Distance measuring equipment

From FlightSim

DME stands for Distance Measuring Equipment. It is a separate receiver, usually tuned with the VOR receiver, that receives a separate signal and reads out in distance from the station. This distance readout is slant range, rather than distance over the ground, that is, the straight line distance from the station to the aircraft. At long distances and low altitudes, the DME reading is not a lot different from the distance over the ground, but at higher altitudes and close to the station, the difference can be considerable.

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See also the distance measuring equipment page on Wikipedia.