Prioritising connectivity for national development
Improved connectivity, both within Sri Lanka and internationally, is considered crucial for driving the country’s trade, tourism, and overall economic growth.
Stakeholders have called for timely policy implementation, strategic expansion, and infrastructure upgrades at key airports and ports in order to ensure alignment with overall national development goals.
Govt. strategy
Budget 2025 has allocated a portion of Rs. 1,000 million to support the initial development and establishment of advanced scanning systems for the Bandaranaike International Airport (BIA) and the BIA Terminal II expansion plan is underway with Japanese investment. The airport is set to expand to handle 15 million passengers annually by 2028 with this new terminal.
Speaking to The Sunday Morning, Deputy Minister of Ports and Civil Aviation Janitha Ruwan Kodithuwakku explained the development plans for increased internal and external connectivity, stating that in addition to the planned development of BIA Terminal II, other development plans were yet to be finalised.
“While the development of the Jaffna International Airport (JIA) is acknowledged as a necessity, its immediate implementation is constrained by the current fiscal landscape. However, we intend to develop the JIA to facilitate more aircraft. We are re-evaluating the project in order to attend to it next year, but it is yet to be finalised.”
He further stated that several infrastructure projects would be planned next year as well, alongside a reevaluation of the management structure which was being conducted to optimise operational efficiency.
Addressing passenger movements, he reported that the preceding year had witnessed an increase to 8.8 million passengers from approximately six million, resulting in the current handling volume exceeding capacity by 2.5-2.6 million, contributing to certain operational inefficiencies and delays as well.
He assured that measures, including the deployment of additional check-in counters, were scheduled for implementation this year. Additionally, certain launches overdue for repair are also being modified, with the work likely to be completed this year.
Commenting on internal connectivity, he noted that there had been no separate aviation act for domestic airlines, with international regulations having been applied to domestic flights as well.
According to Kodithuwakku, this act will be amended this year, with a committee chaired by the Civil Aviation Authority (CAA) already in place, including all relevant stakeholders. Recommendations from this committee are expected within 1-2 months. Accordingly, the act will be amended to improve domestic aviation within about three months.
Increased interest from airlines
Elaborating on development measures, CAA Chief Executive Officer and Civil Aviation Director General, Air Vice Marshal Sagara Kotakadeniya noted that the BIA was on the verge of launching Terminal II, adding that there was already a passenger surplus, with numbers reaching pre-Covid-19 levels.
Therefore, further improvement is expected, as several airlines have expressed interest in operating at the BIA, with plans being made to accommodate these requests.
According to Kotakadeniya, the passenger surplus is due to several factors. The country’s security status is well established and airlines are confident in the high security levels maintained at the airport. He highlighted that this had been proven during audits, which confirmed that safety standards were being met.
“We are expecting the next safety audit in 2026. The security audit conducted last year placed us at the highest level in the South Asian region, which is why airlines are comfortable operating here,” he said.
He added that it was equally important to ensure passenger facilities were up to standard, noting that the CAA was doing its best despite resource limitations. He noted that congestion at the airport was being addressed by increasing the number of security desks, with the situation being closely monitored.
At the JIA, two international airlines are already operating and the CAA has encouraged domestic operators to facilitate travel by offering domestic flights on a charter basis.
Kotakadeniya noted that the Mattala Rajapaksa International Airport (MRIA) had received several letters of intent from operators interested in running charter flights, with three operators currently active. Further, investments are being encouraged in lucrative businesses surrounding the airfield, such as Maintenance, Repair, and Overhaul (MRO) facilities.
“Regarding domestic air travel, it is important to encourage passengers, as there are two airlines operating successfully with well-maintained safety standards. The Minister also discussed the need for domestic aviation and the intention to open a domestic apron to accommodate airlines operating from the BIA to destinations across the country,” he said.
He noted that there were also developments in adventure aviation, such as balloon operations, paramotoring, paragliding, and drone operations, with the aim of boosting domestic aviation. Rules and guidelines have been implemented to regulate these activities and ensure airspace awareness.
Critical for economic growth momentum
Commenting on the importance of connectivity development, University of Peradeniya Department of Economics and Statistics Senior Professor in Economics W.L. Prasanna Perera highlighted that Sri Lanka’s key growth momentum lay in international trade, tourism, and investment.
In its latest International Monetary Fund (IMF) report released in March, real Gross Domestic Product (GDP) growth for Sri Lanka is forecast to average around 3% from 2025 to 2030.
However, Prof. Perera noted that the country had only recovered about 40% of the economic losses incurred between 2018 and 2023, with 60% still remaining to reach the normal growth target of 3%.
“It is important for us to focus on the development of airports because our main growth momentum lies in international trade, tourism, and investment. These are the driving forces of our economic growth in the near future,” he said.
He further noted that enhanced airport facilities would significantly boost tourism, a major contributor to Sri Lanka’s GDP and a key revenue generator, given that improved connectivity could attract more international visitors, leading to increased revenue from tourism-related activities.
Furthermore, Prof. Perera highlighted that improved infrastructure played a critical role in facilitating trade by providing essential logistics and transportation services. “Efficient cargo handling and logistics at the airport can expand our export capabilities, allowing local businesses to reach global markets more efficiently,” he observed.
Additionally, he noted that airports and their surrounding areas could stimulate foreign investment, as investors were more likely to invest in regions with well-developed transport infrastructure. Foreign Direct Investment (FDI) will play a critical role in the coming years, making this sector particularly important.
On improving internal connectivity, he noted that increased investments and infrastructure in this area would develop overall economic development goals. Better services, reduced waiting times, and increased efficiency in this sector will also help diversify the economy beyond traditional sectors.
“Improving connectivity facilitates trade, promotes more efficient services between regions, and positions well-connected airports as logistics hubs. The ability to improve air transport can support growth momentum through logistics, trade, and e-commerce, enabling faster delivery of goods and more efficient movement of passengers,” said Prof. Perera.
Colombo Port developments
The Port of Colombo is widely recognised for its strong connectivity, with a current capacity of 7.5 million Twenty-foot Equivalent Units (TEUs). In 2024, the port recorded an all-time high container throughput, amounting to 7.78 million TEUs, a significant increase from the 6.91 million TEUs handled the previous year.
This surge in activity was driven by the Colombo International Container Terminal (CICT) handling 3.35 million TEUs and the Sri Lanka Ports Authority (SLPA) and South Asia Gateway Terminals (SAGT) handling 2.4 million TEUs and 2.01 million TEUs, respectively.
Commenting on the Colombo Port’s development targets, Deputy Minister Kodithuwakku noted that the port was expected to handle 14 million TEUs by 2026.
“By 2030, we plan to complete West Container Terminal II (WCT-II), which will add another 3 million TEUs. Construction must begin by the end of 2027, and by 2035, we will add the North Port. Altogether, the capacity will reach 30 million TEUs,” he said.
He further noted that delays would be addressed, as some delays arose from equipment that had not been upgraded for a long time and breakdowns in equipment. These issues are expected to be resolved as much as possible.
Speaking to The Sunday Morning, SLPA Chairman Admiral (Retd) Sirimevan Ranasinghe explained the expansion plans for the Port of Colombo, noting that a decision had been made in early 2019 to improve capacity, which had however failed to take place due to various reasons.
“However, this year, the WCT began its testing operations by the third week of February, with ships being almost ready to come in. Operations will continue to expand gradually and by February 2027, the entire terminal is expected to operate at full capacity, adding capacity to the port,” he said.
He further noted that while the SLPA would continue to own the East Container Terminal (ECT), it would function as a fully SLPA-owned private terminal. Accordingly, 50% of the ECT, as a semi-automated terminal, is set to begin operations by the first week of July, adding both capacity and efficiency.
“When starting a new automated terminal, it is likely that efficiency will be slightly lower initially, given the novelty of the situation. It will take time to reach peak performance but the SLPA is doing its best to train staff to achieve peak efficiency as quickly as possible. The SLPA will be ready by July 2026 with full capacity,” he asserted.
By February 2027, the Port of Colombo is expected to handle 12-14 million TEUs annually. Ranasinghe noted that increased capacity would drive demand, while efficiency improvements would also play a key role.
“We will continue with WCT-II and once operational by 2030, we will also proceed with the Colombo North Port expansion, which will include three large terminals, each with a capacity of at least 3.5 million TEUs. This will add another 10 million TEUs of capacity, along with the 3 million from WCT-II,” he said.
Ranasinghe further explained that the new expansion would include, in addition to container handling terminals, facilities for Liquefied Natural Gas (LNG), liquid bulk, and pipe handling. By 2035, the Colombo Port is expected to have a capacity of at least 30 million TEUs per year.
He further noted that the port was not operating at a loss and remained a profitable business, with its primary role in facilitating trade, allowing for approximately 80-85% of the country’s trade to pass through the port.
“Therefore, a significant portion of the nation’s wealth can be extracted through the harbour. It creates an environment that enables the country to engage in trade and generate income, especially given that Colombo is well regarded for its connectivity,” said Ranasinghe.
Suffering from bad policy
Meanwhile, speaking to The Sunday Morning, Shippers’ Academy Founder/CEO Rohan Masakorala noted that the Colombo Port faced challenges due to bad policy. As a transshipment hub, its infrastructure development has lagged, resulting in significant opportunity costs due to over two decades of flawed planning and execution.
Moreover, Masakorala added that the Colombo Port currently handled approximately three million fewer containers than it was potentially capable of, largely due to political decisions and union actions.
Furthermore, the port faces intense competition from emerging regional ports, particularly in India. The recent growth in transshipment, driven by the Red Sea crisis, is expected to diminish in 2025. Additionally, the port lacks capacity for larger vessels.
“The WCT will bring an additional capacity of approximately 1 million TEUs. This terminal is not fully functional or fully equipped yet, and most likely will not be fully operational by the end of 2025. Therefore, the Port of Colombo will remain at a level below its required capacity. By the end of this year, we may have some additional capacity, which is critical for the port’s competitiveness and to gain the confidence of shipping lines,” he noted.
According to Masakorala, despite the port’s vital role in South Asian connectivity, significant changes are needed in shipping line partnerships and business practices. Efficient operation of the West and East Container Terminals is crucial for attracting more business.
He highlighted that competitor ports, including modern Indian ports, utilised landlord models, encouraging Public-Private Partnerships (PPPs) and foreign investment through transparent tenders. Sri Lanka has failed to adopt this model for two decades, instead relying on government-to-government arrangements, hindering competition.
Despite interest from major shipping lines and the world’s top carriers in investing in the country, political decisions have deterred these investments, leading them elsewhere.
“At the same time, we have not developed our terminal. The ECT, delayed since 2017-’18, exemplifies this policy and lag in infrastructure development. We are handling seven million containers, far short of the 10 million we should be processing, representing a substantial revenue loss,” he said.
Masakorala noted that the ECT and WCT together had the potential to double the port’s capacity up to approximately 15 million TEUs by the end of 2026. However, the question remains whether it is possible to get a corresponding amount of business activity to suit that capacity within two years.
“From 1999 up to now, we have only reached seven million containers. Therefore, doubling the container volume within two years would be a miracle and risks overcapacity, potentially leading to competition among terminals within the port, price wars, and reduced revenue,” he warned.
He further noted that the shipping landscape had drastically changed, adding that Sri Lanka’s 25-year policy lethargy had exacted a heavy price, as was evident in its declining regional and local growth rates. For example, Sri Lanka’s share of India’s container throughput has fallen from nearly 25% to 10%, impacting its primary transshipment business, accounting for 85% of transshipment.
