The pilot reported that, during landing, the balloon came to rest pressing against a small tree. He added that when he applied heat to the envelope to reposition the balloon for deflation, a small hole appeared in the fabric and a small tree branch protruded into the envelope. Upon adding the heat, the tree branch inside the envelope caught fire causing the envelope fabric to catch fire. The passengers exited the basket, two fire extinguishers were deployed in an attempt to extinguish the fire, but the basket and envelope were consumed by the fire.

The pilot reported that there were no preaccident mechanical failures or malfunctions with the balloon that would have precluded normal operation.