Royal Mail says it wants to change the universal service obligation that requires it to deliver six days a week for one price nationwide.
The company made the announcement after recording losses of £ 180 million in the spring and summer of this year.
The operator said the losses showed that the universal service obligation should end in its existing form, reports the Times.
Royal Mail agreed to the requirement when it was privatized in 2013.
Keith Williams, Executive Chairman, said: “While we have done exceptionally well in terms of revenues and have seen real growth for the first time since privatization, the decline in letter volumes has had a significant impact and the need for change in universal service. “
The determined that it is “the only company that has the ability to provide a one-price-going-anywhere” service six days a week for a range of letters and parcels to over 30 million addresses in the UK. “
The policy is at the heart of what the company stands for – but means that a person in the far reaches of Scotland will pay the same price as someone in the middle of London, even if the letter is sent from London.
While that’s a commendable model, Royal Mail believes it needs to change so the company can help balance the books.
The losses for the six months to the end of September came after Royal Mail reported a sharp 33 percent drop in letter volumes – far worse than recent performance.
Royal Mail, on the other hand, has seen a 31 percent increase in parcel volume over the same period.
The company is in the midst of a program to reduce the workforce of 150,000 people, with severance packages costing the company £ 147 million.
For the first time in its history, it now handles more parcels than letters.
The company hopes to break even at the end of March.
Including its GLS international courier division, Royal Mail posted a pre-tax profit of £ 37 million.
GLS, which supplies Europe and the United States, almost doubled profits to £ 166 million, while revenues were up more than a fifth.
The group said the growth in online shopping would boost UK revenues by between £ 380m and £ 580m for the year.