On May 23, 1998, at 0550 eastern daylight time, an Aerostar International, S81A, N7165E, experienced a flash fire, during preparation for takeoff from Smoketown Airport, Strasburg, Pennsylvania. Two passengers received serious injuries. The certificated commercial pilot and four passengers received minor injuries. The three remaining passengers were not injured. Visual meteorological conditions prevailed and no flight plan was filed for the commercial balloon ride being conducted under 14 CFR Part 91. In a telephone interview, the pilot stated the accident occurred while warming the balloon for takeoff. He also stated that after the accident, he shut off the balloon's propane tanks and tried to tighten all the propane fittings to prevent another fire. He made no mention of finding any loose fittings. At 0550, the Lancaster Airport, Lancaster, Pennsylvania, report calm winds. A witness at the launch site also reported the winds as calm. On May 28, 1998, at Lancaster Balloonport, Inc., Lancaster, Pennsylvania, all three burners and all three propane tanks were examined under the supervision of a Federal Aviation Administration Inspector. According to the inspector's field notes, when the fuel system was pressurized only a "minor" leak was observed from one of manifolds and one of the burner's hose fittings. Two of the propane tank's spit valves expelled fuel when opened, and one of the tanks was approximately a half gallon low of propane.