Inconel 718 is one of the most widely used super alloys in industries like oil and gas, aerospace and automobile. However, properties like poor thermal conductivity and work hardening tendency make it difficult to machine, using a conventional machining approach. EDM is one of the effective and efficient ways of machining this exotic material. However, the material removal rate (MRR) is very low. In an attempt to enhance the performance of EDM, an arc machining module has been integrated into the existing EDM system and the compound process is named hybrid electrical discharge and arc machining (HEDAM). Due to the high thermal intensity of the sparks/arcs imparted by this process, the material removal rate is elevated. To understand this process better, a comparative thermal modelling between HEDAM and EDM has been presented in this article. Firstly, a thermal analysis is performed for the EDM and HEDAM processes to understand their respective erosion efficiencies. Finally, the numerical simulation for MRR of both EDM and HEDAM is presented. Unlike other EDM models, in this simulation, the thermophysical properties of the material were considered to be temperature-dependent and the latent heat of fusion was incorporated into the modelling process. A comparative analysis was also performed, which showed that incorporating such variables increases the accuracy of the obtained results. The study revealed that the spark radius in HEDAM is larger in size and more stable. Consequently, this resulted in HEDAM to have about three times more erosion efficiency compared to conventional EDM. © 2017, Springer-Verlag London Ltd.