Australia Post wants people to pay more for a fast, five-day-a-week letter delivery service.
Australia Post says its existing letter delivery service is losing so much money that it could eventually overwhelm the entire group, so it needs to be overhauled.
Details of proposed changes came as the government-owned postal service reported a 34.5 per cent slide in full year profit to $116.2 million.
Profit was pulled back by losses of $328.4 million in the mail business amid a drop in letter volumes and higher costs.
Until now, Australia Post’s growing parcel delivery service has been able to cover the losses in the mail business, but that may have happened for the last time.
To help stem mail’s losses, chief executive Ahmed Fahour is advocating a “priority” letter delivery service to be introduced alongside “regular” deliveries.
Under the priority service, customers would pay extra to ensure their letter is delivered within a set time, in a similar fashion to Britain’s Royal Mail which offers a “first” and “second” class delivery service.
The price of the priority stamp has not been determined yet.
Under the regular service, mail would still be delivered five days a week, but letters may take longer to get to their destination.
“What we’re asking for is the regulatory change to enable us to put in place product choices,” Mr Fahour told reporters on Thursday.
“We are not changing five-days-a-week (delivery). We will continue to offer five-days-a-week while customer demand is there.”
The number of letters handled by Australia Post has fallen dramatically.
Mr Fahour said only three per cent of letters delivered to the letterbox is social mail, and the rest is from the likes of banks and government, or advertisers.
And businesses and government are moving away from traditional letters, in favour of email and other forms of communication.
Without urgent changes to its community service obligations on mail delivery and pricing, Australia Post would soon become a loss-making enterprise, Mr Fahour said.
Communications Minister Malcolm Turnbull said the federal government wanted to ensure Australia Post could maintain a sustainable mail service accessible to everyone.
“We are working closely with Australia Post and considering their options for reform to ensure the company does not become a burden on the budget,” he said.
Mr Fahour said continued losses in the letter delivery business would likely result in some more workers being shifted over to Australia Post’s profitable parcel delivery service, or other operations.
Australia Post has already reduced jobs in the mail division and created 2,000 elsewhere.
The union representing postal workers, the Communications Electrical Plumbing Union, urged Australia Post “to do the right things by its employees” and ensure they do not fall victim to short-sighted cost-cutting measures.