Representatives of labor unions in the airline industry yesterday urged Congress to reject legislation which would reduce federal regulation of the nation's airlines.

In testimony on behalf of the Air Line Pilot's Association, the Brotherhood of Railway and Airline Clerks, Flight Engineer's International Association, International Association of Machinists and Aerospace Workers, and the Transport Workers Union of America, William G. Mahoney maintained that legislation which would loosen the grip of the Civil Aeronautics Board over the airlines would do no good and a lot of harm.

Such a measure would hurt both consumers and employees, he said. It would fail to produce the lower air fares some have testified are possible in a more competitive air environment. Mahoney said, except for "temporarily lower fares on selected routes." In addition, he contended, it would cause a loss of jobs as carriers "tighten their belts to cut their prices to meet competition" and widespread employee dislocation as carriers move to new routes.

Mahoney's testimony appeared to fail to convince Senate Aviation Subcommittee chairman Howard W. Cannon (D-Nev.), a co-sponsor of one of the pending measures along with Sen. Edward M. kennedy (D-Mass.). Nothing that the lower fares charged by Taxes and California carriers not subject to CAB regulation suggests that lower fares in some markets are possible over a long period of time, Cannon told Mahoney, "the hard evidence seems to dispute what you're giving us on theory."

Cannon seemed equally unpersuaded on the question of what would happen to airline employees under the bill.

"You say here the bill will cause massive airline unemployment," Cannon told him. "There is certainly no hard evidence to support it." Nothing that the different airlines have different positions on the bill, Cannon asked whether the unions of the various airlines were polled to come up with the unified position. "I think if employees were polled - with the full knowledge of what will happen . . . (to their jobs under the bill) . . . I doubt very much if they would support it," Mahoney replied.

"This is a bugaboo," Cannon said. "If you tell your employees they're going to lose their jobs as a result of this bill, of course, they're going to oppose it. After Cannon noted that some witnesses have testified that employment in the industry could grow in a more competitive environment, instead of shrink, Mahoney conceded it might "in the long run" but said the unions were worried about the "thousands and thousands" of employees who would be dislocated in the "between" time.

In other testimony, Harding L. Lawrence, chairman and president of Braniff Airways, and L. B. Maytag, chairman and chief executive officer of National Airlines, both opposed major change in the existing regulatory framework, arguing that a more competitive environment could lead to increased concentration by the big carriers.

"We smaller airlines are not 'carying wolf,'" Maytag said. "Within the present regulatory framework, many of us are strong, vigorous competitors." But he maintained that even National - "for all its strengths" is vulnerable to the competitive changes which would result from the bill.

"Why do you fear competition?" Cannon asked. Nothing their greater efficiency he added, "it seems to me you and some of the smaller carriers would pose a threat to some of the larger carriers." Maytag said the larger carriers' "excess capacity" would allow them to enter markets more freely and "smother" the smaller, even more efficient and profitable, carriers.

Lawrence said the legislation was "too much of an experiment" whose results couldn't be predicted with any certainty. Just the uncertainty of the outcome of legislative debate on the subject had affected the airlines' ability to obtain financing for new aircraft, he maintained.

"It doesn't sound to me like it's dried up the market for financing," Cannon said, reading from a newspaper account of Braniff's just announced plans to buy six new planes with a newly-establish $80 million line of credit with 20 banks at the prime lending rate, bringing Braniff's orders to 18 planes for more than $200 million.

"I don't think this looks like the financial community was too much concerned about the effects of this legislation," Cannon said. "I'd say it indicates that has a lot of confidence in this industry."

Lawrence contended the larger carriers could overtake the smaller ones because of their "market identity" and "connecting traffic." But he admitted that Braniff was "a low cost, efficient to operator" and that he didn't "intend to preside over a bankruptcy" should there be in the future a less regulated environment.