A new algorithm is presented that treats the problem of systematic errors in radar measurements. These errors cannot be estimated by the usual first-order Kalman filter used in air traffic control, and this fact causes serious degradation of the accuracy of aircraft position estimates, directly affecting the aircraft minimum horizontal separation and the maximum airspace capacity. The algorithm is based on the use of distance measuring equipment (DME) measurements and is an extension of previous DME-based methods dealing with aircraft geometric height estimation. The new algorithm could be considered as part of a radar measurement fault-detection and diagnosis algorithm. Its performance is evaluated in various cases and the results are very satisfactory. The implementation of such an algorithm can reduce considerably the departure and arrival delays and the aircraft operating costs.