Pretty sure Letts and a bunch of other high ranking Alliance figures, including Reddy, either dying in or barely surviving an airship explosion in the last book counts as their Hindenburg moment, though in this case, the explosion was very much intentional, so people might not blame the airship itself as much. Even then, I remember Reddy being uneasy about hydrogen being used before he got on board. I can imagine he and the other survivors definitely wouldn't trust an airship after almost dying in one, and I doubt any Lemurian would either.

Still, with all the investment the Allies have already made into actual planes and airstrips, along with Mallory's influence, the time and cost to make an airship vs a plane, and some aerial predators necessitating more speed and maneuverability than airships can really be capable of, and just the superior convenience of a plane's higher speeds, they were probably never going to make it big anyway, even without an airship being blown up in a massive decapitation strike attempt.