You'd have to put lots of safeguards in place to ensure it doesn't activate on the aircraft, and then probably spend millions on getting regulatory approval so it's probably not going to be feasible to develop such a product.

You can't use speed and altitude alone, because in the cargo hold of the plane, you can be pretty sure that even a SIRF III GPS chip will not be able to obtain / retain accurate data. You could put some sort of pressure switch in, like the kind skydivers use to force activation of their parachute once they pass a certain height and use that as an additional decision making tool.

The device could be told to completely deactivate if the air pressure indicates a certain altitude.

If pressure indicates it's on the ground you could program it to only receive GPS, and go to sleep for x minutes if it can't get a signal within a reasonable time.

Only if pressure indicates it's near the ground *and* a good GPS fix has been obtained *and* that GPS fix indicates you are indeed near the ground and not moving at 600 mph it would activate the GSM module and send an SMS out with coordinates.

I am guessing something super careful like this may be able to get regulatory approval for being switched on in your luggage but then you'd have the problem that the device would be sleeping for most of the time and in the end you'd get no benefit out of it.

You'd really only get useful GPS information when the luggage is being driven across the tarmac. Slim chance of getting a GPS fix in the cargo hold or in the hangar / terminal building.

You could use cell tower information and AGPS to increase your chances but it's really not going to be all that usable.