The source, a business partner of Laker's son who asked not to be identified, said the 83-year-old Laker died early on Thursday of undisclosed causes.
He said no formal statement about the death would be made to the news media until Friday.
"This is a family thing. People are very sad," he told Reuters. "Everything will be taken care of tomorrow."
In the 1970s, Laker Airways' low-fare Skytrain service from Britain to the US opened new vistas for millions of tourists who had previously regarded air travel as a preserve of the rich.
Skytrain, which opened in 1977 offering a one-way fare of $100 between London and New York, sparked a price war as major airlines rushed to follow its lead, many of them going into the red as a result.
In the five years before its collapse, Laker Airways carried over three million passengers on its fleet of 20 aircraft and rose to fifth place from 29th in the Atlantic air travel rankings.
Spirit of free enterprise
Laker's success and spirit of free enterprise - he advertised the venture himself on television and in posters - won him the admiration of Margaret Thatcher, the former British prime minister.
But in February 1982, Laker Airways folded after it became burdened with millions of dollars in debt.
The collapse left an estimated 17,000 travellers stranded abroad and severely damaged the folk-hero image of the man known as Sir Freddie.
Frederick Alfred Laker was born in Canterbury, England, on 2 August, 1922, the son of a merchant seaman. His father deserted the family when Laker was five and the boy grew up in poverty during the Depression in the 1930s.
Thatcher was an admirer of
He learned the fundamentals of aviation engineering and studied mathematics and economics at night school and in World War Two was an engineer and pilot with British Air Transport.
After the war, he turned a profit in ventures that included buying and selling government surplus trucks.
His big break came in 1948 when at age 26 he bought 12 old Halton aircraft and threw his new fleet into the Berlin airlift.
The money he made allowed him to branch out into air charters. He later pioneered air car ferries across the English Channel and ran the world's first hovercraft service.