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H M C Nimalsiri, director general of the civil aviation authority, said the island's domestic aviation sector was small and had been constrained by the effects of the 30-year ethnic war.
The war had cut off the northern Jaffna peninsula when Tamil Tiger separatists took control of the land route, enabling domestic airlines to start scheduled flights for passengers.
The flights took just over an hour but were seen as costly.
But the end of the war in 2009 led to the re-opening of the land route and travellers to shift to cheaper, albeit longer road travel.
The number of people using domestic private scheduled air service had fallen drastically last year, Nimalsiri told a forum on aviation held by the Chartered Institute of Transport and Logistics.
"When the road opened there was a cheaper travel option and part of the traffic shifted to the road and some started travelling on 'Heli Tours'.
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Heli Tours is a commercial passenger service operated by the Sri Lanka air force usin