It depends whos happiness you value more - his or your own. Of course finishing with someone is never easy but if you genuinely don't have feelings for him then it's nicer in the long run to let him go. You don't have to tell him you've met someone else, just that distance is too much and that you'd rather keep him as a friend then end up resenting him for being so far away (or some other colourful excuse like that).
I get the impression you're kinda scared that if you finish with him and pick up with this other lad and then that doesn't work out you'll be left on your own - is that the case?