You could soon have to pay more for your mail as An Post looks for price hikes

AN POST HAS asked the postal watchdog if it can charge more for international mail coming into Ireland as it is hit by mounting costs.

In a letter sent to the Commission for Communications Regulation (Comreg), the organisation’s chief executive Donal Connell said that the price that An Post can charge for incoming mail coming from outside of the EU, which is set by agreements made by the state, is too low.

Comreg has agreed to review the price cap and said that this will involve a public consultation.

He said that the price the company is allowed to charge for mail from outside of the EU is linked to the domestic stamp prices, which are constrained by a cap that further reduces the price that An Post can charge.

Connell said that this means that mail from outside of the EU has to be subsidised, but said that “there is no fund from which that cross-subsidy can come”.

“An Post now requests an urgent review of the PCM (price cap mechanism) by Comreg to address this issue as soon as possible. I cannot over emphasise the importance and urgency of this matter.”

“The price that An Post can charge for incoming cross border mail from outside the EU…is too low to cover costs.”

The letter, which was sent on Wednesday and published on Comreg’s website today, did not make a recommendation as to how much prices should be increased.

Financial troubles

An Post said that until now, it was able to cross-subside delivering the loss-making mail from outside of the EU with other forms of income.

However, Connell said that it is now “clearly unable to do so”, and said that the situation “threatens the financial situation of the company”.

“There are a number of factors which give rise to this serious position. The Labour Court recently awarded a pay increase to staff and has given every indication that it is prepared to consider further increases in the future,” he wrote.

Donal Connell (left) with former Communications Minister Pat Rabbitte

“Volume decline in 2014 and 2015 was in excess of the decline forecast…and the decline in 2016 is now forecast to be in the region of 5% to 6%.”

Comreg carried out an investigation of An Post’s performance under the price cap in which it found that An Post has not charged as much for mail as it could have and that the organisation did not meet efficiency targets.

Review

The two bodies had previously agreed that the state-owned company would achieve “efficiency target savings of 2% per annum”.

“There has been a significant underachievement by An Post with regard to the target savings,” Comreg said.

“An Post claims that this is due to reasons largely outside the control of An Post, ie lack of co-operation with the implementation of change programmes due to outstanding pay claims and unwelcome industrial action.”

It said that pay increases of 2.5% awarded to An Post staff to take effect from 1 May 2016 were not factored into the original targets, and added that “electronic substitution will result in further significant volume decline”.

“Following Comreg’s own assessment and having considered the request by An Post, including the grave financial and liquidity position that An Post faces, Comreg will review the price cap,” it concluded.

An Post made a full year loss of €2.4 million last year, down from €5.5 million in 2014.