MPs are understood to be concerned by the increased competition being faced by Royal Mail from the likes of TNT Post. Royal Mail believes that this competition places the universal service under severe threat and both it and union officials are pressing the Business Select Committee and Ofcom to investigate the operations of TNT Post.
TNT Post is delivering letters and parcels direct to addresses in densely populated areas like London and Manchester where it is able to provide the service inexpensively and generate profits from it. It is, however, not providing a direct service to rural and more costly to service locations. Royal Mail is required to keep the universal service which guarantees a flat rate for delivery of letters to any UK location in operation until 2021. This condition was imposed when it was privatised last year. Royal mail therefore stands to be left to handle the country’s unprofitable deliveries having lost most of the lucrative traffic which traditionally subsidised its service to the rural and less densely populated regions.
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