Traffic congestion has become a significant issue in many cities in Sri Lanka. Colombo, being the commercial capital and largest city of the country, is gravely in need of suggestions to mitigate the loss of efficiency and money due to the idle time on roads. Thus, this paper intends to explore the perception of passengers on an Inland Water Transit (IWT) system which is underexplored or rather unexplored in the context of Sri Lanka. The study seeks to bridge the gap in knowledge between the factors to be considered when planning IWT as a public transit mode by transport planners/providers and the factors passengers would consider when opting for IWT as a public transport mode. Furthermore, the study also attempts to analyze the potential of IWT to be utilized for recreational purposes. Therefore, a conceptual framework was developed based on the literature written in the context of other countries and other modes incorporated with statistics from several authorities as well as data gathered through personal communications with industry experts. This was followed by a survey conducted via printed questionnaires and Google forms among a randomly selected sample of Colombo residents. The sample consisted of passengers bound to take the land routes crossing the canal system proposed for IWT. Details on demographics, trip characteristics and perception towards IWT as a novel public transport mode was collected to proceed with the analysis. After the Exploratory Factor Analysis, a Binary Logistics Regression model was developed to accomplish the primary objective of the research. Apart from the model, Chi-square test, KMO test and correlation analysis are some other analysis techniques employed in the study to derive conclusions on the overall perception of passengers towards IWT. The results suggest that the latent factor ‘Amenities’, including indicators such as availability of service information, customer service, online facilities, multiple counters, etc. are more significant when considering IWT as a public transport mode, than service issues such as cost, connectivity and punctuality. The findings of this study aim to provide a better understanding of the determinants of modal choice of IWT in Colombo, thus, to encourage the incorporation of such non-traditional service attributes in policy developing, transport planning and service providing. Subsequently, it will address the urgent need to discourage the escalated trend in the use of private vehicles due to the limited inhabitable space in this small island—Sri Lanka.