"We will be flying non-stop from New Delhi to Tel Aviv from March 22 over Saudi airspace," an Air India spokesman said.
Israel's national carrier El Al which currently operates from Mumbai takes a detour over the Red Sea to avoid flying over Saudi Arabia and Iran.
Saudi Arabia and Israel have no official diplomatic relations. Egypt and Jordan are the only two Arab nations which have relations with Isreal.
"I think that what this shows is even in the absence of that you can have small gestures that are of real meaning," Spyer, director of Israel`s Rubin Centre for Research in International Affairs, told AFP.
"That's what I think that this Saudi decision to allow the overflights consists of. It`s small but significant," Spyer added.
Recently Prime Minister Benjamin Netanyahu had described relations with the Arab world as the "best ever" even as tensions continued over President Trump's recent decision to move the American embassy to Jerusalem, a move which set off violent protests in the Middle East.
Saudi Arabia does not allow any commercial flight bound for Israel to cross its airspace but the Indian government brokered the "peace flight" amid tensions in the Middle East.