The Managerial Challenge for Airlines in Hydrogen Aviation:
Building Organisational Capabilities Before LH2 Aircraft Adoption

Recent developments in the hydrogen aviation ecosystem suggest that the sector is entering a more mature and more demanding phase.

Technical progress is continuing. In May 2026, the UK’s Hydrogen in Aviation Alliance — which includes Airbus, easyJet, Bristol Airport, GKN Aerospace and Rolls-Royce — announced £188 million of combined investment to accelerate hydrogen-powered aviation innovation and R&D. Propulsion testing is advancing, industrial partnerships are being strengthened, and airport-readiness studies are becoming more concrete.

At the same time, the sector is being forced into a more realistic assessment of its own challenges.

A number of hydrogen and clean-aviation ventures have already failed to reach commercial maturity. Universal Hydrogen, once considered one of the most visible hydrogen aviation start-ups, shut down in 2024 after failing to secure sufficient funding. In May 2026, Maeve Aerospace, a hybrid-electric aircraft developer, was declared bankrupt. In the same month, ZeroAvia went through a leadership transition, with its founder stepping down as CEO while remaining involved at board level.

These developments do not mean that hydrogen aviation has no future. But they do suggest that the sector is moving beyond the optimistic phase of concept aircraft, roadmaps and early demonstrations. It is now entering the harder phase in which technical progress will need to be translated into certifiable aircraft, bankable infrastructure, viable funding models, supportive policy frameworks and commercially workable deployment pathways.

One dimension that has so far received relatively limited attention is the managerial and organisational adaptation that airlines will need to undergo to be successful in the hydrogen aviation transition.

For an airline, adopting liquid hydrogen (LH2) aircraft will not simply mean replacing one aircraft technology with another. It will require changes in the way the company organises its operations, protects its cost base, structures its network, manages uncertainty and defines its value proposition to customers.

In other words, hydrogen aircraft adoption is not only a technological transition. It is a business-model and organisational transition.

This point is particularly important for low-cost carriers.

The low-cost model is built around a delicate combination of high aircraft utilisation, operational simplicity, high-density seating, standardised procedures, ancillary revenues and strict cost discipline. These elements are not isolated. They reinforce one another.

If the introduction of LH2 aircraft increases operating complexity or cost, the implications are therefore not only operational. They become strategic.

Higher costs will make it more difficult for low-cost carriers to preserve the same low-fare advantage that has historically underpinned their competitiveness. If part of the transition cost is passed on to passengers, airlines will need to rethink how they justify the price paid by customers.

This does not necessarily mean abandoning the low-cost model. But it will require adapting it.

For example, airlines could place greater emphasis on transparent green fare options, sustainability-linked ancillary products, differentiated passenger services, or bundled offers that help customers perceive additional value beyond the basic seat. In a world where lower-emission flying will most likely cost more initially, the commercial offer will need to evolve from “the lowest possible fare” towards “the most efficient and accessible lower-emission travel option”.

There is also another important dimension.

Sustainability credentials are likely to become an increasingly important factor in customer choice. In certain parts of Europe, especially in more sustainability-conscious Northern European markets, environmental concerns have already started to influence travel behaviour, leading to public debate around the acceptability of frequent flying. If this tendency grows, airlines able to offer genuinely lower-emission flights will be better positioned to mitigate the risk of passengers choosing not to fly, or reducing their flying, for environmental reasons.

In this sense, hydrogen aircraft will create both a cost challenge and a strategic opportunity.

The additional cost of early adoption could be partly offset by stronger sustainability positioning, higher trust, improved brand differentiation and the ability to attract customers who would otherwise reduce or avoid flying. The value proposition would no longer be based only on price, convenience and network access, but also on credible environmental performance.

This would, however, come with significant managerial challenges.

Low-cost carriers will need to preserve the simplicity and efficiency of their core model while selectively redesigning parts of the customer proposition. The risk is twofold: if they absorb all additional costs internally, margins will suffer; if they pass them entirely to passengers without adapting the offer, demand could weaken.

This is where the development and refinement of new organisational capabilities becomes essential.

Strategic sensing: understanding the transition before it arrives

Airlines will need stronger strategic sensing capabilities.

They will need to actively monitor aircraft development, certification progress, airport readiness, hydrogen supply, energy prices, regulatory incentives, customer willingness to pay and changing social attitudes towards flying. But this cannot be limited to a sustainability department or a small innovation team.

The implications of LH2 adoption cut across fleet planning, operations, finance, commercial strategy, procurement, airport relations and public policy.

The companies that manage this transition best will probably be those able to translate technological uncertainty into a clear understanding of business-model implications earlier than their competitors.

Strategic pathway management: deciding where and how to move first

Airlines will also need the capability to create strategic options.

Because hydrogen aircraft are unlikely to be introduced uniformly across all routes, bases and markets, airlines will need to identify where early adoption could be operationally and commercially viable. This could mean prioritising selected sub-networks or specific airport pairs where infrastructure, demand characteristics, customer sensitivity and policy support make deployment less risky.

This is not simply an operational planning exercise. It is strategic pathway management.

Airlines will need to decide where to experiment and where, instead, to avoid premature commitment. They will also need to protect flexibility and optionality in fleet planning, transition strategy and commercial positioning, rather than committing too early to a single transition pathway and assuming that it will be suitable across the whole network.

Organisational transformation: adapting without destabilising the core business

Airlines will also need the capability to transform without destabilising the core business.

The most complex phase will not be a distant future in which entire airline fleets are made of hydrogen-powered aircraft. The most difficult phase will be the transition itself, when different propulsion technologies, operating requirements and cost structures coexist.

During that period, airlines will need to manage a dual operating logic: one part of the organisation optimised around the current model, and another part designed to learn how LH2 operations can be introduced reliably and commercially.

One possible mitigation approach would be to initially ring-fence hydrogen operations as a specialised sub-operation. This could reduce the risk of disrupting the wider airline system while allowing the company to learn, test procedures, understand cost behaviour, measure customer response and develop dedicated expertise.

However, ring-fencing should not become a permanent organisational separation by default. Managers would need to define clear reintegration criteria: infrastructure-readiness conditions, operating reliability levels, cost thresholds and customer-demand indicators that determine when hydrogen operations can be progressively absorbed into the broader airline model.

This staged approach matters because hydrogen adoption will require both experimentation and discipline.

Airlines cannot transform overnight, but they also cannot afford to treat the hydrogen transition as a distant theoretical abstraction. The managerial challenge is to create enough separation to learn, while maintaining enough integration to protect the existing core business model.

Policy alignment: making early adoption economically rational

Beyond company-level capabilities, public policy will play a decisive role.

If hydrogen aircraft initially carry higher operating costs, airlines alone will not be able to make the transition commercially viable while preserving reasonably affordable air travel. Fiscal incentives, airport-fee reductions, targeted subsidies and taxation frameworks will be necessary to bridge the gap between environmental ambition and economic reality.

Policy should follow a clear principle: airlines that invest early in genuinely lower-emission technologies should not be placed at a structural competitive disadvantage against airlines that continue to operate higher-emission aircraft without making comparable transition efforts.

This will require a more active use of regulatory incentives.

For example, where legally and operationally feasible, genuinely lower-emission aircraft could receive preferential treatment in the allocation of scarce airport capacity, particularly at slot-constrained airports. Similarly, environmental taxation should be designed around the polluter-pays principle: operators with higher emissions should bear a higher cost, and a meaningful portion of that revenue should be ring-fenced to financially support the transition.

Such ring-fenced funding could help subsidise the initial extra costs faced by early adopters of hydrogen aircraft, including aircraft acquisition, operational trials and early deployment risk. The objective would not be to protect airlines from competition, but to avoid penalising those willing to undertake the most difficult initial steps in the transition.

The future of hydrogen aviation will therefore not depend only on whether hydrogen aircraft can be developed and certified. It will also depend on whether airlines can become organisationally ready to adopt them, and whether the policy and regulatory environment makes early adoption economically rational.

That means building the capabilities to read technological change, convert uncertainty into strategic options, redesign the business model where needed, and transform the operating model without undermining reliability, cost competitiveness and customer value.

The central point is therefore clear: while the industry waits for hydrogen aircraft to become commercially available, airlines should already be investing in the managerial and organisational capabilities that will be essential for a successful radical technology transition.

‍This article draws on themes developed in: Babuder, D., Lapko, Y., Trucco, P. (2026). Navigating the sustainability transition in aviation: The case of liquid hydrogen aircraft adoption by low-cost airlines. Journal of Air Transport Management, 135, Article 103011. https://doi.org/10.1016/j.jairtraman.2026.103011