Mildly Infuriating
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It's made exceptionally worse because it's heading toward Christmas. Most likely the plane on the 17th was already sold and filled, they're now sending a second plane which is not full and there's a premium to put stuff on it because it costs them more to fly it than your sheet of paper accounts for.
I agree that that's likely something like the underlying factor -- they have two services, they named them in such a way that lower cost normally maps to the slower service, and in this unusual case that relationship doesn't hold.
However, OP's got a legit point that from a consumer standpoint, where someone only cares about time/money tradeoff, not internal FedEx operations, that doesn't make a whole lot of sense. It'd probably make sense for the "low end" option to just automatically map to the faster service in this case.
Also to OP's credit they could just eat the price of that one shipment the name of providing a stable end reasonably priced service. The cost of all shipments would cover the cost of the average shipment plus a profit margin.
It's kind of absurd to consider that there are hundreds of planes making that trip everyday, many thousands of passengers, and the best option we have is sending a letter via cargo plane.
Airlines do in fact use excess cargo space to ship things for shipping companies / postal services. I’ve also heard before (I can’t verify though), that airlines are more than happy to leave your luggage behind if it means they can squeeze on one more piece of cargo since the cargo makes them much more money than they otherwise would have to pay you for delaying your luggage.
https://science.howstuffworks.com/transport/flight/modern/air-freight1.htm
I think it makes the most sense to name it a little more abstractly rather than use words that have an important meaning that they can't always live up to. It's different but it reminds me of the TurboTax product called "free" that literally was in no way free and only told you that at the end, as if free didn't have a strong meaning for a product you would normally expect to pay something for. And they were required by the government to provide an actual free option, which they literally hid from search engines and didn't link to it anywhere on their website.
This piece of paper better be getting served caviar and Bordeaux on the plane in a fully reclining skybed for that price