Civil Aeronautics Board Chairman Alfred E. Kahn yesterday made what he hopes will be his final pitch for legislation to reduce the CAB's hold over the airline industry.

Opening two days of hearings prior to the House Aviation Subcommittee's mark up of a measure on Wednesday Kahn insisted that new legislation is "genuinely needed.

Alfred E. Kahn yesterday made what for the board's recent successes in trying to reduce delays and increasing competition among airlines, there is only so much the board can do under the 1938 law, he said.

". . . under the present act we can improve regulation . . . but improving regulation is not enough," he contended."The CAB is simply not capable of making business decisions as good as the ones that business itself will make in a competitive environment; it is that simple and that fundamental."

Kahn particularly lamented the "procedural morass" in which the board operates which leads too often to "undue process."

Most often, the businessman with the new idea - new routes, new services, new fares - is the one who gets caught in the procedural requirements mandated by the old law, Kahn said. He pointed to applications several years old by new entrants for low fare services to Chicago and other cities that are still pending because of opposition by incumbent carriers, who are nonetheless ready to meet the new competition if it is approved.

Kahn also admitted that some of the board's recent initiatives may run into legal difficulties. "In many of our reforms we are quite simply reinterpreting a 40-year-old statute," Kahn said.

Some of the airlines that oppose the changes being made "have 40 years of CAB precedent to back them up" and may be sustained in the courts in the next few years, he said.

In other testimony prepared for delivery yesterday:

John J. O'Donnell, president of the Air Line Pilots Association International, said legislation was not necessary to accomplish the reforms needed, and that the substantial relaxation of entry barriers to new routes would result in "excessive competition."

J. Donald Reilly, executive vice president of the Airport Operators Council International, the group of governmental bodies which own and operate most airports, said the pending legislation would not harm the nation's air system and might give communities a greater role in getting air service that fits particular community needs and desires.