Could Mach 1.4 be a better design point for SST? There's been a number of recent proposals for design work on low-supersonic bizjets that would cruise at Mach 1.1-1.6, the common theme being avoiding a sonic boom. 

The conventional wisdom is to avoid this range, and either stay subsonic or go all the way to Mach 2+, because you sacrifice some efficiency the moment you cross Mach 1:


Sharp nose and supersonic airfoils result in lower L/D across the envelope.
Thin airfoils add weight and require more fuselage space for fuel tanks.


On the other hand, staying at low Mach avoids a few other penalties:


The 12:1 slenderness of modern widebodies translates well to a low-Mach SST, allowing for a similar cabin layout. This is critical.
Skin temperature allows the plane to be built with the same resins as subsonic airliners.
Less COL shift, higher AR wings, reasonable bypass engines make it easier to meet TO lift and thrust requirements.
Speculatively, cruise altitude might be kept at FL450 to avoid stricter pressurization rules.


What I'm not sure is which set of factors matters more. It's difficult to glean from existing designs, as they're not really comparable between one another.

The Aerion's wing should behave well on landings, and it claims only a 22% fuel penalty for going supersonic. But its slender nose and long tail leave just 18% of its length for the cabin, so it can't be used as an airliner template. 

This is probably caused by its role as a status symbol and regulatory weight limits; actual SST managed a proper length cabin, and the 2707 was even planned as a widebody. Thin wings have are also featured in some subsonic proposals, so they're not a total efficiency killer. 

I'd imagine a Mach 1.x airliner to be a 779-sized twin, with 788-like seating capacity, area-shaped akin to the Sonic Cruiser, an ogive nose (F-16 style), Aerion-like trapezoid SNLF wings, nacelle engines. 

The question is, could a low-Mach SST, if sonic boom was publicly accepted, be closer in efficiency to subsonics than to historic high-Mach designs? 

To narrow down the scope, let's explicitly exclude:


Whether there is any market for such an aircraft.
Whether Mach 1.x is fast enough to make a difference.
Engines, as it's a major subject in itself. Just assume a rubber engine matching a loose trend line of TSFC~=0.4*Mach.max.


Leaving in scope the technical subject of the efficiency loss imposed by the aerodynamics of supersonic flight. It comes down to how good a L/D can high-tech airfoils like SNLF and area-ruled widebody provide, with how little compromise on capacity, in the range of Mach 1.1 to 2. Fuel per seat-mile being the figure of merit.

To help set a baseline, I've plotted a mix of historic and calculated numbers for known aircraft:



To put the question in more formal terms, I'm looking to estimate the seat-miles/kg function's behavior for an optimal design in the low-supersonic range. 

The red line assumes the worst-case scenario and is based on just stuffing seats into the AS2. The green line represents a best-case scenario based on claims with the Sonic Cruiser as a baseline. The truth is probably in between.
Only for a business jet.

The high end of the business jets has been in a race for higher cruise Mach numbers which has resulted in a top speed of Mach 0.935 so far (Gulfstream 650, Cessna Citation X). So there seems to be a market value for the top spot in cruise Mach. To improve this further, and substantially, the jump to supersonic speed is unavoidable. So far, the expense of developing such an aircraft for a rather small market has been too high.

On the other hand, a Mach 1.4 design will be much easier than one flying at Mach 2.0. The reasons are:


Intake complexity: At Mach 1.4 a simple pitot intake with a single straight shock has acceptable losses, while Mach 2 demands a complex, adjustable intake with ramps producing a cascade of oblique shocks.
Wing aspect ratio: In order to keep the wing's leading edge subsonic, a Mach 1.4 design can get away with 45° sweep while a Mach 2 design needs at least 60° sweep. The Mach 1.4 wing will be much better for take-off and landing, and for the subsonic legs of the trip.


On the other hand, transport performance at Mach 1.4 will only be ⅔ of that at Mach 2 for comparable L/D, so the Mach 2 design will win hands down if airliner economics are used to evaluate a design. As you said, if you venture into supersonic territory, you might as well go all the way to Mach 2 in order to optimize the profitability of the design. Mach 2 still allows to use a fixed-geometry wing and aluminium, so the overall complexity of the resulting design is still manageable. Beyond that, you need to buy more speed with increasingly more system complexity.

Dietrich Küchemann proposed an empirical formula for maximum supersonic L/D: $$\frac{L}{D}_{max} = \frac{4\cdot(M_{\infty}+3)}{M_{\infty}}$$
Using this as a yardstick will result in 12.5 at Mach 1.4 and 10 at Mach 2. Combine this with the Mach number in order to have something close to transport efficiency, and the Mach 2 design enjoys a hard-to-beat 14% advantage in economic value.

So the only sensible reason to design for Mach 1.4 is to capture the high end of the business jet market, where airliner economics don't apply but bragging rights at the golf course are more important.