Queenstown Airport commercial manager Simon Barr said Naylor Love started on Monday on work that was targeted for completion in early June.
The company committed in November to doing the work to cater for an increased number of flights this winter. Thirty international flights will arrive in the resort weekly, a 36% increase on last year.
The extension of the arrivals area involved enclosing an outside walkway to help manage increased international capacity.
Chief executive Steve Sanderson said the airport was able to process one international flight every 30 minutes through the customs area. However, this winter, up to three international flights would arrive in an hour.
"For the airlines, it's important that the aircraft keep their on-time performance and need to disembark passengers efficiently so the aircraft can prepare for departure."
In addition to the covered walkway, the airport was also extending the baggage claim area by 40% - 300sq m - and refurbishing 351sq m.
The extension involved removing an existing wall and building an extension towards the commercial car park.
"Both projects are being completed specifically to meet the needs of the airlines and the large increase in international flights scheduled for the coming winter," Mr Sanderson said.
The enhancements were part of a wider infrastructure programme with several projects under way or in the planning stage.
These included the addition of runway lights and the runway end safety area.
