Swiss Post Lowers Some Letter Prices
24 March 2009 - Sarah Sharpe
Swiss Post will be lowering some of its letter prices and simplifying its range as of 1 July 2009. This was the agreement reached between Swiss Post and the price supervisor. The agreement includes price advantages of around 200 million Swiss francs per year. Consumers and the economy will benefit as a result. The main measures involve making all letters subject to VAT and thus introducing a comprehensive price reduction for most business customers. The additional cost of VAT due on letters as a result of the lowering of the monopoly will be borne by Swiss Post. The intended measures will therefore not impact negatively on the Swiss economy. In addition, prices for large letters will be up to 20% lower, and there will be fewer different letter prices. Bulk mailings and registered letters will also be less expensive. The adjustment of parcel prices and prices for international consignments, originally planned for 1 April 2009, will be deferred for a year. Details of the price adjustments are available at www.swisspost.ch/offer09.
Amid the current economic crisis, these extensive price cuts represent a clear move by Swiss Post to help companies and consumers keep costs to a minimum. The letter market will undergo further liberalization by the Federal Council on 1 July 2009. This means that letters weighing more than 50 g will be subject to VAT by law and would thus become 7.6% more expensive. This would theoretically result in the introduction of a new price limit at 50 g, which would entail considerable outlay for both the customer and Swiss Post and would at the same time disrupt Swiss Post's pricing structure.
To avoid this, Swiss Post intends to charge VAT on all letters without passing on this extra cost to the consumer, however. Business customers who are able to claim back VAT will benefit from price reductions of around 7% on all items weighing less than 100 g.
Large letters greatly reduced
In addition, large letters up to B4 format will be up to 20% cheaper. Large A Mail letters weighing up to 500 g will now cost CHF 2 instead of CHF 2.20 (up to 100 g) or CHF 2.40 (101-500 g). Heavier large A Mail letters (501-1,000 g) will cost CHF 4 instead of CHF 5. Prices for the mass mailing of large letters will also be reduced. Furthermore, registered mail will be simplified and reduced in price: All registered mail items up to 500 g will now cost CHF 5. The format and weight limits – which are already the most favourable in Europe – will be further simplified by the new letter prices.
For private customers, a regular A Mail letter weighing up to 100 g will still cost CHF 1 and a B Mail letter of up to 100 g will cost CHF 0.85. These prices were introduced on 1 January 2004. In real terms, prices have remained at the same level for the last ten years. In international comparison, Swiss Post's services are already among the most cost-efficient.
Parcels and international mailings
The counter prices for mailing parcels in Switzerland and abroad which were to be introduced on 1 April 2009 will now be introduced in a year's time.
200 million Swiss francs for customers
In the logistics units, these price measures are set to cost Swiss Post around CHF 200 million a year. Both consumers and the economy stand to benefit from this. However, this amount will have a negative impact on Swiss Post's results. Depending on how company profits fare, Swiss Post must reserve the right to reconsider these price reductions in due course.
Swiss Post has basically reached an agreement on these pricing measures with the price supervisor and the official agreement is to be signed shortly. The necessary application has been sent to the Swiss Federal Department of Environment, Transport, Energy and Communications (UVEK) in its capacity as responsible body for the prices under the monopoly. Its approval is still outstanding.
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