Flight 307 was about to take off into the friendly skies of China. The luggage was stored away, but the passengers could not find a place to put their knees.

China's national airline, pioneer in no-frills flight, had scored another first. It had crammed two or three extra rows of seats into this British-made Trident 2E, leaving a 5-inch space for the long legs of several American and European tourists on board.

"If the trays drops down, I'll be ruined for life," said British tourist Graeme Hollinshead, exhaling noisily.

Some have suggested that the airline's call letters CAAC, which stand for the Civil Aviation Administration of China, were designed to approximate the sound of a distressed passenger wedging himself into place. But China's airline has made a virtue of its austere service, offering a rockbottom ticket to its local passengers long before the capitalist world tried out such popular tourist bargains as Freddy Laker's transatlantic flights.

A young Chinese nurse, who identified herself as Miss Chen, sat in the row in front to me, on her way back to her hospital job in Kweilin after seeing her family in Canton. The ticket for this 1 1/2 hour flight cost $17. She said she would have paid almost exactly that much to ride the train, yet that trip would have taken 24 hours because of a detour through Changsha, far to the north.

CAAC PRESENTS a strange mix of modern merchandising and revolutionary severity. In the Canton airport terminal, a sign announced the beginning of first class fares for well-heeled foreign travelers between Canton and Peking. It was S186 one way for the 1.200-mile trip. Tourist class foreign passengers paid about $143, Chinese passengers paid about $54.

In the past, foreigners usually got the first class seats in the airline's more spacious Boeing 707s and Soviet built Ilyushin 62 anyway. Now the Chinese have succumbed to the clever Western device of making them pay a premium for what they were getting already. First class passengers also got a double baggage allowance, but no movies, alcohol or anything else.

There were no first class seats on Flight 307. The Chinese appeared to think it not worth the trouble on such short hops. We all got our tea, cigarettes, candy and wet towels, and were left alone.

THE ONE FLIGHT announcement, in Chinese and difficult-to-understand English, was short and somewhat muffled by a faulty loudspeaker system. "Good morning everyone.Welcome to Flight 307 . . . to insure safety, firearms, ammunition, explosives, poison and radioactive material are not permitted on board. If they are already aboard, please give them to the stewardess."

Did she say stewardess? CAAC's unraised consciousness allowed it to use the old-fashioned term, now fast giving way to "flight attendant" on U.S. airlines. None of the female cabin crew, wearing blue slacks, white shirts and pigtails, fliched at the word. In Chinese their title really was "attendant," having descarded the "flying miss" title still bestowed on air hostesses in Taiwan.

I asked one of the attendants if the airline allowed women to continue to work after marriage. "Oh, certainly," she said, although she added that she and her crew were too young for marriage themselves. She was 23. Which did she prefer, the British, Russian or American aircraft? "Oh, they are about the same," she said, with a diplomatic smile.

IN THE LATE 1960s and early 1970s, a time of great ideological fervor here, each CAAC plane was emblazoned with the red characters for "Long Live Chairman Mao" on the fuselage. The loudspeaker announcement to the passengers always began with an appeal to the teachings of Chairman Mao.

All that has gone now. The Canton airport lounges still have some Mao quotes and a statute of the late chairman in the front lobby, but the central point of attention is the flight schedule board, with a steadily increasing number of flights. CAAC reported that a massive influx of tourists in the first quarter of this year required the addition of 400 flights in the Peking-Shanghai-Hangchow-Canton-Kweilin network. Out flight had only two empty seats. Other travelers reported their flights similarly crowded.

Some Western analysts say the expanded service is long overdue for an airline that last year used its 707s and Tridents an average of only about one hour a day. The limited flying time seemed a device to leave room for easy commandeering of aircraft by the military. Soldiers would be perhaps the only people who might not complain about the seating arrangements in the Tridents.

Airport expansion has begun, signaling a new era in civilian flight. The Peking airfield has been enlarged so that jumbo jets can land. Expansion here and in Shanghai is also being planned, and some Western analysts say the Chinese may buy more planes soon. Now they have more than 90 Soviet aircraft of various sizes, plus nearly 30 Tridents and 10 Boeing 707s. Not to be caught short in case of a turn for the worse in relations with the United States, CAAC bought four spare engines for each of the 707s.

Despite Miss Chen, most of the Chinese on Flight 307 and other flights I have taken in China appeared to be on some sort of official business. A group of teachers were getting on a flight in Nanning to go to Canton for an educational conference. There were soldiers in some seats.

When Flight 307 landed in Kweilin, I realized there had been no safety demonstration, no Muzak and, unfortunately in nicotine-crazed China, no No Smoking section. The stewardesses did their best to smile through the haze.

"We are happy to have you on our flight," the loudspeaker said. "Goodbye, everyone."