Code of Conduct wrote:
A paladin must be of lawful good alignment and loses all class features except proficiencies if she ever willingly commits an evil act.
Additionally, a paladin's code requires that she respect legitimate authority, act with honor (not lying, not cheating, not using poison, and so forth), help those in need (provided they do not use the help for evil or chaotic ends), and punish those who harm or threaten innocents.
Associates: While she may adventure with good or neutral allies, a paladin avoids working with evil characters or with anyone who consistently offends her moral code. Under exceptional circumstances, a paladin can ally with evil associates, but only to defeat what she believes to be a greater evil. A paladin should seek an atonement spell periodically during such an unusual alliance, and should end the alliance immediately should she feel it is doing more harm than good. A paladin may accept only henchmen, followers, or cohorts who are lawful good.
RAW, the Paladin doesn't fall, because it hasn't broken its code of conduct. Honestly, I hope you didn't waste an action giving yourself a fly speed...