31 May 2006

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Business Today

Standard letter postage to increase by 1c

Matthew Vella

The Malta Communications Authority is proposing a 1 cent increase in postal services for items weighing up to 50 grams, after an application was submitted by Maltapost back in March to revise tariffs by 2c.
The postage for a local letter weighing up to 50g at present costs 7 cents. The MCA did not however accept proposals by Maltapost to increase other weight categories by 2c.
The MCA said it had conducted an in-depth analysis of the three-year projections on volumes and costs submitted by Maltapost, and had concluded that without an adequate price increase, the business of domestic letters would continue to register losses.
The last adjustment to the price of a standard letter occurred in August 2002. The MCA said this price stability, although beneficial for both business and residential customers, resulted in a gradual erosion of Maltapost’s revenues while its general costs rose.

Over the four-years to 2005, the annual average of the retail price index increased by 6.67 per cent, while mail volumes decreased year on year.
In deciding on the required price increase, the MCA said it had considered both the medium-term viability of the company in providing the standard-letter service, and the need to ensure that postal services remain affordable.
Postal services in Malta only account for just 0.1 per cent of the total consumption spend for households, an average of Lm11.23 spent every year. The MCA said that increasing services by 1c would not result in a great impact over household spending, with the annual spend increased by just Lm1.61 per year.
The decision is, however, expected to have a higher impact on businesses.
According to a survey of Maltapost’s next-day delivery service for the first four months of 2006, the company had registered a “substantial improvement” on last year’s service.
A total of 26 panelists from various areas around Malta, namely the north, Sliema, Qormi, south and Gozo areas, were given a postal plan every month, indicating which items were to be posted and on which date. The letters posted were placed in different envelope formats and varied in terms of printed and handwritten addresses.
Out of 311 items posted between January and March 2006, 293 reached their destination the next day. Performance improved over the same exercise carried out between October and December 2005, with 94.21 per cent of items reaching destination the next day – in 2005 only 88.32 per cent reached their destination the next day.
According to the report, the results are 4.21 per cent higher than the overall standard target set for the whole year.
The MCA will review the targets to be reached by Maltapost at least once a year. If Maltapost fail to achieve the next-day delivery targets it will be liable to pay the MCA a percentage of its yearly turnover.
The quality of service analysis used to be conducted by Maltapost in the past, but the study had to be carried out by an independent organisation having no links with Maltapost as from 1 October, 2005. Informa Consultants and auditors Ernst and Young were appointed to undertake the task.


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