The head of the Civil Aviation Administration, Mohammed Sherif, told The Associated Press at the scene of the crash that the pilot had just renewed his license in January.
"Each time we renew the license, we check up the balloon and we test the pilot," Sherif said.
An aviation official, speaking on condition of anonymity because he wasn't authorized to talk to reporters, blamed the pilot, saying initial results of the investigation showed he jumped out when the fire began, instead of shutting off valves that would have prevented the gas canister from exploding.
But the crash raised accusations that standards have fallen. Mohammed Osman, head of the Luxor's Tourism Chamber, blamed civil aviation authorities, who are in charge of licensing and inspecting balloons, accusing them of negligence.
"I don't want to blame the revolution for everything, but the laxness started with the revolution," he said. "These people are not doing their job, they are not checking the balloons and they just issue the licenses without inspection."
The Civil Aviation Ministry, like much of the government administration, has seen political disputes since President Mohammed Morsi came to power in June as Egypt's first freely elected leader.
The ministry was long dominated by military officers or former officers, some of whom have resented control by a civilian president, particularly one from the Muslim Brotherhood. In other ministries, observers say Brotherhood members have been appointed, or included as volunteers, in many posts.
One civil aviation ministry official told the AP that standards have fallen since civilians were brought in to some middle-ranking positions. The official said inspections have become more lax, taking place once a month instead of weekly. The official spoke on condition of anonymity in order to talk about the industry.
The crash added to the woes for residents of Luxor. Scared off by the turmoil and tenuous security following the uprising, the number of tourists coming to Egypt fell to 9.8 million in 2011 from 14.7 million the year before, and revenues plunged 30 percent to $8.8 billion. Last year saw a slight rise, but most tourists go to the beach resorts of the Red Sea, staying away from Nile Valley sites like Luxor.
That has been devastating for the local economy, with some government estimates saying that 75 percent of the labor force is connected to tourism. Luxor's hotels are about 25 percent full in what is supposed to be the peak of the winter season.
Poverty swelled at the country's fastest rate in Luxor. In 2011, 39 percent of its population lived on less than $1 a day, compared with 18 percent in 2009, according to government figures.
Mohammed Haggag, owner of Viking, a company that runs seven balloons in Luxor, said the flight shutdown meant that the whole industry was suffering for one pilot's mistake.
"Why the mass punishment? Do you stop all flights when you have a plane crash?" he said. "You will cut the livelihoods for nearly 3,000 human beings who live on this kind of tourism."
Khaled Wanis, the owner of a shop selling tourist trinkets near Luxor Temple, said the past two years have been the worst he has ever seen.
"I can spend a week or 10 days before a customer knocks my door," he said. "Since I heard the news today, I felt ache in my heart.
"The general feeling is that Egypt is hard to visit and this is not a safe place to visit. The accident will only add to this feeling," Wanis said. "We are begging for tourists. Now, they get killed, so what do you expect?"
Associated Press writers Haggag Salama in Luxor, Kelvin Chan in Hong Kong, Jill Lawless in London, Angela Charlton in Paris, and Malcolm Foster in Tokyo contributed to this report.
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