Royal Mail Risks Regulatory Wrath With Rate Rise

20 December 2002

Tensions are mounting between British postal operator Royal Mail Group and regulator Postcomm.

Royal Mail chairman Allan Leighton has unveiled plans to increase prices by between 1% and 5% for letters, postcards, printed papers and small packages sent by airmail, as well as parcels over 350 grams, despite opposition from the watchdog.

Postcomm wants to limit airmail and parcel rates in return for granting a penny rise on first and second-class stamps, but the struggling postal operator argues this would cut its sales by £460 million (€449m; £288m).

Leighton is bitterly opposed to such a tit-for-tat scheme and has promised to take the issue to judicial review if necessary. The timing of his announcement is important, as it raises the stakes mere weeks before Postcomm unveils its final price plan.

Royal Mail’s case has been strengthened by comments from the Department of Trade and Industry, which has warned Postcomm that price curbs in some areas would cancel out the benefits of raising stamp prices.

• Separately, Royal Mail announced it has hired Adam Crozier, the recently ousted ceo of the Football Association, as its new chief executive. Crozier replaces John Roberts, who retires in February.

Data sourced from: Times Online (UK); additional content by WARC staff