Johanne Jayaratne, executive director of Airports and Aviation Services (Sri Lanka), a state agency which operates airports, said a building previously used for catering services is being converted as a domestic terminal.
It will held international passengers reach domestic destinations with direct connections to domestic routes.
"Market research has found tremendous interest in creating a domestic terminal at the international airport," Jayaratne told a forum on aviation held by the Chartered Institute of Transport and Logistics.
"Having listened to the market we've begun development of a domestic terminal.
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The planned domestic terminal will be able to cater to about 200,000 passengers a year.
"We've started the infrastructure renovation," Jayaratne said.
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"The terminal will be in operation by November or December this year."
It will be used by domestic airline operators to connect passengers flying into the international airport with the 13 domestic airports.