this
chapter will be dedicated to program partners, with a particular focus on
financial services partners, the driving force behind the proliferation of
the co-branded credit card. An overview of other constituents will be
provided, including a concise overview of type of relationship that they
have with the FFP.
The question whether FFPs are successful continues to receive consider-
able attention. Chapter 6 sets out to answer the key question: are FFPs
Preface
   xix

effective? This chapter will provide an overview of the main contributors—


both positive and negative. This chapter in particular will rely heavily on
the body of work available around FFPs in academic literature. Intrinsically
linked to the matter of effectiveness, is the question around the moral and
ethical dimensions of FFPs. Chapter 6 will provide an overview of some of
the criticisms that have been leveled at FFPs.
Like any other long-term marketing program, FFPs must evolve and
respond to changes in the marketing environment. Chapter 7 will review
what changes are taking place now, and how programs are dealing with
the new realities. It identifies key current trends and how they influence
the programs.
Chapter 8 is dedicated to one particular event which is the formation
of FFP entities separate from the airline. With an increasing number of
airlines choosing to separate out the program from the airline, it looks at
the advantages and disadvantages of the model. In addition, it reviews the
cases where an outside investor has come on-board as a shareholder in the
FFP business. The case study of Multiplus is used to illustrate one such
spinoff event.
Chapter 9 looks at the future of FFPs. What opportunities remain
untapped for the program operators? It also identifies the challenges that
FFPs will face in the short and medium term.
Chapter 10 provides the final concluding remarks and aims to connect
the dots between the various topics addressed in earlier chapters. Although
some conclusions are presented in preceding chapters, Chap. 10 offers a
comprehensive overview. As the book can address many but not all issues,
Chap. 10 also provides an overview of the questions that remain at this
point.
At the end of the book, you can find a list of definitions of the terms
used in the book.

Singapore, Singapore Evert R. de Boer


Acknowledgements

This book could not have been written without the support and encour-
agement I received from different people along the way during my career.
As the book is the culmination of more than eighteen years working with
frequent flyer programs, allow me to go back in time.
First of all, I would like to thank Professor Sveinn Gudmundsson.
Professor Gudmundsson supervised my final thesis at Maastricht
University. Later on, Professor Gudmundsson and I co-authored two arti-
cles on frequent flyer programs in the Journal of Air Transport Management;
something that ultimately set me on a course to write this book.
Back in 1999 and 2000, when I was writing my thesis, I relied on
expert interviews for my research. I am grateful to Rosa Zeegers, Lee
Shave, Oliver Wagner and Iain Webster for taking the time to speak with
me, and sharing their insights candidly.
Gabi Kool played an instrumental role when I joined the workforce in
the year 2000 and subsequently when I moved to Asia. I am also deeply
grateful for the support and guidance I received from Sandra Diem in
Montreal over the last number of years. Her knowledge of FFPs and dedi-
cation is unparalleled.
I would also like to thank Randy Petersen and Professor Nawal Taneja
for writing the forewords. I would like to thank my editor at Palgrave
Macmillan for her support and guidance. I am also grateful for the inputs

xxi
xxii Acknowledgements

I received from wide range of program operators, helping me to fill in the


blanks and confirming data points where required. I would like to thank
Michél Herrmann and Chen Peng for helping me find and translate
materials from German and Mandarin respectively. Lastly, I would like to
thank my family for their patience and support.
Contents

1 Introduction  1

2 The Different Types of Frequent Flyer Programs 29

3 Core Elements of the Frequent Flyer Program 59

4 The Economics and Accounting of Frequent Flyer Programs 115

5 Exploring the Ecosystem of the Frequent Flyer Program141

6 Taking the Frequent Flyer Program to Measure173

7 Trends and Innovations193

8 The Standalone Frequent Flyer Program205

xxiii
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also dropped over the rail, and clinging with one hand a moment, let
go simultaneously with his friend and patron.
Brandon tried to send him back, but it was too late then. The first
wave seized them in its embrace and they were carried far out from
the steamer’s stern.
The cork belt kept the young second mate above the waves, but
even with this assistance, he found himself much less able to cope
with the heavy seas than was his companion.
Swivel dived through the rollers like a gull, keeping faithfully by his
friend’s side; and had it not been for the street gamin, Brandon
afterward declared that he should never have reached the wreck
alive.
He had no idea how furious the waves were until he was among
them, battling for his life, and trying to reach the distant brig.
It was a terrific struggle, lasting perhaps not five minutes, but a few
more seconds would have completely exhausted him.
A great wave suddenly swept them directly under the brig’s bows.
Swivel seized Brandon’s hand with one of his own and with the other
grabbed a rope trailing over the rail of the wreck.
Fortunately the other end of the rope was securely fastened, and
with an almost superhuman effort Swivel raised Brandon until the
second mate of the whaleback could grasp the rail.
In another moment Brandon was aboard the brig, and had pulled
Swivel over the rail after him.
“Wot—did—I—tell—ye?” gasped the gamin, whose spirit no amount
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Then she recognized Brandon.
“You?” she exclaimed, in surprise. “I never thought of you being on
that steamer.”
“I didn’t forget what you did for me,” Brandon said in reply. “I’d have
risked a good deal more than this for you.”
“You couldn’t risk any more,” she declared firmly; “for you’ve risked
your life.”
Meanwhile Swivel was signaling to those on the steamer to attach a
heavier cable to the one tied about his waist. This was done in a
short time, and then all three of the endangered ones laid hold and
pulled the cable in, hand over hand.
It was hard work. The heavy rope was wet and unmanageable, and
the strain on their young muscles was terrible.
Milly worked as unceasingly as did the two boys, but the cable came
across the tossing waves but slowly.
“Where are the crew—where is your father?” asked Brandon.
The girl’s face worked pitifully at this question.
“Father is dead,” she sobbed, “and the crew took to the boats while I
was below. That was early this morning.”
“And you’ve been here alone ever since!” said Brandon pityingly.
At that instant there was a slight exclamation from Swivel, and the
small cable by which they were endeavoring to gain the larger one,
came in over the rail with fearful suddenness.
All three were sent sprawling on the deck.
“What is it?” gasped Milly.
“The rope’s parted,” cried Brandon in horror.
“Never mind; don’t you give up, missy,” Swivel exclaimed. “We’ve got
anoder rope yet. Where’s de end o’ dat rope you had tied ’round you,
Brandon?” he demanded.
Brandon only groaned.
“Where is it?” shrieked the other lad, fairly shaking him in his
impatience.
“I cast it loose,” was the disheartening reply. “It is gone!”
CHAPTER XXXIV
THE INCIDENTS OF A NIGHT OF PERIL

Night was shutting down over the face of the storm tossed ocean—
night of the blackest and wildest description. Already the outlines of
the steamer ahead were scarcely visible from the bows of the water
logged brig.
By a series of misfortunes (Brandon Tarr bitterly accused himself of
causing the crowning mischance of them all) the three unfortunates
on the Success were entirely cut off from escape.
“Oh,” cried Milly, in bitterness of spirit second only to Brandon’s own,
“you have lost your lives for me—both of you. I am not worthy of it!”
“Don’t ye lose heart, missy,” Swivel declared, with a courage he was
far from feeling. “Th’ ship hain’t sunk.”
“No one but God Himself knows how long it will keep afloat, though,”
Brandon returned despairingly.
“And the gale is increasing again, too,” added Milly softly.
“This is the last end of it, that’s wot I think,” declared Swivel
cheerfully. “It’ll blow itself out now purty soon.”
Brandon could not look at the situation thus hopefully, but he
determined to say nothing further to make the girl despair.
Swivel’s tone shamed him into thinking of her rather than of himself.
The men on board the steamer, had ere this discovered what had
happened, but they could do nothing to assist the three on the brig.
It was absolutely necessary to keep some headway—considerable,
in fact—on the whaleback, to prevent her from swinging around into
the trough of the waves. Every moment they were getting farther and
farther away from the doomed derelict.
Caleb roared something to them through the trumpet, but the
distance and the howling of the gale prevented them from making
out what he said. The wind and spray beat upon them alternately as
they crouched together in the high bows, and every other sound but
that of the elements was drowned.
“Come back in the shelter of the mast,” Brandon shouted at last. “We
can do nothing further here. Our position is so exposed that we may
be washed off before we know it.”
Each of the boys grasped an arm of the captain’s daughter and with
no little trouble they managed to reach the great tangle of rigging
and shreds of canvas which hung about the one remaining mast.
The topmast had long since been carried away, but the main spar
still defied the storm, writhing and twisting like a thing of life in the
fierce grasp of the gale.
Here, crouching under its lee, the shipwrecked boys and girl clung to
the stiffened ropes with hands little less stiffened by the cold and
water.
As an extra precaution they bound themselves together, and then
fastened the same rope to the mast, knowing that a wave might
board the lumbering brig at any moment and sweep everything on it
that was not fastened, into the sea.
Occasionally, as the wreck climbed heavily to the summit of an
enormous roller, they could catch a glimpse of the steamer’s lights;
but as the hours dragged slowly on, these became less and less
distinct.
Without doubt the whaleback was drawing slowly away from the
wreck, and the worst of it was, those on the steamer probably did not
suspect it.
The castaways had no means of showing their whereabouts by
lights, and the steamer was too far away, and had been since the
darkness shut down, for those aboard her to see the outlines of the
brig. Therefore Caleb Wetherbee and his officers had no means of
knowing that the steamer was traveling nearly two miles to the brig’s
one.
Suddenly there was a flash of light from the steamer’s deck, and a
rocket went hurtling upwards into the leaden sky, to fall in showers of
sparks into the sea. It was a message of hope to the unfortunates on
the brig—it was meant as such, at least—but they had no way of
replying to it.
“Aren’t there any rockets aboard?” asked Brandon of the captain’s
daughter.
“There may be, but I do not know where,” the girl replied; “and the
cabin is half filled with water, too.”
“Never mind if it is; I believe I’ll try to find them. There must be
something of the kind aboard.”
“Ye’d better stay here,” Swivel warned him anxiously. “I don’t like ter
see ye git out o’ sight.”
“Don’t you think I can take care of myself?” Brandon demanded.
“Not alone,” was the prompt reply. “I reckon ’at none of us can’t take
very good keer of ourselves in this gale. We’d best not git too fur
apart.”
“Well, I’m going to try to get into the cabin,” Brandon added. “Nothing
ventured, nothing gained.”
He unfastened the rope from about his waist, and in spite of the
objections of his two companions, crept aft toward the cabin
companionway.
The feat was not of the easiest, as he quickly found; but once having
determined to do it, he would not give up.
The door of the cabin was jammed fast, but after some little
maneuvering he was able to force an entrance and descended into
the apartment, which was knee deep with water washed in from the
heavy seas which had broken over the brig during the day.
There was no means of lighting a lantern, however, and after
rummaging about in the darkness for half an hour, he had to return to
the deck without having accomplished anything.
As he stepped outside again, he found the brig pitching worse than
ever. The gale was full of “flaws” now—a sure sign that it was
blowing itself out—but occasionally it would rise to greater fury than
it had shown in all the two previous days.
Just as he reached the deck one of these sudden squalls occurred,
and a huge green roller swept in over the stern of the brig, and
advanced with lightning speed along the deck, sweeping wreckage
and all else before it.
Brandon had just closed the door, and by clinging to the handle, was
able to keep himself from being washed overboard; but he was
almost drowned during the few moments while the wave filled the
companionway.
As it passed, there was a sudden crack forward, and even above the
shriek of the gale, he heard Swivel’s cry of alarm.
With a rush and roar like the fall of a mighty forest tree, the mast,
splitting at the deck, toppled over across the rail.
Brandon uttered a despairing shout, for it seemed impossible for the
wreck ever to right herself, the weight of the fallen spar dragged her
over so far.
But providentially the mast had split clear off at the deck, and after
staggering a moment from the blow, the brig shook off her
incumbrance, and came to an even keel again.
But following the falling of the mast came a shriek from Milly Frank
which pierced his very soul.
“Brandon! Brandon! Help!”
With that cry ringing in his ears, the boy dashed forward along the
slippery deck and reached the spot where he had left his
companions.
“Quick! this way!” called the girl’s clear voice, and darting to the rail
he was just able to grasp the captain’s daughter and drag her back
from the cruel sea.
“Now him!” commanded the girl, and pulling in the line which was still
attached to her waist, Brandon drew the form of Swivel out of the
waves.
“Oh, he is dead!” cried Milly in agony. “He saved me, Brandon. When
the mast fell he cut the rope and took me in his arms and ran, but
one of the ropes tripped him up and we were washed to the rail by
that great wave.”
“I hope he isn’t dead—oh, I hope not!” Brandon returned, kneeling
down beside the motionless boy, and chafing his forehead tenderly.
Milly took one of the poor street gamin’s hands in her own and
chafed it likewise.
Probably never before during his miserable, eventful existence had
Swivel known such gentleness. His life had been hard indeed, and it
looked as though its lamp had gone out now in the performance of a
noble and courageous deed.
There on the storm swept deck Milly and Brandon knelt for nearly an
hour before the unconscious boy showed the least sign of life.
Then the eyelids fluttered a little and he drew in his breath with a
slight sigh.
“He’s coming to!” Brandon exclaimed.
But although poor Swivel opened his eyes once or twice, it was a
long time before he seemed to realize where he was or what had
happened.
At last he whispered brokenly.
“Don’t—don’t—fret yerself—missy—I’m—I’m goin’ ter be all right.”
“Are you in pain, Swivel?” queried Brandon, having almost to shout
to make himself heard.
Milly was crying softly. The strain of the last twenty hours was
beginning to tell on even her bravery and fortitude.
“Dret—dretful!” gasped the injured boy weakly.
Brandon had to place his ear almost to his lips to distinguish his
words.
“Right—here,” and he laid his hand feebly on his chest.
“That’s where he struck across the rail,” declared Milly, when
Brandon had repeated these words to her. “Oh, the poor fellow has
been hurt internally. Do you think the morning will ever come,
Brandon?”
“I’m afraid it will come very soon for him, poor boy,” replied Don
meaningly, and there were tears in his own eyes.
Swivel had closed his eyes and a strange, grayish pallor was
spreading over his drawn features.
His hearing seemed wonderfully acute, however. He heard the word
“morning” at least, and his eyes flew open again and he struggled to
raise himself on his elbow.
“Is it morning now?” he asked feebly.
“No, no,” replied Brandon soothingly. “Not yet, Swivel. Don’t exert
yourself. Lie down again.”
The injured youth strove to speak once more, but suddenly fell back
upon the rude pillow Don had made of his coat, and a stream of
blood flowed from his lips.
Milly uttered a startled gasp, but Brandon hastily wiped the poor
fellow’s lips, and after a moment the hemorrhage ceased.
But they looked at each other meaningly. They had lost all hope now
of the shock not proving fatal.
While they had watched Swivel, the gale, as though at last satisfied
with its cruel work, had gradually lessened. The wind ceased almost
wholly within the next hour, although the waves did not entirely go
down.
Swivel lay motionless during all this time, occasionally opening his
eyes to gaze up into the faces of his two friends, whom he could see
quite clearly, but otherwise showing no sign of life.
Finally he attempted to speak again.
“It’s—it’s hard—on me—ain’t it?” he gasped, in Brandon’s ear. “I—I—
don’ wanter die.”
His friend did not know what to say in reply to this, but Milly seized
his hand and tried to comfort him.
“Don’t be afraid. Swivel,” she said, trying to make her own faith serve
for the dying fellow too. “It will be better over there.”
“Mebbee—mebbee they won’t let me come.”
“Yes, you may, if you ask, Swivel. Don’t you love God?”
“I hain’t—hain’t never—heered—much erbout Him,” returned the lad.
“I heered the chap at the mission—school talk erbout—erbout Him
some. I—I never paid much ’tention.”
His voice was stronger now, but in a moment the blood gushed from
his lips again.
“Don’t talk—oh, don’t talk, Swivel?” cried Brandon beseechingly.
“’Twon’t matter—not much,” the boy returned, after a few minutes.
He felt blindly for Brandon’s hand and seized it tightly. Milly, still
kneeling on the opposite side, held the other.
“Can’t ye say a prayer, like—like that feller in the mission did—er one
o’ them hymns?” he muttered.
The boy and girl crouching above him looked into each other’s faces
a moment in silence.
Brandon Tarr might have faced a thousand dangers without
shrinking, but he could not do this. It remained for Milly to comply
with the poor boy’s request.
After the terrific howling of the gale, the night seemed strangely still
now. The hurrying, leaden clouds were fast breaking up, and here
and there a ray of moonlight pierced their folds and lit up the froth
flecked summits of the tossing billows.
One narrow band of light fell across her pale face as she raised it
toward the frowning heavens and began to sing:

“Jesus, Saviour, pilot me,


Over life’s tempestuous sea;
Unknown waves before me roll,
Hiding rock and treach’rous shoal:
Chart and compass come from the Thee:
Jesus, Saviour, pilot me.

“When at last I near the shore,


And the fearful breakers roar
Twixt me and the peaceful rest,
Then, while leaning on Thy breast,
May I hear Thee say to me,
‘Fear not, I will pilot thee’!”

Faintly at first, but mounting higher and clearer, rose the sweet girlish
voice, and not only the poor street gamin, but Brandon himself
listened entranced.
When the beautiful hymn was finished, Brandon felt that it was a
prayer not only for him whose spirit might at any moment depart, but
for Milly and himself, who should remain behind at the mercy of the
storm tossed sea.
CHAPTER XXXV
SHOWING HOW CALEB APPEARED ON THE
SCENE JUST TOO LATE

The anxiety of Caleb Wetherbee for Brandon’s safety was really


pitiful to behold. When the cable parted which attached the wrecked
brig to the steamer, the captain at once realized that his ward and his
two companions were in a very serious predicament.
There was absolutely nothing that those aboard the whaleback could
do in that howling gale to assist in the rescue of the castaways.
Occasionally Caleb had a rocket fired to show the unfortunate trio
that he was remaining near them; but, as we know, that was very
sorry comfort to Brandon and his two companions. It simply served
to convince them how rapidly Number Three was leaving them
astern.
On one point Caleb’s calculations were very much amiss. He was
running the whaleback as slowly as practicable, keeping just enough
headway on to keep her from broaching to; but he failed to realize
that even at that speed he was sailing two miles or more to the brig’s
one.
Of course, when once the night had shut down it was impossible for
anybody aboard the steamer to see the outlines of the wreck, and
therefore this fact escaped their attention. The water logged Success
moved at a snail’s pace, and all night long the steamer drew away
from her, so that, after the storm had cleared away and the sun rose,
not a sign of the brig appeared.
“Has she sunk?” queried Caleb in distress, as, in company with his
two remaining officers, he swept the horizon with his glass.
“Rather, we have left her behind,” declared Mr. Coffin, making a
shrewd guess as to the real facts in the case. “The brig must have
sailed slower than we supposed.”
“Then we must turn about at once and run back,” Caleb declared,
and the necessary orders were given.
The day following the cessation of the gale was most beautiful, but
Caleb cared nothing for that. He neither ate nor slept, but remained
on deck nearly all the time, scanning the wide stretch of sea visible
from the top of the after cabin.
The day passed and night came on, however, without a sign of the
wreck appearing.
During this time the steamer had been running in a direction
generally south; while the gale was on she had run northeast. The
whole day being spent in fruitless search in this direction, however,
Caleb commanded the steamer to be put about again at evening.
All that second night she ran slowly to the eastward, thus allowing for
the supposed drift of the Success, but they saw no signs of the
derelict, although the night was clear and the moon bright.
The day following they spoke several partially dismantled vessels
whose crews were beating into the Bermudas for repairs. None of
these, however, had sighted the wreck of the Success.
“They’ve gone to the bottom,” groaned poor Caleb that afternoon, as
he sat on the edge of the berth in his stateroom.
He could not sleep, but had taken Mr. Coffin’s advice and tried to.
“All gone—Brandon, whose dead father I promised I’d look out for
him, an’ that other poor lad, an’ the little girl. God help me! how can I
go back and tell Adoniram about this?
“An’ then, we’ve not found the Silver Swan yet—nor air we likely to
after this gale. She’s gone to the bottom, too, mayhap, and
Brandon’s fortune along with her. Well——”
Just here he was interrupted in his soliloquy by the hurried entrance
of Mr. Bolin.
“Will you please come on deck, sir?” said the third officer, evidently
somewhat excited. “We have sighted what appears to be a steamer
and a dismantled vessel with her. Mr. Coffin wishes you to come up
and see if you can make her out.”
But Caleb was out of the cabin before Mr. Bolin had finished
speaking, glass in hand.
“Where is she?” he demanded.
“Right ahead, captain,” replied Mr. Coffin. “There! you can see the
black smoke rising from the steamship’s funnels now. The wreck, if it
is a wreck, is between her and us.”
Caleb got the range of the two vessels almost immediately, and it did
not take a very long look to assure him that his mate was right.
“That’s a wreck, sure enough,” he declared, paying but very little
attention to the steamship. “Order the engineer to go ahead at full
speed.”
Fifteen minutes later they were near enough to see the wreck quite
plainly. The steam vessel seemed to be lying quietly upon the sea
now, and as they looked a boat was lowered and pulled toward the
dismantled hulk.
They were still several miles away, however, and could not see
whether the wreck was boarded by those in the small boat or not.
“It strikes me,” began Mr. Coffin after a prolonged gazing through his
glass at the wreck, “that that doesn’t have the same appearance as
that vessel the boys are on. What do you think, Mr. Wetherbee?”
Caleb had doubts in that direction himself.
“I tell ye what it is,” he said: “the Success had a mast for’ard. This
one hain’t.”
“It’s my opinion that’s the hull of a brig, just the same,” Mr. Coffin
declared.
Suddenly Caleb uttered an exclamation.
“That’s no steamship,” he declared. “See her colors and open ports.
Why, it’s a man o’ war!”
“Right you are,” returned the mate.
“It’s the Kearsarge,” added Mr. Bolin. “She was to come down this
way, you know. Going to the West Indies.”
“One of her duties was to blow up derelicts—the Silver Swan among
them. Suppose this hull is the Swan!” cried Mr. Coffin.
Caleb had fairly grown white in spite of his tan.
“Great Peter!” he ejaculated. “Look-er-there!”
The small boat had left the side of the wreck, and was now some
distance away from her.
The whaleback was near enough to see that the officer commanding
the cutter had ordered the men to cease rowing and was standing up
in the bow of the boat.
“They’re going to blow her up!” shouted Caleb. “Crowd on every
ounce of steam she’ll hold. We must stop it! Suppose that it is the
Silver Swan!”
He fairly groaned aloud, and in his excitement allowed the costly
glass to fall upon the deck, which treatment did not materially benefit
it.
Mr. Bolin darted away to the engine room, and in another moment
the funnels of the whaleback began to pour forth the blackest kind of
smoke, and the water beneath her stern was churned to foam by the
rapid beats of the propeller.
They were all of a mile away from the wreck yet, and every instant
was precious. Caleb stumped up and down the deck, fairly wild with
apprehension, his eyes fixed on the cruiser’s cutter, in the bow of
which the officer seemed to be adjusting something.
If the whaleback had been armed Caleb would have fired a shot to
attract the attention of the cruiser’s people, but there wasn’t a
weapon larger than Brandon’s rifle on the steamer.
Mr. Coffin looked at his commander anxiously. He did not fully
understand why the captain wished to reach the Silver Swan and
save it, if this was the Silver Swan; but he did not believe that they
could accomplish it. And he was right.
The whaleback was still half a mile away from the scene of
operations when suddenly the officer in the cutter sat down, and the
instant following there was a loud explosion.
A column of smoke and flame shot into the air, and when the smoke
cloud rose, only a few harmless splinters on the surface of the sea
remained to show the former position of the wreck!
And then, when it was too late, the officer in the small boat
discovered the approach of the whaleback.
Number Three was still driving ahead at full speed, and when her
steam was shut off she had such headway that she nearly passed
the cruiser’s cutter.
Caleb, his voice trembling with apprehension, leaned over the rail
and shouted his question to the officer who had just “touched off” the
charge that had blown the derelict into atoms.
“What craft is that you blew up?” he asked.
“That was a derelict,” responded the officer, who was an ensign, in
surprise.
“What was her name, d’ye know?”
“She was sunken so low at the stern that we couldn’t read her
name.”
“But can’t you guess?” cried Caleb, in great exasperation.
“Oh, there’s not much doubt in our minds as to who she was. She
was one we were ordered to destroy. The name on her bow was
badly battered, but we could make out part of it.”
“Well, for heavens’ sake, what was it?” burst forth the wooden
legged captain wildly. “Don’t beat ’round the bush any longer.”
The ensign began to grow as red as a peony. The old man’s manner
of questioning ruffled his dignity sorely.
“To the best of my belief it was the brig Silver Swan, of Boston, U. S.
A.,” he declared stiffly.
CHAPTER XXXVI
THE CASTAWAYS ON THE BRIG SUCCESS

To Milly and Brandon on board the water logged brig, it seemed as


though the long night would never end. They crouched together over
the body of poor Swivel, until his clasp relaxed from their hands and
he sank into a deep sleep.
Brandon did not believe that the injured boy would ever awake from
that unconsciousness; nevertheless, he made his way below to the
cabin again and brought up an armful of blankets to add to his
comfort.
He wrapped one about Milly, and she made him share it with her,
when Swivel was more comfortable.
Thus sitting close together on the cold, wet deck, they conversed in
whispers till dawn; Milly, at Don’s earnest solicitation, relating all that
had occurred since the night he had escaped from the Success at
Savannah.
It was rather a disconnected story, for the poor girl often broke into
weeping at the memory of her father’s violent death. She had
sincerely loved him, although he was a stern, rather morose man.
It seemed that Leroyd had learned that the plans of himself and his
friends to delay the departure of the whaleback from New York had
failed, and that the steamer had touched at Savannah and departed
the very night the Success got in.
Finding that Sneaky Al had already arrived by steamship from New
York, he promised Captain Frank an extra hundred dollars if he
would land only a portion of his goods and set sail for the Bermudas
again.
The brig’s commander could not resist this temptation, and therefore
the Success lay at Savannah but a day and two nights. Then, with
Messrs. Weeks and Leroyd aboard, she had sailed directly for that
part of the ocean in which the whaleback had run across her during
the gale.
Brandon also elicited the information that the brig had not been
successful in her search—had not seen a derelict, in fact, since
leaving Savannah—and that Leroyd was in a fiendish temper before
the gale came up.
When that began, he and his friend, Weeks, turned to with the brig’s
crew and did all they could to keep her afloat. Captain Frank,
however, was crushed under a falling spar and instantly killed when
the gale first started in, and the first officer was washed overboard.
When the brig became unmanageable and the crew rushed for the
boats, nobody thought, or at least nobody stopped, for the bereaved
girl in the cabin. She discovered that the crew had gone and left her
only by coming on deck after the water had begun to fill the cabin.
Brandon and the captain’s daughter had ample time, before the sun
appeared, to get very well acquainted with each other.
Don told her all about himself, about the object of the voyage of the
whaleback, and of the plot concocted by his uncle Arad and Messrs.
Leroyd and Weeks to find the Silver Swan and obtain the treasure
aboard her themselves.
As soon as it did grow light, Brandon made his way below again and
after a great deal of trouble lit an oil lamp and heated a little water
over its blaze. He was then able to make some warm drink for Swivel
and Milly, denying himself until she had swallowed some, and
between them they had forced a little of the mixture between the
injured boy’s lips.
After this Swivel brightened up a bit, and, as he did not try to talk, the
hemorrhage did not return. But he was very weak.
Milly and Brandon ate a little solid food too, but their companion was
unable to do that.
Now that it was light enough for them to see over the expanse of
waters, they found as they had feared, that the whaleback had left
them behind during the night.
Not a sign of her presence nor of the presence of any vessel which
might come to their assistance, appeared.
The condition of the Success worried them a great deal—or worried
Don and Milly at least—for she was gradually sinking at the stern,
and the water was gaining more rapidly than they liked in the cabin.
Whereas it had only been to Brandon’s knees when he had first
gone below, it was now up to his waist.
During one of these trips of his to the flooded interior of the brig, he
heard Milly’s voice excitedly calling to him to come on deck.
“What is it?” he asked, hastily making his appearance.
“Look! look, Brandon!” cried the girl.
She was standing up in the stern and looking over the starboard
side.
Brandon hurried toward her and followed the direction of her hand
with his eyes.
Far across the tossing sea a dark object rose and fell upon the
surface. It was not far above the level of the water, and therefore,
though hardly three miles away, had until now remained unseen by
the voyagers of the Success.
“Is it a wreck like this?” she inquired eagerly.
“It must be,” said Brandon, after a careful examination.
“Bring poor papa’s long glass up from his stateroom,” cried Milly.
“You can see it then more plainly.”
The boy hurried to obey this suggestion and quickly brought the
instrument from the dead captain’s cabin.
By the aid of the glass the shipwrecked boy and girl could quite
plainly view the second wreck, for wreck it was. There was no room
for doubt of that.
“It’s the hull of a vessel like this,” Brandon declared, “though it’s not
sunken at the stern, and it rides the waves easier.

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