Continuity mistake: When the guy in the phone box is shot, and Michael yells for K.I.T.T, once K.I.T.T stops the front wheels are facing to the left. But when Michael drives off they are facing right. (00:13:15)
Continuity mistake: When the bad guy hits K.I.T.T with a log and he says "I beg your pardon", you can see a normal steering wheel inside K.I.T.T. (00:43:35)
Continuity mistake: Just after Michael wakes up from being knocked out trying to stop the plane, he goes from the front of the Knight semi trailer (where all the computer equipment/office is) they are travelling in to get into KITT. He gets into the driver's side of the car (far side from the camera, indicating that KITT is facing towards the rear door of the trailer. However, in the exterior shot of KITT leaving the trailer, he emerges backwards down the ramp then does a 180 spin to go back the way he was facing when inside.
Continuity mistake: When Michael falls off the plane and onto KITT's hood, he is not wearing his leather jacket as he tries to stuff it in the rudder to stop the plane from taking off. Very next scene, he awakens in the FLAG Semi, wearing the jacket that fell into the driver's seat as he fell off the plane. I doubt the doctor would take the time to put Michael's jacket back on.
Answer: KITT didn't choose to go off the cliff in Goliath Returns, it just happened as he tried to avoid Goliath. Just 'cus it happened, doesn't mean It's gonna cure his fear of "flying"