A three-dimensional magnetohydrodynamic model of an air arc plasma, considering the metal vapour from erosion of an iron splitter plate, is developed. An equation describing conservation of the iron vapour mass is added to the standard mass, momentum, and energy conservation equations. The influence of the iron vapour on the thermodynamic and transport properties of the gas mixture is considered in the calculation. The arc voltage, and distributions of temperature, gas flow, and mass fraction of iron vapour in the arc chamber are calculated and analyzed in detail. The experiment was carried out to support the simulation work. The images recorded by a high-speed camera and arc voltage measurement were compared with the predictions of the simulations, which proved the validity of the simulation model.