Yes, it's only fair to tell him. He knows something isn't right, and since people are keeping it from him, he is possibly wondering if whatever's wrong has something to do with him. A child's imagination can create stories much worse than a beloved family member dying. And some day he'll find out, and feel betrayed by all the secrecy.
And ultimately, death is a very intimate part of life, and should not be handled as some terrible secret that can't be shared with children. Secrecy breeds fear and misunderstanding, and leaves the impression that nobody would be willing to answer honest or troubling questions.
Kids are more resilient than adults give them credit for. Yes, the child could be torn up for awhile. But if I were the adult in charge, I think I would spend some quiet time with him, tell him I had some sad news to report, and tell him his great grandmother had died while traveling. Then watch his reaction, and respond accordingly. Answer questions honestly and as simply as possible. He might break into tears, want to be held, appear shocked, seem oblivious, have a million questions, just want to be left alone for awhile, or ponder for awhile and then go play. No matter what his reaction, he'll be processing this news for quite awhile.
My grandson lost a beloved GG last year when he was four. He was sad for a short time, then life just took over and he seemed quite normal and playful. But he asked about her and about dying fairly frequently for a couple of months, mostly just genuine questions, and sometimes a few tender tears. He still mentions her from time to time and asks questions about death. We observe that his happy memories of his GG are a part of who he is now, and she will always be with him in his memories.
There is nothing traumatic, grim, or frightening about this process for my grandson – I think younger children still have a very open-ended view of what life's all about, because it brings new discoveries daily. And death, if not handled as something too dreadful to talk about, is just another horizon of life to discover and explore.
We tell him that all living things, people and animals and plants, have a turn to live, and most of us people live a long life and become very old. Then our bodies become tired and sometimes sick, and when our time is finally finished, we are grateful to die and give a new baby a turn at living in the world.
When he asks where we go when we die, I tell him I don't really know, but I think it's a happy place where we won't feel tired or sick or old, and we'll always feel close to the people we have loved. I tell him many people believe that we go to live with God – that we lived with Him before we were born and we will live with Him again, and it will feel happy, like going home.