The transport ministry has sought the government's permission to license Vietstar, a military-run aviation company, to provide passenger and goods transport services.
Vietstar Airlines plans to operate routes linking main destinations in Vietnam, besides routes to Southeast Asia and East Asia regions in the first five years, after it acquires the approval.
The company, which currently provides charter flights, filming and rescue services, has stricken a deal to lease three Boeing 737 aircraft to operate the transport services.
Founded in April 2010 by the defense ministry, Vietstar Airlines' equity was estimated at VND652.7 billion ($29.2 million) at the end of last year.
Vietnam's domestic passenger air market is now dominated by state-run Vietnam Airlines and private low-cost Vietjet Air, with respective shares of 40.8 and 36.3 percent.
Jetstar Pacific Airlines, a low-cost carrier run by Vietnam Airlines and Australian-owned Qantas, controlled 14.9 percent. The national airline's short-haul carrier VASCO, now operated in collaboration with Techcombank, owned the rest.
Vietnam's air market is forecast to see a rise of 19 percent to 45 million passengers this year, with the domestic sector accounting for more than 58 percent.
But it's not all clear skies for new carriers in Vietnam.
Vietjet Air has quickly grown into a strong player. But in 2011 and 2015, local authorities had to ground two private carriers Indochina Airlines and Air Mekong, only after a few years of unsuccessful business.