It is a relatively large balloon that is orange and red. It has a small basket with some sandbags hanging from it.
Role in episode
It appears when SpongeBob tries to help Squidward find his "happiest memory." SpongeBob takes Squidward on this hot air balloon but Squidward wears a blindfold due to his fear of heights. SpongeBob removes the blindfold so Squidward can see the magnificent view. However, he starts to panic.
SpongeBob bursts the balloon, which causes them to fall on top of Mt. Bikini.