I think this is Winds of Adventure!, a segment on The World of Jonathan Singh (fair warning, TV Tropes entry).

This is the main segment of the series. The series starts with a teenager named Jarrod who has to rescue his friend Isabel from a group of nasty pirates. He and Professor Louie rescues her, but their hot air balloon gets zapped by lighting, which takes them into another world. The heroes meet the race of the new world, the tomarlings where they're being lead by Prince Rohanor. Their mission is take back the kingdom from King Halgor.

First episode

Found with a search for tv show "hot air balloon" lightning king puppets

I think this is Winds of Adventure!, a segment on The World of Jonathan Singh (fair warning, TV Tropes entry).

This is the main segment of the series. The series starts with a teenager named Jarrod who has to rescue his friend Isabel from a group of nasty pirates. He and Professor Louie rescues her, but their hot air balloon gets zapped by lighting, which takes them into another world. The heroes meet the race of the new world, the tomarlings where they're being lead by Prince Rohanor. Their mission is take back the kingdom from King Halgor.

I believe the "transported to another world" bit starts at the end of Episode 3, leading into Episode 4, although the storyline is a bit different, with Isabella kidnapped by pirates.

Found with a search for tv show "hot air balloon" lightning king puppets

I think this is Winds of Adventure!, a segment on The World of Jonathan Singh (fair warning, TV Tropes entry).

This is the main segment of the series. The series starts with a teenager named Jarrod who has to rescue his friend Isabel from a group of nasty pirates. He and Professor Louie rescues her, but their hot air balloon gets zapped by lighting, which takes them into another world. The heroes meet the race of the new world, the tomarlings where they're being lead by Prince Rohanor. Their mission is take back the kingdom from King Halgor.

First episode

Found with a search for tv show "hot air balloon" lightning king puppets

I think this is Winds of Adventure!, a segment on The World of Jonathan Singh (fair warning, TV Tropes entry).

This is the main segment of the series. The series starts with a teenager named Jarrod who has to rescue his friend Isabel from a group of nasty pirates. He and Professor Louie rescues her, but their hot air balloon gets zapped by lighting, which takes them into another world. The heroes meet the race of the new world, the tomarlings where they're being lead by Prince Rohanor. Their mission is take back the kingdom from King Halgor.

First episode

Found with a search for tv show "hot air balloon" lightning king puppets