While Congress continues to debate whether or not to reduce regulation of the nation's airline industry, Civil Aeronautics Board chairman Alfred E. Kahn has begun to do it. At least, he's geared up to begin doing it.

It should come as no surprise since he put everyone on notice during his confirmation hearings last June that he had "a clear philosophical economic conviction" favoring as much competition as possible in the regulated industries and would seek to implement that belief in practice if confirmed. In addition, his every public utterance since then has reaffirmed that view.

Now, a half year later, Kahn has just about completed a restructuring restaffing of the agency he has referred to as the "Great Handicapper" to equip it for its new mission. His reorganization is designed to make the board's decision-making as rational as possible and to eliminate the infamous regulatory lag - a field in which the CAB has in the past excelled.

He has also placed in all top positions appointees with impressive credentials who share his view that consumers in a free competitive marketplace - should as much as possible determine the succes or failure of the wide variety of products and prices the forces of competition will make available to the public.

"Everyone - all the top bureau officers - fit the prevailing philosophy, which is now the new theology," one of them jokes.

Several of the CAB's new officials were picked from among the ranks of those most critical of past CAB policies, practices and procedures, and those intimately involved in trying to change the direction of the agency from outside. Now, they're inside.

"All the bomb throwers are here and in place," one says. "You have to judge this agency starting from this point forward; now there are no excuses."

Here are the top new officials of the board who share a "free the market" philosophy and will advising board members on their decisions:

Michael E. Levine, director of the Bureau of Pricing and Domestic Aviation. Levine, 36, was cajoled back from London where he was academic visitor at the London School of Economics to take the job. He was on sabbatical leave from his joint appointments on the faculties of the California Institute of Technology, where he was the Henry R. Luce Professor of Law and Social Change in the Technological Society, and of the University of Southern California as professor of law. The holder of a law degree from Yale University, Levine was an attorney with the CAB in 1965 and 1966 and has written extensively on the legal and economic aspects of aviation regulation.

Donald A. Farmer, Jr., director of the CAB's Bureau of International Aviation. Farmer, 33, joined the Justice Department's antitrust division in 1969 after graduating from Stanford Law School. His work at the division centered on regulatory agency and federal antitrust litigation involving regulated industries, primarily transportation and energy with a heavy emphasis in recent years on aviation matters. Farmer jests that hell consider his tenure at the CAB a success if he avoids being sued by his old employers.

Philip J. Bakes, 31, General Counsel. Bakes came to the board from the Senate Antitrust and Monopoly Subcommittee which he joined as a special counsel when Sen. Edward M. Kennedy (D-Mass.) took over as its chairman last year. He helped draft the air reform legislation sponsored by Kennedy and Sen. Howard W. Cannon (D-Nev.) the Senate is currently considering.

As assistant chief counsel of the Senate Subcommittee on Administrative Practice and Procedure, he played an important role in the hearings Kennedy held on the CAB in 1975.

Prior to that, Bakes, a havard law graduate, was assistant special prosecutor for the Watergate Special Prosecution Force of the Justice Department.

Darius W. Gaskins Jr., director of the Office of Economic Analysis. Gaskins, 38, was enticed over the CAB by Kahn from his position as director of the Bureau of Economics of the Federal Trade Commission. Before of economics at the University of California at Berkeley.

Nahum Litt, chief administrative law judge. Let, 42, spent 10 years as an attorney with the Interstate Commerce Commission before becoming an ALJ with the Federal Energy Regulatory Commission. There, he handled a variety of proceedings involving the kinds of economic and legal questions that come up repeatedly in all regulatory agencies. He also presided in the case which dealt with installation of the gas pipeline to Prudhoe Bay, Alaska, the largest application case of that agency's history.

The administrative hearing process is "one of the biggest bottlenecks" in the regulatory process, one CAB insider notes. "Litt is in there cracking whips already," he says, and is expected to help work out streamlined hearing procedures.

Dennis A. Rapp, Managing Director. Kahn brought Rapp down with him from the New YOrk State Public Service Commission, which Kahn headed prior to his appointment as CAB chief. Rapp had been director of the PSC's Office of Environmental Planning for seven years. The holder of a Master in Pulic Administration degree from Harvard University, Rapp was brought to the CAB to "make things work," one of the new officials said. The major reorganization of the agency is said to be his work, and is believed to be agency's decision-making already.

Levine, a licensed pilot who has been interested in aviation since he was six, is a good example of the kind of person Kahn appears to be drawing to the board. A long-time advocate of regulatory reform and a more competitive airline environment, Levine admits that Kahn enticed him back from London by persuading him that he could have a "real impact" in helping direct changes at the board that will result in a more competitive market-place with all the benefits that may accrue to consumers.

In the past, the likelihood that any given bureau at the CAB could make a difference was slight, he says, but the new structure has given his bureau combined authority for the first time over domestic routes and rates. By intergrating route licensing the industry, Kahn hopes to encourage new and existing carriers to offer new service at lower fares, a policy goal Levine also believe in.

It remains to be seen, of course, whether or not the board under its new leadership can do all Kahn wants it to do under the current law. Although many airline officials contended during the extensive hearings on proposed legislation that many of the reforms sought could be accomplished under the existing statute, others believed it to be protective of incumbent carriers.

Kahn himself told a White House briefing on the administration-supported air bill last year that he felt "very strongly" that he needed "a new set of instructions" from Congress. I'm pledged to enforce a law that was passed 40 years ago and...is clearly promotional and protectionist in its orientation," he complained.

Although the new members of the CAB team would like to see a pro-competitive bill pass the Congress, the prevailing attitude appears to be take their chances in testing whether the statute was as anticompetitive as some have believed. "We basically declared the old interpretationof it null and void," one of the laughs.