The GPS receiver can calculate speed without being on the ground although it will take longer to get a fix while it is moving. Position of the receiver is calculated from position of the satellites and time. So it will work even at airplane altitudes.

http://tycho.usno.navy.mil/gpsinfo.html
http://www.trimble.com/gps/howgps.shtml
http://www8.garmin.com/aboutGPS/