You could open the seam where it is splitting, then reinforce the the split seam from the inside with either thin leather, folded linen or other heavy duty cloth, use a heavy duty thread, don't forget the needle from a fabric shop or marine store that has a sail section such as West Marine.
I repaired a very similar fray on my old Chouinard bag, the repair has held up very nicely.
That is a nice bag
