A cooperative Sense and Avoid (SAA) algorithm for safe navigation of small-sized UAVs within an airspace is proposed in this paper. The proposed method relies upon cooperation between the UAV and the surrounding transponder-equipped aviation obstacles. To do so, the aviation obstacles share their altitude and identification code with the UAV by using a Mode S operation of the Secondary Surveillance Radar (SSR) after interrogation. The proposed SAA algorithm benefits from the estimate of the aviation obstacle's elevation angle for ranging. This results in more accurate ranging compared to the round-trip time-based ranging, which is currently used in existing SAA systems. We also propose a low-complexity and accurate radial velocity estimator for the Mode S operation of the SSR which is employed in the proposed SAA system. Furthermore, by considering the Pulse-Position Modulation (PPM) of the transponder reply as a waveform of pulse radar with random pulse repetition intervals, the maximum unambiguous radial velocity is obtained. The proposed SAA is equipped with an intruder identification method that determines the risk level ofthe surrounding transponder-equipped aviation obstacles. Given the estimated parameters, the intruder identification method classifies the aviation obstacles into high-, medium-, and low-risk intruders. The output of the classifier enables the UAV to plan its path or maneuver for safe navigation accordingly. The root mean square error (RMSE) of the proposed estimators are analytically derived, and the effectiveness of our SAA solution is confirmed through simulation experiments.