Shares of Garuda Indonesia, the country's national airline, have fallen more than 20% on their market debut.
Garuda shares were trading at close to 600 rupiah on the Indonesia Stock Exchange, down from their 750 rupiah listing price.
Analysts said the listing price was too high, and the sale has come at a time when emerging stocks markets are under pressure.
There are also fears about the earnings outlook for airlines this year.
"It's just bad timing and a higher valuation even scared off retail investors," said Bayburs Alfaris, a trader at Kim Eng Securities.
Many of Asia's stock markets have been under pressure this year as the unrest in Egypt, high oil prices and fears about inflation prompted investors to move money from emerging markets.
This negative sentiment has been brewing for months and limited demand for the Garuda share sale.
Out of the 6.3 billion shares on offer, just over half were taken up by investors. Banks and underwriters were left with the rest.
At the same time, there are concerns that oil prices of close to $100 a barrel and weak consumer demand will limit services such as air travel.