The postal regulator is to warn An Post that there is limited scope for any further significant price increases over coming years, despite the company’s ongoing financial problems.
ComReg has expressed concern that significant price increases in postal charges, sanctioned earlier this year, “seem unlikely to have ensured the continuing survival of An Post.”
It follows the decision to permit An Post to raise the cost of posting a standard letter from 72c to €1 in April, after the company issued a warning it might not be able to provide a national postal service unless a price cap was increased.
An Post suffered losses of over €40m in the provision of the universal postal service last year, although its other businesses — including the post office network, the Gift Voucher Shop and Post Insurance — are profitable.
An Post is the designated universal service provider until 2023, although it is open to ComReg to review the situation next year.
In its draft Postal Strategy Statement 2018-2020, ComReg has forecast that An Post’s financial and liquidity situation will remain a main challenge because of the company’s obligations to provide a national mail collection and delivery service.
Postal charges in Ireland for a standard letter are now the fourth highest in the EU, after prices increased by over 80% since 2012.
ComReg said there was “very limited scope” for any further increases, especially given the price sensitivity of large customers.
It also said there was an urgent need for An Post to reduce its costs in line with a decline in mail volumes as well as to respond to changing demand dynamics in the postal sector.
ComReg said all postal service providers would need to be “flexible and innovative” to adapt to expected reductions in the number of items being posted by traditional mail.
It said the UK’s exit from the EU was also likely to bring challenges, such as potential new customs declaration procedures and the collection of Vat and customs duties.
“It is unclear what these will be, as much will depend on whether the UK will be part of the European Single Market or the European Customs Union or neither.”
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