User blog comment:FairyRaven/Fairy Tail Chapter 397: Steel, Review and Commentary/@comment-25111584-20140826200458/@comment-7418318-20140827073159

If you are refering to Naval Battle then I think they didn't need to hold their breath in there. They were in there for very long and nobody seemed to even try to hold their breath, they were talking freely and Lucy didn't drown despite being unconscious for quite some time.

Most likely they put a spell on that water that still allowed people to breathe (just like they put a spell on Sky Labyrinth that suppressed people's motion sickness) to make sure it would be an interesting fight rather than just a test of who can hold their breath the longest.