An Post to put pricing on a sustainable footing
6th December, 2016: The global trend of e-substitution for postal mail is impacting now on An Post’s business to the extent that significant losses in the mails business will result in An Post making a loss of €12-15m in 2016 and a much greater loss in 2017. These losses are not sustainable. Consequently An Post welcomes the statement by Minister Denis Naughten to provide An Post with the freedom required to bring its postal pricing in line with European peers by repealing the price cap mechanism.
To balance the loss of volume, letter prices in Europe increased by 36% from 2007-15 - with further increases of up to 10% in 2016 – while in Ireland prices have increased by only 16% in the same period. An Post’s quality of service is now benchmarked as one of the best in Europe but continued service provision is dependent on correct pricing.
An Post will make the step change in pricing once the legislation is in place in early-2017, with prices in the various mail categories increasing in a range from 14% to 35%. The average stamp price across the EU15 is currently €1.06. A price increase in line with peers will allow An Post to continue to meet its Universal Service Obligation, delivering mail to every house in the State every weekday for a uniform price, with one of the highest next-day delivery rates in Europe.
An Post is also undertaking its first major strategic review since the recession which will consider the scale, scope and structure of the Group for the long-term, taking into account major technology and market shifts. It is expected that this review will be completed by May 2017.
David McRedmond, the recently appointed CEO of An Post, said:
“Across the world, postal companies have taken the necessary steps to increase prices to ensure delivery of service is maintained. An Post delivers an excellent service but must charge the correct price for that service. Mail is an important medium and even with these increased tariffs, still represents real value, and where the impact is greatest (on high volume users such as SMEs and larger businesses), An Post will do everything possible to mitigate the impact through improved volume discounts. While a price increase will provide near-term certainty for the Company in its mails business (without any recourse to State subsidy), it is essential that we complete the current strategic review thoroughly and urgently to design the service and Company for the long-term future. I am determined that the evolving strategy takes full account of An Post’s economic and social responsibilities.”