The department is also looking into $2.5 million in civil penalties against the airlines -- Lufthansa, KLM and South African Airways -- for "extreme delays" in providing reimbursements.
"When a flight is cancelled or significantly changed, you shouldn't have to fight with the airline to get their money back," said US Transportation Secretary Pete Buttigieg in a statement.
"We are using all of our tools to improve air travel for everyone," he added.
Lufthansa was ordered to pay $775 million in refunds, while KLM was made to pay $113.3 million and South African Airways $15.2 million.
The assessed civil penalties amounted to $1.1 million each for Lufthansa and KLM, and $300,000 for South African Airways, the Transportation Department said.
It added that the airlines have paid back the refunds exceeding $900 million.
A Lufthansa spokesperson told AFP that the company has long been in contact with the US Transportation Department and "in comparison with other airlines, the fine does not differ from the norm."
The delay in payments, Lufthansa added, was due to the "historically unique level of refunds during the Covid pandemic."
The US flight cancellation rate was below 1.2 percent in 2023, the lowest level in more than a decade despite a record amount of air travel, according to the Transportation Department.
Earlier this year, US authorities issued a rule requiring domestic and foreign air carriers to provide prompt automatic refunds when flights are canceled, or significantly changed with consumers rejecting the alternative offered.
