Q&A: Why Royal Mail is in trouble

Postal workers may have voted for a peace deal, but the past week's series of wildcat strikes have been yet another serious blow for the newly-named Consignia.

BBC News Online examines the key issues.

Tough times for the Royal Mail?

Yes. The strikes came at a difficult time for the Royal Mail which has just seen its 150-year-old monopoly on the delivery of letters come under threat.

Since March, a new postal watchdog - known as "PostComm" - has had powers to introduce competition into the market.

Other companies and operators can now get a licence to carry mail.

In tandem with this, the former Post Office has also changed its name to Consignia. About £2m was spent on the rebranding, which is designed to show that the operation involves a lot more than delivering mail.

So the Post Office Group is sitting pretty?

The new Consignia is not quite the cash happy enterprise you might think.

In the year to April 2000, the then Post Office Group reported its first loss (of £264m) in 23 years, largely due to the cost of installing computer systems.

The business has in recent weeks been criticised for the number of first class letters delivered in less than an express manner.

And the company has the worst labour relations record in Britain - postal workers are thought to be responsible for half the strikes in the UK.

The firm, which employs 200,000 people, has lost about 56,000 working days over the past 12 months due to industrial unrest or the hangover from October's Hatfield rail crash, which has caused delays to mail trains.

Labour relations are no doubt set for a stormy ride in the months ahead. A leading left-winger in the Communications Workers Union (CWU) has stunned the industry by being elected the union's new general secretary from July.

Billy Hayes beat the union's deputy general secretary John Keggie, who had been tipped to win.

Who are Consignia's main rivals?

While the letter delivery market has been liberalised, it will still be tightly regulated by PostComm.

Firms wanting to deliver letters will have to win a licence from PostComm.

That licence currently covers the right to deliver mail up to £1 in value and 350g in weight.

Consignia holds a licence to provide a universal postal service (UPS) for 15 years, but other operators are free to apply for a licence to operate within the UPS or outside it.

Candidates are likely to include the courier companies.

And PostComm spokeswoman Daryl Barrett on Thursday confirmed to BBC News Online that even at this early stage, they are in talks with interested parties.

"We are having discussions, but at this stage we cannot reveal who their names are," she said.

"We are open to innovation and to see how the market develops, we want to see what competition brings.

"Consideration could be given to any licence application - even those from current providers of door delivery services, such as milkmen."

Is the universal postal service under threat?

PostComm says categorically that its primary aim is to preserve the universal postal service, which guarantees a collection from every postal point once a day, six days a week.

The service also has to be operated at a standard price.

"PostComm will ensure any competition introduced will not damage the provision of the universal service," it says.

Although new players will not themselves necessarily have to offer a universal service.

They will be able to apply for licences to operate throughout the UK or in specific areas, for example in a city or across a number of counties.

Some will undoubtedly apply for the more profitable licences, in cities, for example, at the expense of rural rounds, prompting accusations of "cherrypicking".

What do consumer groups say?

The consumer group Postwatch welcomes the prospect of increased competition into the market.

"This latest industrial action is a good enough reason for bringing in competition, they have been holding up to ransom customers who need these services desperately." Peter Carr, chairman of the group told BBC News Online.

"Let's bring it in tomorrow,."

PostComm too is excited by the prospect of providing "innovative new services" to consumers.

But no doubt the Royal Mail, which has seen its public image suffer yet another knock through the latest spate of industrial action, is wondering what the future holds.