CCI queries Irish An Post over 12c price move

Businesses are digging in their heels against another expected rise in postage prices, saying it would be the death knell for An Post.

The Chambers of Commerce of Ireland (CCI) has urged the Communications Regulator to reject outright the current request by An Post to increase the price of a stamp from 48c to 60c.

It warned that businesses will turn to competitors when the sector opens up early next year if prices are hiked any further. “The company is undoubtedly under pressure,” said Sean Murphy, CCI Head of Research and Public Affairs.

“It is continuously failing to meet next day delivery targets set by the regulator; mail volumes are falling, previous price increases have failed to yield adequate revenue returns, and the European postal market liberalisation is well under way and due to intensify,” he said.

The CCI said the postal service is at a crossroads in its survival where it needs to prepare itself for the introduction of competition into the sector rather than burying “its head in the sand”.

“If the organisation is to remain a leading player in the market, then it must reform its vision and embrace this new reality by weaning itself away from demands for price increases in favour of driving increased demand for its service.”

An Post boosted its revenue last year with a 16pc price rise, but its annual report showed its mail business rose by just 3pc over the same period.

“This suggests that price increases have already had a negative impact on volumes and are no longer the easy option for sustaining revenue,” Mr Murphy said.

Under EU regulations, the postal market will become further exposed to competition in January 2006 when 40pc of An Post’s mail volumes will open up to competing firms.

“An Post’s fixed cost prices will be far greater than those of any new entrants to the market, as it is required to ensure a pick-up from every post box and a delivery to every home each weekday – allowing its competitors to operate from a far lower cost base.”

A spokesperson for An Post rejected claims of exorbitant costs, and said price rises are essential for its survival. “The fact is that we’re only playing catch-up because we didn’t impose a price increase for a 12-year period,” said An Post spokeswoman Anna McHugh.

“The proposed price rate of 60c is absolutely essential if we are to be in a position to pay our staff the national wage agreement. The rise would only bring us to the average EU pricing.”