On October 12, 1995, at 1715 eastern daylight time, an Aerostar Raven S49A balloon, N6348X, caught fire during inflation at Ark, Virginia. The certificated flight instructor (lighter than air) and the dual student evacuated the balloon after the fire started and were not injured. The balloon was destroyed. The balloon was being operated as an instructional flight under 14 CFR 91 when the accident occurred. Visual meteorological conditions prevailed for the local flight, and a VFR flight plan was filed. According to the flight instructor, he was inflating the balloon for the instructional flight using an external fuel tank. The flight instructor reported that when the balloon was inflated, he turned off the external tank valve and entered the basket. He reported that when he attempted to loosen the external tank fuel hose fitting, some residual fuel from the fuel hose leaked out and ignited at the pilot light of the burner. The flight instructor and dual student exited the basket, and the balloon lifted off the ground. The balloon remained airborne, unmanned, for about one mile before it landed in a timber cut area. The basket and the skirt were destroyed by fire. The flight instructor reported that the accident balloon is equipped with a 20 gallon fuel tank, and that the inflation of the skirt uses about three to four gallons of fuel. He stated that "...it is important to carry as much fuel as possible on a balloon flight...as [a] safety precaution we use an additional 10 gallon aircraft certified spare tank for the inflation." He stated: "Before takeoff we switch the fuel system from the 'inflation' tank to the on board tank. This requires changing the feeding fuel hose from one tank to another. This technique has been practiced by many pilots and by myself for several years." The flight instructor stated that he used the following procedure: "Changing from the inflation tank to the in flight tank I have the following rules established: 1. Turn off the tank valve. 2. Bleed all the fuel out of the supply hose by using the burner to add heat to the envelope. 3. Disconnect the hose from the inflation tank and attach the in flight fuel tank hose. 4. Check new connection for leaks." According to the Balloon manufacturer's representative, the flight instructor should have included turning off the pilot light valve, and ensuring that no residual flame was present in the burner in addition to the procedures above. The aircraft was examined after the accident by an FAA Aviation Safety Inspector. The examination included inspecting the check valve for the inflation tank valve. The examination did not disclose evidence of mechanical malfunction. The flight instructor reported that there was no mechanical malfunction, and the accident could have been prevented if, "...turn off the burner pilot light when changing fuel hose connections."