Professor William Waterman Sherman is the main character of the story. After chapter one, he also becomes the story's narrator. He is sixty-six years old, and a retired arithmetic teacher, from San Francisco. In the first year of his retirement, he decides to build and fly a hot air balloon, and hopes to be the first man to fly across the Pacific Ocean.
While there are several smaller conflicts within the greater context of the story, the main conflict occurs when his balloon is punctured by a seagull, and crashes on the island of Krakatoa. This island is actually an active volcano, which is about to experience a massive (and historically accurate) eruption.
There are several minor characters that Professor Sherman meets while stranded on Krakatoa, who are members of the 20 families that inhabit the place. These families live in a secret and wealthy utopian society, and each are named for a letter of the alphabet, from A on down.