Does airplane-mode disable GPS?
Yes, airplane mode shuts down the radios that amplify all antenna circuitry. Compass isn't affected by airplane mode other than not being tuned by GPS location. Your observed relative changes will be mostly unaffected but absolute accuracy could suffer between one and ten degrees on much of the globe. 

Of course the GPS signals still hit the iPhone case and antennas, just the hardware doesn't do the work to fix a location from those signals while in airplane mode. (Nor does e software do any processing of the location updates which is a big part of the functionality for many people as opposed to the hardware side of the radios being idle / off / silent)