Proactive Investors - Royal Mail (LON:IDSI) may end Saturday postal deliveries as part of potential reforms being considered by communications watchdog Ofcom, leading to the UK’s Greeting Card Association (GCA) drafting a letter to MPs pleading for the plans to be cancelled.
The GCA wrote to MPs to warn that the Royal Mail is “sleepwalking” its way into “terminal decline”.
David Falkner, boss of Cardology and leading member of the GCA said: “My conclusion is that this is an attempt by Royal Mail to put Saturday and Sunday delivery into a premium service, enabling them to make super-normal returns on a monopoly service.
“To believe that they have suddenly forgotten how to do that because of the pandemic just doesn’t stack up. I feel like we’re sleepwalking into losing something that’s really important to people.”
A consultation paper due to be released by Ofcom may propose removing Royal Mail's legal obligation for six-day-a-week deliveries.
Other potential reforms involve revising first- and second-class delivery targets and increasing stamp prices, reports from Sky News revealed.
Current rules require the postal service to deliver 93% of first-class post within a day of collection and 98.5% of second-class post within three working days.
Royal Mail was found to have “caused considerable harm to customers” last year when it breached these requirements, being fined £5.6 million as punishment.
After years of operational difficulties, Royal Mail has been seeking changes to the universal service obligation (USO (NYSE:USO)), including moving to a weekday-only system, claiming the current requirements are unrealistic.
“The bar set by the regulations is unrealistic given the market realities,” said Martin Seidenberg, the boss of Royal Mail-owner International Distributions Services PLC (LSE:IDS).
Seidenberg hopes to fix the issues by increasing prices, receiving a government subsidy and/or implementing reforms to the USO.
Ofcom's document is expected to present evidence and options for the postal service's evolution but not provide specific proposals.
Any changes to the USO would require parliamentary approval.
“While there are no current plans to change the statutory minimum requirements, we will carefully consider any advice that Ofcom puts forward to meet the needs of consumers,” a government spokesperson added.