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We present an algorithm for the distributed navigation and conflict avoidance of nonholonomic aircraft-like agents in 3-D space. The proposed feedback control scheme offers improved applicability to aircraft navigation and compatibility with Air Traffic Management practice with respect to previous work. Our approach aims to maintain a desired horizontal velocity for each aircraft, while limiting the climb or descent angle within bounds according to aircraft performance characteristics. Moreover, the algorithm is designed to favor straight and level flight, resulting in more sensible manoeuvres that require reduced steering effort. The proposed control scheme is based on the Navigation Functions methodology and offers formally guaranteed conflict avoidance and convergence properties. The performance characteristics of our method are demonstrated through simulation results.