Royal Mail requests business product rate hike
Royal Mail has issued a request to increase the price for business mail products over the allowed levels. The postal operator submitted the request to UK-regulator Postcomm in light of the “rapid continuing decline in the mail market”.
If approved, this extra increase would not apply to First and Second Class stamps or to any other consumer and small business mail, and would take effect for a one-year period only.
Royal Mail said that in total, it was asking Postcomm to allow increased prices to generate extra revenue of up to £100m 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 chance once-and-for-all to charge a fair price to other companies who use our network to carry mail and to end what is, in effect, the very substantial built-in subsidy which our rivals have enjoyed for years.”
If Postcomm decides to consider Royal Mail’s price application, there would be a public consultation and if the regulator then approved the application, the additional price rises would come into effect in April 2011.
A company spokesperson said: “Royal Mail made a £157m operating loss after exceptional items last financial year, 2009-10, on “access” mail – the letters, packets and parcels collected by its rivals but delivered by Royal Mail’s postmen and women.
“The loss amounted to an average of 2.5p per item for the 6.4bn 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 in three of all letters delivered by Royal Mail is an “access” item of mail.”
Further details about any price increases taking effect in April 2011 will be issued later this year.
