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I wonder what this does to fedex/ups business model?
A single plane can do what?!
Form the first part of a logistics chain? Even a single plane has significant capacity to help distribute stuff, and you'll note from the blog the initial roll out is going to be 40 planes over the next couple of years.
If you watch the video, they say it's the first of the 40 planned. You always start with one :)
So is it expected that they'll open this up eventually (like AWS) or keep it to themselves?
They still have to get packages from the airport to your front door.
I'm glad to see this as lately "two day prime delivery" is really three day. Also had another delivery that said it would arrive on a Thursday (!) after ordering on Friday instead come on Friday.

In the 10 years or whatever I've been using Prime I've never had packages take this long as they have been over the last 6 months. Maybe they are testing out new algorithms?

Just to add to your observations. For me, several recent Prime deliveries have taken more than two days. And I live in the still fairly dense outskirts of a major metropolitan area, with an Amazon distribution center maybe 10 miles away.
Here in Israel packages take weeks, so I don't have an intuition about this but I'm curious - at what point this fast shipping stops becoming something important, a competitive advantage - 3/2/1 day ? And why ?
IMHO: Predictability is more important than the difference between 2/3 days: if it says "delivery in 2 days", it has to be there in 2 days. If it says 3 days and I need it in 2, then I'll have to find an alternative, but that's better than ordering it, thinking it's going to be there and then it isn't.

1 (next) day is a really nice difference if you need it: e.g. something broke and you want a replacement now, having it the next day is great and saves a trip to the local electronics store.

Amazon tries to squeeze every last bit of efficiency out of a process. This is just another way for them to cut costs. In a possible reality, it wont be long before amazon starts dropping drones out of the back of planes in order to simplify the last mile.

Maybe we should all start building landing delivery landing pads on our roofs next to the solar panels. ;)