The route over Saudi Arabia will cut down the flying time from some eight hours to about five and a half.
India's state-run carrier Wednesday confirmed the launch of flights between New Delhi and Tel Aviv later this month which are expected to use Saudi airspace. By comparison, Air India's three flights a week between the Indian capital and Tel Aviv - a longer flight by distance - will take only seven hours.
Jerusalem Post had reported that after his meeting with US President Donald Trump, Netanyahu said that Air India signed an agreement that day enabling the flights to and from Israel over Saudi Arabia.
El Al recently reached out to the International Civil Aviation Authority seeking its support in gaining permission to fly over Saudi airspace.
Business aircraft flying direct between the two countries have been observed on public flight tracking websites to make a stopover en route to break up the journey, usually in Jordan.
Netanyahu had told reporters that Saudi Arabia has given Air India approval to fly through its airspace on flights between Israel and India. This was followed by appeals from El Al, the Israeli airline, to be granted similar rights, the report added.
El Al slammed what it termed a "discriminatory" move by Saudi authorities, in a letter to the International Civil Aviation Organization (ICAO) this week.
Saudi Arabia and Israel have no official diplomatic ties, like much of the Arab world.
But the historic animosity has given way to cautious, if often denied, cooperation based on a shared enmity towards Iran.
Rumors also circulated that a senior Saudi prince made a diplomatic trip to Israel with officials.
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