This claim is always trotted out, but is false. The kerosene fuel produced the visible flames, while the hydrogen burned mostly invisibly. The skin mostly survived. Another common and false claim was that a bomb started it. No, it was the leaking hydrogen that ignited.

This doesn't mean a modern, unmanned airship shouldn't use hydrogen for lift. Adequate ventilation prevents ignition of leaks, and modern sensors can detect leaks. Harvesting humidity to replenish losses, using solar panels all over the top of it, is a reasonable design choice.