Equipment now under review by the Federal Aviation Administration would eliminate the need for a flight engineer from the Boeing 727 cockpit, meaning significant labor savings to both passenger and cargo carriers despite an $800,000 price tag.

The conversion kit is from Aeroworks of Incline Village, Nev., and the Gull Electronic Systems Division of Parker Bertea Aerospace.A supplementary type certificate (STC) from the FAA, which the companies hope to obtain by the end of the first quarter of 1996, will allow them to convert the current three-person 727 cockpit configuration to a two-person arrangement.

The conversion kit, called a DuoDeck, involves modification, rearrangement and selective automation of the 727 cockpit instruments, thus eliminating the flight engineer position while incorporating FAA safety features.

Cargo and passenger operators could expect to save $350,000 to $650,000 an aircraft each year in labor and support costs, said Edward Smith, managing director for Aeroworks.

"We probably have a shot at about 600 to 700 of the 1,300 727s out there," said Mr. Smith. The target market is the nearly 600 727-200s built between 1977 and the end of production of the plane in 1983, he added.

"We're talking with all of the 727 operators, passenger and cargo," Mr. Smith said. "We don't have anybody signed yet, but I would say there is serious consideration."

Any operator planning to install a hush kit on a 727 to meet federal noise standards by the end of 1999 "is a good candidate for us, because they obviously are not planning on parking the plane" after that date, said Mr. Smith.

John Mazor, spokesman for the Airline Pilots Association, said the union is not opposed to the equipment in principal.

"What's going to happen is going to happen," he said. "We opposed the general industry move from three-man to two-man cockpit. But that was fought and decided in 1980, so we're not waging that battle any more."

Still, the union has some questions about the DuoDeck.

"We found that some of the instrumentation and controls are configured in a way that are hard to read, and hard to reach," he said. "We found some difficulties in performing the check list.

"Our main concern is that we want to avoid where pilots have a common rating for both two-man and three-man service," said Mr. Mazor. "You're really talking about two different airplanes. You don't want to force a pilot at a critical moment to have to stop to think about which procedure for which plane."

Installation of the conversion kit can be accomplished during a normal ''C" check, or about ten days. Test flights for the certification aircraft are scheduled to place in January. Aeroworks has logged more than two years in product development and more than 400 hours of simulation exercises.