I experienced this problem and your comment got me to do some digging.
As it turns out the UCharacterMovementComponent is actually using a physics volume under the hood. The unexpected behavior occurs because when the Character Component calls the PhysFlying () function, it computes the friction as being
const float Friction = 0.5f * GetPhysicsVolume()->FluidFriction;
The underlying UMovementComponent that’s running the show grabs a physics volume from the scene (possibly from its location) and if there’s nothing to grab it just gets the default physics volume defined by the editor. I thought that would be it, because you can go to Project Settings->Engine->Physics->Constants and neutralize the default Fluid Friction. For some reason this doesn’t seem to have an effect, so instead I managed to get away with setting the fluid friction when beginning play in the Player Blueprint that contains the CharacterMovement component, as indicated in the picture.
