A Nice, Indecent Little Town - S1-E17
Revealing mistake: In the scene where Michael chases the counter fitter and KITT supposedly jumps over some cars with his turbo boost, you can see a jumping ramp which wasn't there before, painted in the colour of the street behind it. (00:25:25)
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"