Royal Mail wants to increase business mail prices, including access rates for competitors, aboveits price cap level because of the continuing rapid decline in the mail market.
The British postal operator said yesterday that it was asking the postal regulator Postcomm forthe ability, for one year only, to increase prices on business mail products over and above thelevels allowed in the existing price control. This extra increase would not apply to First andSecond Class stamps or to any other consumer and small business mail.
Royal Mail said that in total, it was asking Postcomm to allow increased prices to generateextra revenue of up to £100 million over and above the existing price control for mail products,including “access” mail, used primarily by large business customers.
Moya Greene, Royal Mail Group’s Chief Executive, said: “What we are asking for is the chanceonce-and-for-all to charge a fair price to other companies who use our network to carry mail and toend what is, in effect, the very substantial built-in subsidy which our rivals have enjoyed foryears.”
Royal Mail made a £157 million operating loss after exceptional items last financial year,2009-10, on “access” mail – the letters, packets and parcels collected by its rivals but deliveredby Royal Mail’s postmen and women. The loss amounted to an average of 2.5p per item for the 6.4billion pieces of “access” mail delivered by Royal Mail. “Access” mail volumes continue to grow –despite the overall decline in mail volumes – and last year rose by more than 20%. More than one inthree of all letters delivered by Royal Mail is an “access” item of mail.
Wholesale “access” mail – mail carried by Royal Mail rivals but delivered over the “final mile”by Royal Mail postmen and women – rose from 4 billion items in 2007-8 to 6.4 billion last year andis expected to reach 7.1 billion items by the end of this financial year. This means that mailvolumes handled by rivals are likely to be more than half of the total by 2011/12.
If Postcomm decides to consider Royal Mail’s price application, there would be a publicconsultation and if the regulator then approved the application, the additional price rises wouldcome into effect in April 2011.
Further details about any price increases taking effect in April 2011 will be issued later thisyear, Royal Mail added.
