This paper proposes a new hybrid control action of differentials aerodynamic drag and thrusters to control satellite formation flying in low Earth orbits. Parameterized output regulation algorithm for formation flying missions is developed based on the Schweighart-Sedwick relative dynamics equations. It is implemented to precisely track the different trajectories of reference relative motion and eliminates the effects of the J2 perturbations. Parametric Lyapunov algebraic equation is derived to ensure the stability of the linear relative model subject to saturated inputs. The main goal of this study is to approve the viability of using the differentials in aerodynamic drag to precisely control different formation flying missions. Numerical simulations using a high fidelity relative dynamics model are implemented to analyze the performance of the proposed control algorithm in comparison with the linear quadratic regulator algorithm for actual satellite parameters. The paper exploits a high-precision orbit propagator model to verify the robustness of the control algorithm.